The best plastic for your college kid probably isn’t marketed as a student card; such options have all but disappeared since 2009’s CARD Act went into effect. Among collegiate cardholders, 66% carry balances, Sallie Mae/Ipsos found. So a low APR should be a high priority.
Students must be 21 or have real income to get their own cards. Before 21, you can co-sign. A secured card — you deposit cash up to the limit as collateral — caps the damage your kid can do to your credit. But beware: With a low limit, “it’s easy to max out, which isn’t great for his credit score,” says Gerri Detweiler of Credit.com.
BEST SECURED
Digital Credit Union Visa Platinum Secured (dcu.org)
APR: 11.5%
Annual fee: $0
Why it’s a winner: No annual fee is rare on secured cards, and rates as low as 11.5% can soften the blow if Junior misses a payment. Digital Credit Union reports account status to the credit bureaus, so your child builds a credit history. You can set the credit limit, from $500 to as high as you wish.
The caveat: Must be a member of DCU to apply, though you can join with a $10 donation to Reach Out for Schools. Set the limit above what you think your child will need to use so as not to harm his nascent credit score.
BEST UNSECURED
Northwest Federal Credit Union FirstCard Visa Platinum (nwfcu.org)
APR: 10% fixed
Annual fee: $0
Why it’s a winner: Features a very low APR for a no-fee unsecured card available to those without credit history. Account status is reported to credit bureaus. Another plus: Applicants must complete an online course about credit.
The caveats: Must be a member of the credit union, but a $10 donation to Financial Awareness Network gets you in. Also, maximum credit limit is only $1,000, so caution Junior to spend cautiously.
BEST REWARDS
Sallie Mae MasterCard (upromisemastercard.com)
APR: 14% to 23%
Annual fee: $0
Sign-up Bonus: $25 when card is used within first 90 days
Rewards: 5% on gas on up to $250 a month in purchases, groceries up to $250, books up to $750, 1% after you hit these limits; 1% on all other purchases
Why it’s a winner: Gives almost top-level cash back for groceries, gas, and books, with no annual fee. Cash earned can be applied as a statement credit, used to pay down a Sallie Mae student loan, or swept into an account at Upromise, an online rewards program designed for college savings. From Upromise, you can save it in a 529 or have a check issued.
The caveats: Not ideal for those who simply want cash since the money filters into the Upromise account first. A 3% foreign transaction fee means this is not great for Junior’s trek across Europe. Also, excellent credit is required, so even a 21-year-old most likely needs a co-signer.