Student credit cards are designed to assist college students with little or no credit history in getting somewhat of a jump on building their own credit. However, in order to avoid establishing bad spending habits and lifetimes of debt, these cards need to be low-fee, low-interest rate credit cards – which is not always possible with cards that also provide rewards programs. The Discover it® for Students succeeds in addressing these needs.
- Fees. There is no annual fee or penalty APR. The balance transfer fee is 3% of the amount of the transfer. There is a returned payment fee of up to $35, but no late payment fee on the first late payment. After the first, the late payment fee goes up to $35. There is no foreign transaction fee.
- APR. The APR for the Discover it for Students credit card is based on your credit worthiness, and for purchases ranges from 12.99% to 21.99%. There is an introductory 0% APR on purchases for 6 months.
- Reward Program. You must sign up each quarter to become eligible for bonus categories that earn 5% cash back. There is a cap on the category purchases, which may vary each quarter. For example, the October to December 2014 quarterly category includes online shopping and department stores. Eligible purchases earn 5% cash back up to a cap of $1,500 in purchases, meaning you can earn $75 in cash back in that category for the quarter. All other purchases and anything over the capped amount earns an unlimited 1% cash back.
- Double Cash Back Your First Year. Following your first year, Discover doubles the cash back you’ve earned to date. For example, if you earned $20 cash back in your first year, you get another $20 added to your account.
- Redemption. Cash back rewards can be redeemed for a statement credit, direct deposit, or cash at $50 increments, or for partner gift cards and Discover gift cards as low as $20. You can also redeem your cash back (without a minimal requirement) with online retailers such as Amazon, Facebook, iTunes, and various gaming sites. There is no expiration date on the rewards; however, if your account is closed or inactive for 18 consecutive months, or if you miss a minimum payment due for two consecutive billing periods, you will lose any rewards that you have accumulated and not redeemed.
- Online Portal. As a Discover cardholder, you also receive access to its online portal, ShopDiscover, where you are able to shop more than 200 popular online retailers and earn more cash back on purchases. These bonuses can range from 5% to 20%, depending on the retailer and simply requires you to log in and shop with the retailers that are part of ShopDiscover.
- Freeze It. This feature online or through the mobile app allows you to easily switch off new purchases, cash advances, and balance transfers. This is useful if you ever lose your card or see any suspicious activity in your account.
- 5% Cash Back. If you sign up for the quarterly categories and make your purchases according to the bonus opportunities, you can earn 5% cash back for those purchases, which is the highest rate available for cash back rewards. Plus, you are able to earn even more rewards when you shop through ShopDiscover.
- 0% Introductory APR. You get a 0% on purchases for the first 6 months of owning the card. Of course it’s never a good idea to carry a balance that will lead to hefty interest charges, especially as as student with limited income.
- Double Cash Back Your First Year. This is a nice benefit if you use the card a lot in your first year. It gives you 10% cash back on the quarterly 5% bonus categories, and 2% cash back on all other purchases.
- Redeem Rewards Easily. There is basically every opportunity available to redeem rewards from just cash to online purchases. Many rewards credit cards limit the redemption to only statement credit or points that can be used for purchases through the card’s online portal. The Discover it for Students card, however, offers cash, gift cards, merchandise, charitable donations, and purchases online with Amazon and iTunes.
- Low Fee Card for Students. The Student version of the Discover it card is similar to the regular Discover it in that there are very few fees for the card. There is no annual fee, no foreign transaction fee, and if you are late you won’t be charged a late fee – at least, not the first time. Additionally, that late payment won’t result in a penalty APR because there is no penalty APR on the card. For example, the Citi Dividend Card for College Students may impose a penalty APR of up to 29.99% if a payment is late or returned and a foreign transaction fee of 3% – plus, the balance transfer fee is higher at $5 or 4%, whichever is greater. A penalty APR of up to 29.99% may also be applied to the BankAmericard Credit Card for Students if there is a late payment as well.
- No Foreign Transaction Fee. The Discover it for Students card is one of the few credit cards designed for college students that does not carry a foreign transaction fee. Cards that charge this fee typically charge between 1% to 3%, which can become a significant extra fee if you travel frequently outside of the United States. Students who travel abroad and need a credit card should keep this fee in mind while traveling.
- Not Accepted Everywhere. Discover is still one of the least-accepted credit cards globally, so while there is no foreign transaction fee, if you travel frequently to Africa, the Middle East, or many parts of Asia or Australia, you will have difficulty using a Discover card anyway.
- Rotating Categories. If you are juggling work, family, and school, you may find it difficult to sign up and keep track of the categories that earn bonus cash back each quarter. If you don’t remember to sign up for the category and don’t use your card on the special purchases that are eligible for 5%, you are only going to earn 1% on your purchases. In this case, a credit card that offers a flat rewards rate on general purchases or rewards bonuses on purchases you make often (such as groceries and gas) may provide more rewards than the Discover it card’s rotating categories.
- Cap on Categories. Even if you do remember to sign up for and plan your spending around the quarterly bonus categories, in most cases the cap is $1,500 in purchases, allowing you to earn only $75 in cash back per quarter in the bonus categories.
- Loss of Rewards for Inactivity. If you decide not to use the card for 18 consecutive months or miss a payment twice in a row, you will lose any rewards that you have accumulated and have not redeemed. This can be a problem if you earn a bunch of points from purchases, pay the balance in full, and then forget about the card. It is best to make sure you use the card occasionally, pay at least the minimum amount due every month, and redeem your points when you are able to avoid forfeiture.
- High APR. Although it’s possible you could qualify for the lowest APR of 12.99%, the purpose of student cards is generally to help establish or begin building a positive credit history – and there is a good chance that you will not qualify for the lowest APR available on this card. If you do already have a positive credit history established and can qualify for the lowest APR, you probably don’t need a student credit card and could opt for either a low-interest alternative, or a standard card with better rewards opportunities.
When it comes to student credit cards, the Discover it for Students offers the card with the fewest fees, along with a program that allows you to earn cash back on purchases. Even if you don’t keep up with the quarterly categories, you have an opportunity to at least earn 1% cash back just for using your card – and if you shop through ShopDiscover, you are able to earn much more. However, if you plan to carry a balance, you should forgo cards with rewards programs and instead opt for a low-interest credit card.
Because there are very few extra fees and a rewards program that allows you to earn cash back on purchases, the Discover it® for Students is one of the best cards available for college students.
4.5 out of 5 stars: The main drawback of this card is that it isn’t as widely accepted as Visa or MasterCard, which could pose a problem for students who travel.