How college students can maximize travel rewards credit cards
Update: Some offers mentioned below are no longer available. View the current offers here.
This page includes information about the Discover it Cash Back that is not currently available on The Points Guy and may be out of date.
Travel rewards credit cards run the gamut from premium products charging top dollar for benefits like lounge access and Global Entry, to mid-range entries that waive their first year’s annual fee, all the way down to cards with no annual fee.
For regular consumers with good credit, the choice can be hard enough. But for college students just starting to manage their personal finances and credit scores, the choices can be that much tougher.
Luckily, the travel credit card marketplace is more diverse than ever, meaning college students have some amazing opportunities to build their credit while reaping rewards at the same time. With some strategy and savvy, college students can make the most of their credit while sticking to a budget and keeping their credit score healthy.
Know your score
You wouldn’t dive into a pool without knowing its depth. So why would you start applying for credit cards without knowing your credit score? Finding out your score will provide you with a benchmark for measuring both your financial health and your progress as you build your credit over the years. It will also make sure your expectations as to which credit cards you are eligible for are realistic.
We often use the terms “credit score” and “FICO score” interchangeably. They are not exactly the same, but they’re similar. The three major credit bureaus — Equifax, Experian and TransUnion — all compile their own detailed credit reports, which can vary. A FICO score is your credit score as determined by the Fair Isaac Corporation, and is the score most commonly used by lenders, so it is the most useful to know.
Your FICO score is determined by five key factors:
- Payment history: Whether you pay your bills on time counts for 35% of your score, so it’s the most weighted factor. The accounts considered include credit cards, retail accounts, installment loans (like car loans), finance company accounts and mortgage loans.
- Amount of debt: Also known as credit utilization, or the debt-to-credit ratio, this factor is calculated based on how much credit has been extended to you versus how much you are actually using. It is weighted at 30% of your score, so it, too, is very important, and a good reason to keep your balances as low as possible.
- Length of credit history: FICO considers this factor as 15% of your overall credit score. College students just starting out with credit are naturally at a disadvantage, but the longer you hold on to your accounts and keep them in good standing, the more this will be reflected in your score.
- Credit mix: FICO also considers the types of accounts you have open, such as credit cards versus an installment loan. This is weighted at 10% of your score.
- New credit: Also accounting for 10% of your FICO score, lenders want to know how many new accounts you’ve applied for lately and what the lines of credit extended to you have been. Contrary to popular wisdom, inquiries about new lines of credit will only drop your score minimally and stay on your record for 3-6 months.
Knowing how your financial behavior affects your credit score is of paramount importance, both as you start out with credit and as you mature. A few irresponsible decisions early on can impact your score — and thus your opportunities not only to maximize travel rewards but get a good interest rate on a car loan or mortgage — for years.
How to get your score — for free
Now that you know what goes into your credit score, how do you find out what it is? These days, there are plenty of free ways to do so. More and more credit cards themselves are offering it to cardholders for free as a benefit. However, if you do not have a credit card yet, you still have some good options.
You have to create an account with some basic personal information, but Credit Karma offers free credit reports from both TransUnion and Equifax that you can check anytime.
American Express, Bank of America, Chase Journey, Capital One CreditWise, Citi and Discover Scorecard all offer accountholders and non-customers alike programs through which they can access and monitor their credit scores.
What your score means
Once you find out your score, the numbers break down the following way:
- Over 800: Exceptional credit
- 740-799: Very good, demonstrates you are a dependable borrower
- 670-739: Good, you’re an above-average borrower
- 580-669: Fair: A below-average score, though many lenders might still approve your for some loans and credit
- Under 580: Poor, lenders consider you a risky borrower
If you’re just starting out with credit, you’ll likely be in the middle to lower range somewhere, which means you are eligible for some of the travel rewards cards out there.
Which credit cards are right for you?
Now that you have a handle on your credit, it’s time to decide which credit card you’re going to get. At TPG, we tend to break down the types of rewards cards down into four categories:
Airline credit cards: Everyone is familiar with these cards, which are associated with a specific carrier, like the Gold Delta SkyMiles® Credit Card from American Express, the United Explorer Card from Chase, or the Citi® / AAdvantage® Platinum Select® World Elite Mastercard®, among many others. Whether this type of credit card is right for you will depend on whether you actually fly a lot, where you fly to and from, and if you take a particular airline more than any other, as well as whether you can maximize perks such as free checked bags and in-flight discounts. Read our picks for best airline credit cards here. The information for the Citi AAdvantage Platinum card has been collected independently by The Points Guy. The card details on this page have not been reviewed or provided by the card issuer.
Hotel credit cards: If you’re a college student, you’re more likely to be staying at a hostel or splitting an Airbnb with friends than staying in luxury hotels. But if you are interested in accruing points toward free hotel stays, you could consider a no-annual-fee card that participates in a hotel loyalty program like the Hilton Honors American Express Card (see rates and fees) or the Marriott Bonvoy Brilliant™ American Express® Card. Read our picks for best hotel credit cards here.
Transferable points cards: Transferable points include American Express Membership Rewards, Chase Ultimate Rewards, Capital One miles and Citi ThankYou Rewards, each of which can be redeemed directly for travel through their respective online portals, or transferred to a unique set of travel program partners including both airline frequent-flyer programs and hotel loyalty programs. Though many of the best cards that participate in these points programs — like the Chase Sapphire Preferred Card and the Citi Premier® Card — charge annual fees, there are some that do not, including the Amex EveryDay® Credit Card from American Express. The information for the Amex EveryDay Credit Card has been collected independently by The Points Guy. The card details on this page have not been reviewed or provided by the card issuer.
Fixed-rate or cash-back cards: Finally, fixed-rate credit cards allow you to accrue points or miles on everyday purchases and then redeem them at a set value (usually 1 cent apiece) toward travel or other purchases. Among the no-annual-fee credit cards that earn these types of points/miles are the Bank of America® Customized Cash Rewards credit card, the Discover it Cash Back, the Capital One Venture Rewards Credit Card, the Wells Fargo Propel American Express® card and the Chase Freedom Unlimited.
The Wells Fargo Propel card is no longer available for new applicants. The information for this card has been collected independently by The Points Guy. The card details on this page have not been reviewed or provided by the card issuer.
Related: Best cash back credit cards
One reason to consider the last one in particular is that if you’re not going to use your points toward cash-back statement credits anytime soon, you could wait until you get a more premium card such as the Chase Sapphire Preferred later on and then your points will be transferable as well as redeemable at fixed rates.
The other main consideration is which credit card will offer you the most return on your spending. Apart from whether you actually want airline miles, hotel points or cash back, every card’s earning structure is different. The Amex EveryDay® Credit Card from American Express, for instance, earns 2x points per dollar at U.S. supermarkets (up to $6,000; then 1x), 1x point per dollar on other purchases and a 20% bonus each statement cycle you make more than 20 purchases with it.
By contrast, with the Discover it Cash Back you can earn 5% cash back on up to $1,500 in purchases made in accordance with Discover’s 2019 Cashback Calendar after enrollment, plus 1% cash back on all other purchases. Thinking about your prospective card’s earning structure will ensure that you are able to maximize its bonus categories, and thus, your rewards.
Applying for a card
If this is your first credit card and you have no established history, don’t worry. Several issuers field cards specifically for students looking to build credit. Most notable among them is Discover, which has this handy guide for applying for your first credit card.
Second, be certain you are applying for the best possible sign-up offer. Bonuses rise and fall all the time, as do the minimum spending requirements. Do your homework and make sure any cards you’re thinking of applying for are offering historically good bonuses.
When you are ready to apply, make sure you have all the information necessary, including an accurate estimate of any income, mortgage or lease payments, your current address and your social security number.
One more note if this is your first credit card and you have not had a credit score at all before. It takes three months to generate a VantageScore credit score (this is used by some lenders) and six to generate a FICO score. Wait until you’re past that time frame to apply for additional cards, because these applications will count as hard inquiries on your credit score, and any rejections could bring it down.
If you’re not approved
It happens to all of us. You apply for the card you think is the perfect fit, only to have your application declined or put into pending status. Don’t give up just yet. Credit card issuers have reconsideration phone lines that you can call to argue (politely) the specifics of your application and have it reviewed by a credit specialist.
Treat the agent with respect, have all the information you might need on hand, and be prepared to explain your circumstances and why you need this specific card.
Ideas for meeting minimum spend
If and when you are approved for a credit card, you will likely have to meet a spending requirement in order to qualify for the sign-up bonus. For college students on tight budgets, that might seem intimidating. However, there are ways to accomplish this without racking up debt right off the bat.
Before we jump into them, though, let me just stress again how important it is that you not bite off more than you can chew. Before making purchases on your new card, make certain you can pay them off on time. Otherwise, you’ll just be going into debt, hurting your credit score and negating the value of any rewards you might earn.
Related reading: Ten commandments for travel rewards cards
With that out of the way, here are some creative ways to meet your spending requirement (and continue earning rewards beyond it).
Pay for tuition with a credit card: This is often easier said than done. Some institutions completely prohibit you from paying for tuition with a credit card. Others either charge you a convenience fee or partner with payment services that charge a fee (usually around 3%). However, a few colleges will let you pay with a credit card without fees, and in those cases it can be worth it. If you’re thinking of doing this, ask your college’s accounts department what their policy is to determine whether this might be a good option for you.
Use Plastiq to pay bills: Plastiq is an online bill payment service that basically lets you use your credit card for charges you might not otherwise be able to use a credit card to pay, such as utilities and rent, but also tuition. Plastiq is widely hailed as one of the best of these services since you can pretty much send a payment to any person or business within the U.S. or Canada. To do so, though, you have to pay a 2.5% fee, so do the math and consider whether it’s worth it before you commit.
Put your books and supplies on your new card: As the school year starts, chances are you'll have to buy a lot of books, school supplies, and maybe even make a big purchase like a new laptop. As long as you'll be making these purchases anyway, you might as well be earning rewards on them.
Pay for group meals: As long as your friends can pay you back before your statement is due, either with cash or through a free service like PayPal or Venmo, it might be worth putting big group meals on your credit card in order to hit your minimum spending requirement.
Club expenses: Are you part of an on-campus club or group with a budget? Ask if you can put some of the expenses for events or other needs on your card and get reimbursed. This can be a quick and lucrative way to rack up some spending, as long as you can be sure of getting reimbursed in time to make your statement due date.
Gift cards: If you’re not going to be able to make the purchases you need to within the spending time frame but coming up with the cash is not an issue, you could always purchase gift cards at a pharmacy or grocery store. Just be sure it’s for something you’ll actually use.
Related reading: Best credit cards for students and recent graduates
Now that you have the information you need at your fingertips, and strategies for meeting the spending requirements on a new credit card, it’s time to figure out which one is best for you. Check out this post on 5 Starter Cards for College Students and Recent Graduates for ideas.
Your credit can help you earn fabulous rewards when it comes to credit cards and travel. Just be sure that you are using your credit responsibly, paying off your bills on time and maximizing the benefits of any card you do decide to carry.
For rates and fees of the Hilton Honors Amex card, click here.
Additional reporting by Sam Lipscomb and Liz Hund.