My experience of getting my first student credit card — and which credit card I want next
Quick summary
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This past winter, I ditched my People's United Bank debit card and applied for my first credit card: the Discover It Student Cash Back Card. I'd been using my debit card since high school and it had always seemed like the easiest way to manage my spending. I'd get a paycheck, deposit it at the bank and then swipe my debit card when I needed to make a purchase. Super simple.
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However, when I entered the second semester of my junior year in college, things started to get real. I started thinking about life after college: where I'd live, what I'd do and how I'd pay for it. I realized that the best way to save money was through having a credit card that would give me rewards simply for spending money.
Credit cards offer perks that debit cards don't. You can earn points and miles for travel, receive cash back on everyday purchases and build a solid credit score. As I learned more about how credit cards worked, it became clear that there was no point in using a debit card: I was just spending money and getting nothing in return.
So here's how I embarked on my first foray into the world of credit cards and how I chose the best one to suit my needs as a student.
The eureka moment: I need a credit card
As it turns out, you can't apply to lease an apartment or take out loans without a credit score. So if I wanted a place to live and a way to pay for (shudder) graduate school, I needed to start earning credit ASAP.
When I started researching credit cards, I knew nothing about the world of credit. I didn't know what a credit score really was, let alone what constituted a good credit score. I also didn't understand how using a credit card was better than using a debit card or how to actually use the credit card once I got it.
After scouring TPG for advice, combing through beginner credit card options and grilling my parents about their card habits, I settled on a beginner card and sent in my application.
Related: TPG beginner's guide: Everything you need to know about points, miles, airlines and credit cards
How I chose my first card
The Discover It Student Cash Back card is specifically designed for students who are working on building their credit. It's meant to be your first credit card, so you don't need a credit score to apply. When comparing beginner credit card options, I discovered that cards like Chase Freedom Unlimited and Capital One SavorOne Student Cash Rewards Credit Card have great cash back deals but they require a credit score in the application process. Since I didn't have a credit score, this was a dealbreaker.
Other than the credit score issue, there are some criteria you have to meet for most student cards: you have to be a college student over the age of 18 and a U.S. resident. If you check those boxes, it should be fairly easy to get your hands on a student credit card.
Learning the art of financial responsibility
No fees, no bells and whistles
As a full-time student, I am not exactly raking in crazy amounts of cash. I needed a credit card option that didn't add the extra expense of an annual fee and the Discover It Student Cash Back doesn't have one. In fact, many student cards don't. It's one less thing to worry about. Sure enough, the card might be a bit limited when it comes to perks, but the main thing is that I'm building my credit card portfolio.
In addition, when cardholders take out a student loan with Discover, they're eligible for 1% cash back of their loan if they have a 3.0-grade point average or higher. While 1% might not seem like a lot, it's still a substantial amount of money if the loan you take out is large. Free money for good grades isn't bad.
'Free' money
Every quarter, cardholders get 5% cash back when they spend money in certain service categories or places. For example, I got 5% cash back on gas and on anything bought at Target this past quarter. This deal has been great in light of the rise in gas prices. Whenever I fill up my car all the way (which costs about $25), I'm getting $1.25 back.
This quarter, I'll get 5% cash back at restaurants or when I use PayPal. All I have to do to activate the rewards is click a button on the Discover app. In general, Discover's rule is that you make 1% back on all other purchases.
By the end of your first year, Discover matches your cash back, essentially doubling the money you get. So, if you make $60 in cash back by the end of the year, you get $120 altogether. Say it with me: free money.
As a beginner credit card user, it's also important that I learn to establish good credit card habits, like paying my credit card bill in full each month. For each payment period, I've been able to apply my cash back when I pay my bill, allowing me to keep more of my savings in the bank.
Related: TPG's 10 commandments of credit card rewards
Save, budget and spend wisely
The Discover app offers a spending analyzer that tracks how you spend money. It breaks down your monthly spending pie-chart style to show what you spend on expenses like gas, groceries and restaurants. This feature offers card users a way to easily budget and plan expenses based on past trends in spending.
When I sat down to budget out my summer, for example, I used data from the spending analyzer to determine how much I should aim to spend on groceries each week. Since most college students operate on some kind of budget, this analyzer is an amazing tool. (Added bonus: the spending charts it generates are colorful and pretty.)
When you open the Discover app, there's a section where you can clearly see your spending history. You can also opt to receive notifications on your phone whenever you make a purchase. While I had a similar feature for my debit card, it was not nearly as user-friendly and clear-cut.
While putting charges on the plastic can feel like you're not spending real money, seeing the charge pop up on your phone is a reminder that you certainly are. It's also helpful for security purposes: if someone else swipes your card, you'll know. If you're frightened by credit card theft like I am, it's a wonderful assurance to see that I'm the only one using my card.
Related: Senior year in college: What's in my wallet?
What's next for my wallet: Build credit for travel rewards
As a travel enthusiast, I'm hoping to eventually build enough credit to be eligible for travel rewards credit cards. Reaching a credit score above 740 is my goal. I still don't have a credit score quite yet: FICO can't calculate it until I've had the card for a full six months. In the meantime, I'm making sure I pay my credit card bills on time and in full. I'm also continuing to budget so I can make sure I'm not overspending.
Having the Discover It Student Cash Back card is a bit like riding a bike with training wheels — it's beginner-friendly and built for learning. My next credit card, however, will hopefully be more like a three-speed bike — I'll be able to cover more ground by receiving better cash back rates (or points) and more benefits directly related to travel.
For now, I have my eye on the Chase Freedom Unlimited card, which is a TPG favorite. Like the Discover It Student card, there's no annual fee. The benefits of the Chase card are much better than my tricycle student card: the card offers 1.5% back on all purchases, 3% back on dining and drugstores, and 5% on travel booked through the Chase Travel℠ portal.
However, you can't just jump right to a card like Chase Freedom Unlimited right away — you need to build your credit and have a good enough score to get approved. In other words, if you have no credit, you will probably get rejected as a card applicant. So if you want to keep getting better deals and rewards, you need to start small, like me, and work your way up.
Bottom line
Even if you're a beginner without a line of credit to your name, you can learn the ropes and build your credit. While I was initially intimidated by the idea of spending invisible money and paying it back later, I soon found that using a credit card was way easier than I thought it would be — and that it also saved me money.
The Discover It Student Cash Back Card is a great option for credit card beginners who are college students. It's what I recommend to all my friends who are still using debit cards. Ditching the debit card for an easy-to-use student credit card is definitely the way to go and will bring the world of travel rewards one step closer.
Related: Friends don't let friends pay with cash (or debit cards)