Student Credit Cards: Build Credit, Not Rewards

Posted September 16, 2013 by CCC Staff in


Get Double The Points, Earn Extra Miles or Receive Bonus Cash Back! It’s hard these days to come across a credit card offer that’s not promoting some sort of rewards program. Issuers are offering more and more rewards these days in an effort to get you to sign up for their special credit card. And, with many offering extra points, double miles and more cash back for certain purchases, why wouldn’t you want one?

While rewards cards might be extremely popular, they’re not always the best option…especially for students just starting out.

Rewards Credit Cards Are Not For Everyone

Rewards credit cards are an excellent option for consumers who spend a significant amount in a certain category – such as travel, electronics, gasoline, or even Harley Davidson merchandise. These types of cards give you reward points, cash or miles for certain purchases, which you can redeem later for special items. Essentially, they’re rewarding you for spending money, sounds great doesn’t it?

Unfortunately, rewards credit cards don’t reward everyone.

While rewards cards do give users great benefits, they can also come at a price for others. Rewards credit cards generally have higher interest rates – which is definitely not a benefit when you carry a balance. They are also geared more towards experienced consumers who use their credit card for everyday purchases. If you’re a student starting out with a credit card, getting comfortable using a card responsibly should be the first priority – not racking up the rewards. Students can find themselves quickly buried in high-interest debt, and that’s no way to enter the “real world” after college.

If you can answer any of the following statements with TRUE, you should probably avoid a rewards credit card:

  • Sometimes, I may miss a payment, or two, on my credit card.
  • I generally pay the minimum balance or a portion of the balance due.
  • I do not use a credit card for everyday purchases.
  • I don’t have any experience using credit cards.

If any of those statements sound like you, try looking into a low rate or student credit cards – instead of that trendy rewards card.

So, What’s a Student To Do?

If you are attending a college or university, now really is a great time to get started with credit cards – with the condition that it will be used responsibly! Having access to a credit card may sound scary or overwhelming, but getting a card now may make it easier to get more credit after graduation – such as a mortgage or car loan. Banks and card issuers are more willing to give you a loan or credit card after you’ve established some credit history, but they’ll give you a chance to start out if you’re a student. If you wait until after graduation, you may find it extremely difficult to get approved.

Now’s definitely the time to apply, but finding the right credit card is crucial. Not every credit card out there will best suit you, so it’s critical to do your homework when searching for a card. Just because your best friend has a specific card, doesn’t mean it’s the best for you. You may want to avoid the popular rewards cards out there, as the annual fees and higher interest rates can quickly become a financial burden, especially when you haven’t quite mastered paying bills and living within your means.

It’s much more important to start building your credit than earning rewards. Instead of applying for the latest and greatest rewards card, look for a credit card with no annual fee and low interest rates, just in case you start off on the wrong foot by missing payments and carrying monthly balances.

If a card has a low rate, no annual fee, AND even offers a reward program, then that’s just an added bonus. But, don’t start out looking for the best rewards card that will give you the most back – unless you are already responsible, only buy things you can afford, and will pay off your balance in full every month.