If a credit score is a GPA for your financial responsibility, then credit cards are those easy intro classes that can help you boost the average. If you use credit cards throughout college and gradually build a sound credit history, you're going to enter the dreaded "real world" with some significant financial advantages.
Simply put, a good credit score will save you money and vouch for your financial responsibility. It will help you get low interest rates on mortgages, car loans and even a line of credit for a new business. When you submit an application to rent your first apartment, a good credit score will help you get approved. And when you submit job applications, many employers will take your credit score into consideration. Grades stop mattering a few years after college, but your credit history follows you for the rest of your life.
To boost your credit score with credit cards, you just need the right mindset -- and the right card.
If you live within your means, pay your balances in full, and pay on time, you won't accumulate long-term debt and you will improve your credit score. Most credit card providers now let you automate payments online so you never have to worry about paying late.
However, not all student credit cards are created equal. As a student, you should look for credit cards that:
1) Have no annual fee.
2) Offer cashback or generous reward points
3) Don't have foreign transaction fees (especially if you plan to study abroad)
4) Offer extra rewards for responsibility
5) Offer lenient purchase APR
With those considerations in mind, here are three of the best student credit cards on the market.
Discover it for Students
This card comes with no annual fee, 5 percent cashback on spending categories that change quarterly, 1 percent cash back on other purchases and a $20 signing reward.
Discover it is lenient on novice credit card users. Your APR will never be raised if you pay late, and Discover will not charge a late fee on your first late payment. If you get absorbed in study (or other distractions) on the payment due date, you always have up until midnight (ET) to pay your bill.
Also, Discover it has no foreign transaction fees, which can save you a lot of money during that semester abroad. And finally, Discover will share a free FICO credit score on your monthly statement so you can see how your credit score is doing without paying for a full report.
Citi Forward for College Students
Like Discover it, the Citi Forward has no annual fee, good perks and plenty of leniency. For the first 7 months, you get a 0 percent introductory APR on all purchases. When you sign up for the card and spend $500 within the first 3 months, Citi will reward you with 2,500 Thank You Points. You also earn one point for every dollar spent.
The Citi Forward is one of the best cards for students because it will reward you for using the card responsibly. You can earn a 2 percent reduction in your purchase APR when you stay under your credit limit and pay on time 3 billing periods in a row. For every month you pay on time and stay within your credit limit, Citi will even give you an extra 100 Thank You Points. You can spend your Thank You Points on electronics, travel, restaurants and many other categories.
Capital One Journey Student Rewards
With no annual fee or foreign transaction fees, the Journey is another great starter card that rewards responsibility. The Journey offers 1 percent cash back on all purchases and a 25 percent bonus on the cash back each month you pay your bill on time. Capital One will send text and email alerts so you know when payments are due. The card includes access to your monthly credit score, calculated by TransUnion, as well as on online tool that lets you track your score over time and simulate how certain financial actions will affect it.
Remember, even the best student card can be a double-edged sword. Let huge debt accrue or miss payments, and the card will hurt rather than help your credit score. Monitor your spending carefully, pay on time, watch you credit score rise, and you'll go into the real world with a real financial edge.