Student credit cards are becoming increasingly rewarding, a new analysis by CreditCards.com found.
Some student cards, for example, are offering plumper sign-up bonuses. Others have retooled their rewards programs, making them friendlier to students’ budgets. In addition, many student cards now come packed with a variety of student-friendly benefits, such as rewards for good grades, automatic credit limit increases, streaming service credits and loyalty bonuses.
Students in the market for a first credit card also have more cards to choose from this year, including a brand-new cash back card from Chase and redesigned rewards cards from Bank of America and Citi.
The student lender Sallie Mae is also getting ready to launch a new set of student cards after discontinuing its cash back card in 2012.
But in exchange for richer rewards and student-friendly perks, today’s student card holders are also paying substantially more to carry a balance.
For the third year in a row, student cards have grown dramatically more expensive, according to CreditCards.com’s latest survey of bank-issued student cards. CreditCards.com evaluated the APRs, penalty charges, promotions, rewards and benefits of 11 student cards that are available nationwide and found that every card that was around last year now advertises a higher APR.
Student cards more generous – but also more expensive
Some student cards have hiked students’ rates by as much as 1 to 2 percentage points or more, helping push the average minimum APR for all 11 cards to 17.46 percent – up from a high of 16.48 percent in 2018. In 2014, the average student card APR was just 13.27 percent. One student card even hiked its lowest available APR by more than four and a half percentage points.
Late fees have also ticked up since the last time CreditCards.com surveyed student cards. For example, among the 11 student cards surveyed, at least seven charge late fees up to $39. Meanwhile, only two cards waive students’ first late payment.
According to Beverly Harzog, a credit card expert at U.S. News and World Report, many students are likely paying even higher interest rates since their experience with credit is so limited.
Most student credit cards advertise a wide range of possible APRs, including maximum rates that run as high as 25 percent or more. As a result, the average maximum card APR for student credit cards is currently 24.18 percent, while the average median card APR is 20.82 percent.
If you’re a student with minimal credit experience, “more than likely, you’re going to fall into the top of the range,” said Harzog….Read more>>