Happy woman holding credit card

Best Credit Cards For Students With Bad Loans

Having a low or no credit history is some of the things that hinder young people from getting a credit card. This is a great challenge considering that credit cards can also be used to boost your credit.

With good credit history, you can easily qualify for loans with low rates of interest, get a good apartment, or even get your dream job.

A large percentage of students use credit cards. However, only a few of them know how to use these cards responsibly.

Remember that just one missed payment on your credit card can still reduce your credit score. One of the ways to improve your credit is by making full and on-time payments.

But if your credit score is already poor, there is still no need to panic. There are several best credit cards for students with bad loans to help rebuild their credit history.

Qualifying for a student credit card

In the past, most credit card issuers targeted college students. Student applications for credit cards were easily approved, even for those who did not meet the requirements.

For instance, you could find a college student with no stable source of income, no cosigner or credit history, but he/she is approved for a credit card.

After the Credit CARD Act was passed, it was quite difficult for students to qualify for credit cards. If you do not have a verified source of income, you need to get a cosigner to qualify.

There are several differences between student credit cards and other types of credit cards. First, these cards have a lower borrowing limit compared to other cards.

There are also less stringent requirements to get approved for a student credit card. By applying for the card, you will also get additional benefits like financial education, payment reminders, and rewards exclusively designed for students.

Such rewards include cash back boosts for getting a good grade or making payments on time.

Criteria used – the best credit card options for students with bad credit

Student credit cards are just a fraction of all available credit cards. Some of the factors used to come up with the best student credit cards include Annual fee, foreign transaction fee, regular APR, rewards rate, credit needed, sign-up bonus, ease of application, customer service, and others.

Among all these options, the factors that distinguish the best cards from mere student credit cards include:

  • Credit Needed
    If you are a student, there are chances that you have no or limited credit history. With these cards, you can be approved even if you do not have a good credit score or an established credit history.
  • Annual fee
    The cards also do not charge an annual fee. If you are a student, the last thing you can think about is additional expenses when applying for a credit card.
  • Foreign transaction fee
    When signing up for these credit cards, there are also no foreign transaction fees charged.
  • Rewards
    Just like other consumers, students also deserve rewards. The rewards vary depending on the type of credit card you apply for:
  • Student-specific benefits
    When it comes to looking for credit cards, there are quite a number of options available. But there are also the ones that are specifically designed for students, and these cards come with student-specific benefits. This includes additional rewards for good grades and free Amazon prime student membership.

Here are some of the best credit cards for students with bad loans that you can consider:

    • Journey® Student Rewards from Capital One®
      With this card, you will earn 1% cash back on all eligible purchases. Your cashback increases to 1.25% every month you pay on time. There are no foreign transaction fees or annual fees charged. When used responsibly, the card can also help boost your credit. If you make timely payments in the first 5 months, you will automatically qualify for a higher credit line. Additionally, you can also use the CreditWise® app to monitor your credit profile. Other features of Journey® Student Rewards from Capital One® include:

      • It offers 0% liability if your card is stolen or lost
      • You can select due dates that are most convenient for you
      • The Capital One mobile app lets you Manage your account 24/7

      Journey ® Student Rewards card is a good option for students who want to build good credit. The 1.25% cash back also provides additional motivation to use the card in a responsible manner.

      What you need to know about Journey® Student Rewards from Capital One® card
      If you want to improve your credit, it is always important to make payments on time. This is because missed or late payments can greatly affect your credit score. Creditors see such consumers as people who are less responsible with credit. With credit cards, there are multiple incentives to ensure that you make timely payments. First, you get 1% cash back on purchases made. This then increases to 1.25% every time you make a payment before the due date. After making timely payments for the first five months, your credit limit also increases. An increase in credit limit can help boost your credit score since higher limits reduce your credit card utilization ratio.

      What to watch out for
      As much as the card is specifically designed for students, you should have a source of income to qualify. You may also not qualify for the card if your monthly income is less than your expenses by at least $425. Again, the card has a high variable APR of 26.98% for purchases and balance transfers. You may pay huge amounts as interest if you carry monthly balances on your credit card.

      How to use the card
      Journey® Student Rewards from Capital One® can work well if you practice healthy credit habits. You can benefit from the card if you make payments on time; this will increase your cash back rewards, you will avoid high-interest charges, and most importantly, your credit score will improve.

    • BankAmericard® Credit Card for Students

  • If you are still new to credit cards, this card will help you understand how credit cards work. It will also help improve your credit with responsible use. The card, however, does not have many rewards. It has a variable APR of 14.99-24.99% for purchases and balance transfers. This is much lower when compared to the Journey® Student Rewards from Capital One® card. Besides, you will get a 0% introductory APR for 15 billing cycles on purchases. The same applies to balance transfers made within the first2 months of opening the account. Once the introductory period is over, you will start paying the regular APR for both balance transfers and purchases. What to watch out for
  • After the 0% introductory period is over, ensure that you don’t carry a balance or ignore the repayment date since these two can have a great impact on credit scores. This will also help avoid the interest charges on purchases. How the card is used
    If you want to make bigger purchases, the interest-free introductory period sounds attractive. When you want to transfer a balance, you should also do so within 60 days of opening your account to benefit from the 0% APR on balance transfers.
  • Deserve ® Edu Mastercard
    his card works well for students- especially international students -with no prior credit history. With the Deserve ® Edu Mastercard, college students have a chance to start from scratch, and international students can qualify even without having a cosigner or social security number. If you want to make overseas trips, the card also comes with additional benefits. This includes the Mastercard platinum benefits like price protection, roadside assistance, and ID theft protection. The card does not have foreign transaction fees. You will also get 1% cash back on all eligible purchases. You can also use the Deserve® Edu Mastercard to sign up for an Amazon prime student subscription and be reimbursed up to 59 lifetime total. The card currently launched its mobile app for Ios and AndroidThings to watch out for
    Deserve ® Edu Mastercard does not offer cash advances or balance transfers. It also has a variable APR of 20.49% for purchases. How to use the card
    Deserve ® Edu Mastercard can be a good option if you want to build a good credit history and earn cash back at the same time. But it can only be helpful when used responsibly. To maximize your rewards, only make purchases that you can easily afford to repay before the due date. Also, ensure that you sign up for the Amazon prime student membership to benefit from the $59 credit.

Other credit card options available for students with bad credit

  • Discover It Student cash back
    Just like the journey® Student Rewards Card from Capital One®, the card has a zero percent annual fee, and there are also rewards for good grades. With Discover It student cash back, you can enroll every quarter to get 5% cash back on rotating categories. You will also get 1% cash back on eligible purchases.
  • Discover It Student Chrome
    The card also comes with a number of benefits, including no APR charges for late payment and no annual fee, and you will also benefit from the good grades rewards. Another benefit of this card is that you will get a $20 statement credit each year you finish with a 3.0 GPA for a period of five years. The card also has 2% cash back at gas stations and restaurants on up to $1,000 combined per quarter. You will get 1% cash back on any other purchase.
  • Citi ThankYou Preferred Card for college students
    One benefit of this card is that it has a special feature that is rarely found in student credit cards. This is a sign-up bonus. If in the first 3 months you make purchases of up to $500, you will earn 2500 thank you points. These points can be redeemed for a gift card worth $25. Besides the sign-up bonus, you will also get 2 points on every dollar spent on entertainment and dining and an additional one point on every other purchase. The points do not have an expiration date.

What if you don’t qualify for a student credit card?

Even when it is impossible to qualify for a student credit card due to one reason or another, there are still other options available.

This includes signing up for a secured credit card. In fact, secured credit cards are a great place to start considering that you will learn good spending habits at an early stage.

With secured credit cards, a cash deposit is required to get a line of credit. When it comes to unsecured credit cards, there is no cash deposit required.

Why students should have a credit card

Being an adult isn’t very easy, and you shouldn’t make it harder by not paying bills on time. Also, do not take more student loans than you need. Here are some of the reasons why you should have a credit card:

  • Build credit
    One of the ways to build credit is by paying your student loan on time. But you can also use a credit card for the same purposes. In fact, credit cards can help improve your credit within a few months. You only need to pay on time and keep your credit card balances low.
  • Build habits
    You can also practice good habits using a credit card. There are student cards that offer benefits for those who make monthly payments on time and besides getting these benefits, you will also boost your credit. If you have a credit card, you will also want to use it on everything; restaurant, gym membership, and other purchases. By doing so, you will keep your account active and such habits will also reflect in your credit reports.
  • Enjoy convenience
    You can also get a credit card for convenience purposes. Rather than carrying cash around, which can also be risky, you only need to get a credit card and pay for your expenses. The good thing about credit cards is that you can use them for both online and in-store purchases.

Unique advantages of student credit cards

As stated earlier, student credit cards have unique features that are specifically designed for college students. First, the cards, unlike secured credit cards, do not require security deposits.

Secondly, you can qualify for a student credit card even if you have a low or no credit history. Besides, you will;

  • Benefit from unique rewards like special bonuses for excellent grades
  • Practice good spending habits.

Can students have more than one credit card?

Most college students tend to have only one credit card until they build up their credit score. But if you are a responsible student, you can also get additional credit cards.

The true cost of credit cards

You obviously are aware that credit cards also have interest rates. But there are also other additional fee charges that you ought to know. These include:

  • Annual fees
    These fees are not common for student credit cards, but for reward cards, you can pay an annual fee that ranges from $50-500.
  • Balance transfer fees
    If you open a student credit card, it is not advisable to transfer a balance from a different card onto your new account since this comes with a balance transfer APR.
  • Cash advance fees
    You can pull cash from your credit card, but this also comes at a cost.
  • Foreign transaction fees
    If you plan to study abroad, you are likely to sign up for a credit card with foreign transaction fees since some cards charge the fee.
    Some card issuers also offer other hidden fees, and it is therefore important that you though the terms and conditions before applying for the credit card.

Pitfalls to avoid when using a student credit card

Student credit cards come with many benefits, but this can only work when used responsibly. Here are some of the things you need to know when using a credit card:

  • Stay within your limit
    Even when you have a credit limit of $ 1000, you can easily go over the limit if you do not practice good spending habits. Going over your limit will also cost you a fee, but there are also student credit cards like the Deserve® Edu Mastercard that charge over-limit fees.
  • Pay in full
    One of the factors that determine consumer credit scores is how much available credit you have. The more this amount is, the better. To ensure that your balance is low, it is important to pay your balance in full every month.
  • Pay several times a month
    Consumers do not know the time when credit issuers report their information to the major credit bureaus. You may only realize that your payment history is sent when you have not cleared a large bill before the due date. It is therefore important to pay in full 2 or 3 times every month to keep your credit utilization ratio low.
  • Pay on time
    If you make late payments, you will not only hurt your credit score, but you will also have to pay a late fee. Remember that a late payment entry can stay in your credit report for up to 7 years before you are cleared. You can easily avoid this by making payments on time every month.
  • Use your card frequently
    Applying for a card and not using it may not help. To improve your credit, ensure that you use your credit card frequently. Some credit card issuers close accounts very a very small reason-lack of use.

Bottom line

Having bad credit does not mean that your credit life is over. Even if you have no or little credit, you can still qualify for a student credit card.

Your first card may have a low credit limit with high rates of interest, but if you use the card responsibly, you can easily qualify for better options.

With the best student credit card, you will learn good spending habits, build credit and also get rewards for excellent grades. The rule is, to use your student credit card responsibly, and you can build solid credit even before you graduate.