Best Cashback Credit Cards For Students

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Best Cashback Credit Cards For Students

Graduation season will be here soon, and a lot of TPG readers are young people just getting started with credit, so I thought I’d have a TPG contributor named Mark, himself a recent college grad, write about the best cashback cards for college students looking to build their credit. As you’ll see, there are plenty out there with a lot of great features for credit newbies.

Back in 2007 when I was still in high school, I saw a powerful documentary called “Maxed Out” about the dangers of easy credit. I think it should be required viewing for any young person starting out with credit, and though it was meant to scare us about the dangers of playing fast and loose with your credit, I viewed it as a practical learning tool.

Here are a couple of other things I learned as I was building up my own credit as a college student, as well as a few of the best cards out there for young people to start with.

Cosigners
One easy way for students to build their credit responsibly is for their parents to cosign on a card with their children.  This strategy is great for many reasons.  For one, that card could be a miles-earning card and get you that much closer to a great spring break trip.  Secondly, the parents on the card can put a spending limit on it so their kids don’t (in fact, they can’t) go wild at the mall.  Building credit this way worked for me, as it taught me how to spend responsibly in a safe way.

Some parents might not want to run the risk of damaging their good credit scores if their children make a few mistakes (who can blame them?). So I’ve picked out four good cards are catered to young people. Now, neither of these earns miles or points, but they are cashback cards. Sure, you might not get those sexy trip awards, but think about this as a sensible first step in building to those better cards. When banks see you can handle a lower limit card, when you do decide to apply for a points-earning credit card, you can get a great one that will send you around the world and back!

Student Credit Cards

1.  Citi® Dividend® Card for College Students:
This card is a great start for students.  It is specifically designed for them to build credit up for themselves in a responsible way.
Pros
-Enroll to earn 5% cash back in must-have categories up to $300 per calendar year.
-Earn a full 1% cash back on all other purchases
-Free enrollment each quarter for new categories that earn additional cash back.
-Manage your account online, on your tablet or on your Smartphone
-No Annual Fee and no co-signor required

Cons
-APR ranges from 13.99%-23.99% (Variable).

2. Discover It®
College students will love this card’s generous cashback terms and friendly customer service from Discover.
Pros
-0% APR for 14 months, which again is great for larger purchase you know you can pay off.
-5% cashback rotating calendar.  This is great because the categories rotate quarterly. For this past year, January to March was gas and entertainment, April-June is restaurants and movies, May is restaurants, July-September is gas and “summer fun” (movies and theme parks), and October-December is Holiday shopping.
-Up to 20% cash-back through the Discover shopping mall, with retailers like Best Buy, Nordstrom, and Apple.
-Great student-friendly customer service including raising limits or dealing with bill-related issues.

Cons
-No points earned on purchases, but with the generous cash-back you may not miss them.
-Up to 22.99% APR at the end of the 14-month trial period, which won’t matter if you are a good spender and don’t go over your budget.

3. Journey Student Rewards Card by Capital One
Check out this card if you know you can spend within your limits and not have a balance at the end of each month.
Pros
-1% cashback on every purchase, which takes the guesswork out of what you can earn back on your card.  While it’s not high, it is something!
-No Annual Fee
-25% additional cashback on all cashback you receive if you pay your bill on time.  If you spend $400 a month, you’ll be earning back an extra dollar!  This is great because it’s a positive reinforcement for paying your bills on time.

Cons
-No miles earned on the card
-High 19.8% APR no matter what, so no grace period like the above cards.

For those who don’t want a credit card, but want to learn using money responsibly, American Express offers the Pass Card which is a prepaid spending card parents can reload with their child’s allowances each month, and is designed for teenagers.  No credit is earned, but it teaches younger children about credit and how to spend wisely.
Pros
-Teaches valuable spending lessons to a younger population, which will make them more responsible spenders in the future
-Preloaded with money deposited by parents, so no overdraft fees associated with ATM cards
-Accepted everywhere American Express is accepted.

Cons
-No credit earned. The point of the card is to teach about spending within a set limit, not about credit.
-$2 ATM fee after the first withdrawal each month, which is not free like most ATM cards from the major banks.
-Must reload card if more money is needed.

Like I said, these aren’t the lucrative points-earning cards that TPG normally covers, but they are some of the best options out there for college students just starting out to begin building their credit while still earning some valuable cashback before transitioning into points-earning cards.

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