How Brexit will affect your finances

In less than a year from now – on March 29, 2019 to be precise – the UK is scheduled to leave the European Union.

Although much of the political debate has been over the rights of citizens to move within Europe and the pros and cons of the Single Market, Brexit will also have an affect on our everyday finances.

Here we look at how this might affect savings, business and credit cards in the UK.

Interest rates

On May 10, the Bank of England announced it was not changing interest rates, which would stay at 0.5%, amid fears that the UK economy was too fragile to cope with a rate rise.

This is good news for borrowers, including those people with credit card debt and mortgages, but bad news for savers. Consumer price inflation is currently at 2.5%, which means that the real purchasing value of savings is being eroded.

Fitch, the ratings agency, said the household savings ratio (relative to income) was now 4.9%, a historical low. It forecasts that the UK base interest rate will rise gradually to reach 1.25% by the end of 2019.

“The impact of the Brexit referendum on real wages may be fading, but Brexit uncertainty creates risks of a bigger shock to growth and employment,” it says in a Special Report “Weakening UK Household Finances Pose Risks” published on May 8.

Foreign exchange rates

The value of your holiday pound, and the exchange rate you get when you use your credit card to spend abroad, are affected by foreign exchange (forex) fluctuations.

As of May 2018, sterling is worth just over 1.13 euros, compared with May 2016, when it was worth 1.3 euros, and July 2015 when it reached a ten-year peak of 1.44. Since July 2016 it has traded within a range of 1.08 to 1.12 and has recovered from its low of 1.07 soon after the Brexit result.

GBP vs. EUR for the last five years

Xe.com

When you make overseas purchases using your credit card or debit card, your provider applies a foreign currency conversion rate. This rate will be affected by the variations in the value of the pound, and any volatility in exchange rates.

If the Brexit talks look as though the UK is failing to secure a good deal, sterling may fall again. The Bank of England may have to raise interest rates to protect the pound.

Angus Dent, CEO of ArchOver, a peer to peer lender, said: “With Britain’s GDP growth at just 0.1%, it’s no surprise that the Bank of England has kept interest rates at 0.5%. [The] decision is yet another result of the uncertainty surrounding the UK’s financial health. And keeping rates so low means savers lose out once again.”

Credit card rates and rewards

While interest rates remain low, credit card companies are unlikely to increase their own interest rates. However, the era of rewards and benefits for holding a card seems to be at an end, says Andrew Hagger, founder of MoneyComms, the money information service.

“The only decent rewards you get now is if you use a card to buy items within a certain store – for example using a Tesco card to shop instore. If you use the Tesco card, or ones from M&S, John Lewis and Sainsbury’s outside their own shops, the rewards are slim. I don’t see any major changes in the pipeline.”

Credit card fees

Until the Brexit deal is finalised, the government in the UK has to comply with EU directives. After Brexit, all existing European law will be incorporated into UK law.

This includes a ban on credit and debit card surcharges and applies to all purchases made within the European Economic Area (EEA). It means airlines can’t add hidden charges for online bookings. There are unlikely to be any changes in the short term, as Teresa May has heralded this move as a victory for consumers.

Savings compensation

If you have savings with a bank or financial institution that goes bust, you’ll be compensated by the UK’s Financial Services Compensation Scheme (FSCS).

The compensation limit is £85,000, equivalent to the €100,000 deposit protection limit in the EU. Similar terms are likely to be included in UK law when the changeover happens. Read more about compensation limits on the FSCS website.

Interchange fees

The EU put in place a 0.3% cap on credit card interchange fees that was aimed at reducing the cost of card payments. The UK Cards Association estimated that almost £900 million in savings should be passed onto consumers.

Interchange is a fee paid by the retailer’s card acceptance provider to the consumer’s card issuer each time a card payment transaction occurs.

The cap on fees applies on most product types within the European Economic Area (EEA).

This will become law in the UK after Brexit, and is unlikely to change, says Andrew Hagger, of MoneyComms.

“All the EU laws will be incorporated into English law and then the government will look at which ones need to be changed. Interchange fees aren’t going to be a priority as there are many other issues they will need to look at, so I anticipate things staying much as they are for several years at least.”

Business and the economy

There are still some concerns about the health of the economy, which is why the Bank of England decided not to increase interest rates this time.

Brian Johnson, Insolvency Partner with the accountant HW Fisher, said that the economy had been affected by concerns over Brexit, and would continue to do so while the uncertainty remained.

“Immediately after the Referendum there was doom and gloom, and then the stockmarket recovered and the pound came down which made exports cheaper and interest rates stayed low,” he said. “That was a false dawn, with people saying that Brexit was not a problem.”

Behind the scenes, businesses were delaying decisions on investment and recruitment until the negotiations were concluded, he said, and there would be more insolvencies among businesses. This was not necessarily a bad thing, as poorly-run companies would be taken over by more efficient managers.

Now read: How to find the best current account

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Last updated: 28 January, 2019

Student credit cards 101

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Heading to college can be a big change of pace. The new location and overall lifestyle is both exciting and overwhelming. While applying for a credit card may not be the first thing on your mind when entering this new experience, “Intro to Building Credit” is definitely a course you’ll want to take sooner rather than later.

Many credit card issuers offer cards designed specifically for students. Now, you don’t have to be a student to apply for one – and it’s no guarantee you’ll be approved. But student credit cards do offer an opportunity for inexperienced cardholders to start building credit.

Here’s a study guide on how they can help.

Intro to student credit cards

Student cards are marketed primarily to people in school who have not yet had a credit card in their own name. They can be a great way to solve the “you can’t apply for a credit card without a credit history” problem.

Issuers are willing to take the risks that come with a lack of creditworthiness for the chance to secure a future loyal cardholder. For students, you’ll benefit by being able to use your card on purchases and establish a decent credit history — something that’s vital when applying for an apartment or a car loan.

You might be thinking that building a good credit score will be difficult on a college budget. But student credit cards offer affordable benefits like $0 annual fees, cash back opportunities and introductory specials.

Cards like the Citi Rewards+℠ Student Card give promotions like 0% APR for your first 7 months (16.74% – 26.74% variable thereafter), allowing you to spend on books and food interest-free.

Some cards allow cardholders to earn rewards tailored to the student lifestyle. For example, the Discover it® Student Cash Back Card features cash back deals at restaurants, gas stations, grocery stores and Amazon.com, in addition to a $20 statement credit each year you keep your GPA at a 3.0 or higher.

Student credit cards vs. traditional credit cards

More traditional cards are only accessible after building a credit history, so there are some key areas where they differ from student cards.

For starters, student cards usually have a lower credit limit. Being new to credit, students aren’t yet fully trusted by card issuers when it comes to paying back large balances. Credit providers are known to set limits in the $300-$400 range to begin, but you should be able to get a limit increase approved after displaying consistent, on-time payments.

Although some cards allow for great rewards, your typical student credit card will be more limited with its perks. You can find plenty of student cards with cash back and category savings available, but you won’t find luxury rewards like airline miles, sign-up bonuses or enormous savings.

Additionally, student cards are typically unsecured. While secured credit cards are an alternative for new cardholders, a cash deposit is required to get one. The collateral makes your card much less risky to the issuer, but tying up a few hundred dollars can be prohibitive for a penny-pinching student.

Qualifying for a student card

Age becomes a factor when applying for a student card, so things can get a little tricky. By law of the Credit Card Act of 2009, if you’re under 21, you’ll either need the approval of a cosigner or proof that you earn enough independently to make the anticipated payments. Not every credit card company will allow you to use a cosigner, so you may need to shop around if you’re still underage. Another option for younger students is to join someone else’s account as an authorized user.

Card issuers may be more lenient with students’ proof of income, so consider providing evidence of money you’ve earned at any full-time, part-time or seasonal jobs you’ve had. Student loans, grants or scholarship money won’t apply, but cash regularly deposited into your account by means of inheritance or gifts can qualify as proof of payment as well.

Keep in mind, there are some lenders who make it a requirement that you’re a college student when applying for their card. On your application, you’d see a space designated to providing your school’s information. If you’re not a student but find yourself in a similar situation, you may be interested in zero percent APR cards or no annual fee cards as alternative options.

Simply put, if you’re a student of age and have worked in the past, you should have no issue when applying for a student card. Utilize credit card calculator resources to assess your current financial standing and decide on the right card for you.

Using your student card

As a new credit builder, it’s important to start a trend of proper financial practices. Wise credit card usage is the same whether you’re a student or not, but there are certain things you should know that are specific to your case.

One thing to be aware of with student cards is that they have high interest rates. So, staying up to date and even paying more than the minimum requested payment is essential. Budgeting ahead of time will be important when getting used to paying off your new card, so be disciplined to avoid hefty interest charges or late fees. The majority of credit issuers are compatible with mobile banking if you’re looking for a way to start tracking your payments.

The simple, but important key to staying on the right track is to avoid overspending. By doing so, you can set up automatic payments to ensure you’re on time each month and not get hit with penalties. Check your statements regularly and familiarize yourself with your spending habits. If you do slip up by missing a payment or exceeding your credit limit, it’s not the end of the world — but it might be time to set a calendar reminder.

Bottom line

Student credit cards help set the tone for your credit-building future, so be sure to do your homework before applying for one. With the right student credit card and a well-managed budget, you can build yourself an impressive credit score in as little as a year. This will allow you to graduate to cards with more flexibility and lucrative benefits.

Southwest Rapid Rewards® Premier Business Credit Card Review

Editorial disclosure: All reviews are prepared by Bankrate.com staff. Opinions expressed therein are solely those of the reviewer and have not been reviewed or approved by any advertiser. The information, including card rates and fees, presented in the review is accurate as of the date of the review. Check the data at the top of this page and the bank’s website for the most current information.

Bankrate.com is an independent, advertising-supported comparison service. The offers that appear on this site are from companies from which Bankrate.com receives compensation. This compensation may impact how and where products appear on this site, including, for example, the order in which they may appear within listing categories. Other factors, such as our own proprietary website rules and the likelihood of applicants' credit approval also impact how and where products appear on this site. Bankrate.com does not include the entire universe of available financial or credit offers.

This card offer is currently unavailable on Bankrate. To see more cards in this category, please visit our airline category page .

A FICO score/credit score is used to represent the creditworthiness of a person and may be one indicator to the credit type you are eligible for. However, credit score alone does not guarantee or imply approval for any financial product.

The Southwest Rapid Rewards® Premier Business Credit Card can help you earn rewards for everyday purchases and flying Southwest.

When you include the card’s generous welcome bonus and travel-specific perks, the Premier Business easily gives top business travel cards a run for their money.

Here are the details:

You’ll earn 2X points on Southwest® purchases and 1X points on all other purchases for a $99 annual fee.

There’s also a 60,000-point sign-up bonus when you spend $3,000 on purchases within your first three months. When you include your business’ everyday spending, the sign-up bonus could help you reach the 110,000 points required to earn the Southwest Companion Pass.

Employee cards are free and rewards earned on these cards will be deposited in the main cardholders account.

Is this card right for you?

The Premier Business card was made for business owners who frequently fly Southwest and/or are aiming for the airline’s companion pass.

If you’d rather earn more points on Southwest purchases or want to earn rewards for purchases related to running your business (think: advertising and Internet service), you may want to consider Southwest’s newest business card.

With the Southwest Rapid Rewards® Performance Business Credit Card, you’ll earn 3X points on Southwest Airlines®️ purchases, 2X points on social media and search engine advertising, Internet, cable and phone services and 1X points on all other purchases.

The Performance Business offers a stellar 80,000-point welcome bonus after spending $5,000 in your first three months from account opening, along with up to a $100 Global Entry or TSA Pre✓®️ Fee Credit. But with the added perks, you’ll pay a higher annual fee of $199 per year.

Overall, if you only fly Southwest Airlines occasionally, you’re probably better off with a business credit card that pays flexible rewards in the categories you typically spend.

Advantages

• 60,000 bonus points when you spend $3,000 in your first three months from account opening
• Get 6,000 bonus points after your cardmember anniversary
• Check your first and second bag for free (weight and size limits apply)
• $0 change fee (fare differences may apply)
• No foreign transaction fees or blackout dates on travel
• Unlimited reward seats to more than 100 destinations

Disadvantages

• $99 annual fee
• Southwest does not offer airline partners, so flights must be booked through the Southwest site
• You can’t pay for flights with a combination of points and cash

How much are the rewards worth?

If you spent 5,000 a month on Southwest flights with your Premier Business card, you’d earn $1,200 worth of points by the end of your first year. Keep in mind the rewards earned from spending on employee cards funnels into your account.

That also means you’d earn 10,000 points a month, or 120,000 points for your first year of card membership. When you include the 6,000-point bonus you’ll receive after your cardmember anniversary, that’s 126,000 points earned in your first year ⁠— more than enough to qualify for Southwest’s Companion Pass.

How to use this card

The Premier Business comes with Visa Signature benefits, including auto and travel protections, insurance and hotel discounts and benefits at participating properties. It also provides extended warranty protection on qualifying purchases.

To redeem your points, simply visit Southwest.com and log into your Rapid Rewards account. When searching for your itinerary choose the “Points” option instead of Dollars. Select the fare you want and then check out using points to pay. Unfortunately, you cannot pay with a combination of points and cash.

Rapid Rewards cardmembers can also redeem their points for hotel stays, rental cars, gift cards, event tickets, merchandise, and other unique experiences. Our guide to Southwest Rapid Rewards goes into further detail about the program, including how to best utilize your points and how the benefits stack up against other frequent flyer offers.

The bottom line

The Premier Business can help you earn rewards for your business-related spending on Southwest flights.

Thanks to its hefty welcome bonus and 6,000-point bonus after each account anniversary, you can quickly accrue enough points for the coveted Southwest Companion Pass offer.

The information about the Southwest Rapid Rewards Performance Business Credit Card and the Southwest Rapid Rewards Premier Business Credit Card has been collected independently by Bankrate.com. The card details have not been reviewed or approved by the card issuer.

How to Pay for Relocation

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Moving is one of the most stressful life events you can endure — especially if you aren’t confident you can afford it. Whether you’re moving for a new job or personal reasons, there are a variety of factors that affect the cost and timeline of your move.

As a result of tax reform, Americans can no longer deduct moving expenses. So depending on how much help you get from your family, friends, or your new employer, the entire cost of the move might rest on your shoulder. Thankfully, there are a few quick, effective options to help ease the financial burden of embarking on a new adventure.

The repeal of the moving expense deduction

Under the previous law, taxpayers were allowed to deduct some of the costs of moving their goods and effects, plus certain travel expenses. But as of 2018, exclusion for qualified moving expense reimbursements and deductions are both suspended until 2025. The one exception is members of the military on active duty who move due to a military order.

The cost of moving

Consider this: The American Moving and Storage Association says that the average cost of an interstate household move costs about $4,300. That’s no small expense. Even moving within the state costs an average of $2,300.

Every move is unique, but here are six common expenses to help estimate what your move might cost:

• Movers.

  Hiring movers is one of the most important expenses you’ll make — you get what you pay for.

  HomeAdvisor

  found that the average move costs around $800, but that can vary widely based on the location, travel, and amount of goods and personal items you need to transport.

• Travel.

  Gas, lodging, and food can add up quickly. And if you’re flying, it’s easy for a small family to rack up over $1,000 for a one-way domestic flight. Travel to your new home the potential to be the biggest expense of all.

• Boxes.

  Boxes can generally be obtained for free from grocery or department stores. If you need containers for transporting fragile items, remember that durable plastic tubs can cost more than $20 each depending on the size.

• Storage.

  If your move takes longer than expected because a house closing is delayed, for example, you might have to put some of your belongings in storage. The cost of a self-storage unit varies widely and depends on the location. CostHelper.com says a self-storage unit that’s 10 feet by 20 feet typically ranges from $95 to $155 a month, and $170 to $180 if the unit is climate-controlled.

• Replacements.

  Odds are, at least a few things will be broken during your move. Remember to set aside some money to cover replacements.

• Deposits and fees.

  It’s possible that you may have to pay early termination fees for services like cable or utilities. You might even have to put down a deposit for services at your new place prior to your 

Instate vs out of state long distance moving costs

According to Homeadvisor, here are the average costs for local and interstate moves. Local moving is any move under 100 miles within the same state and interstate or long distance moving across the country or over state lines. 

Type of mover Average Charge Extra charges Local/Intrastate $80-$100 per hour +25-$50 extra per additional mover Interstate/Cross Country $2000-$5000 per load $0.50 per pound

Costs of moving based on house size

These are average costs for moving based on house size, according to HomeAdvisor. The chart is based on average hourly rates charged by local moving companies.  

Size of house Estimated time of move Average price range

1 bedroom apartment

3-5 hrs $200-$500 2 bedroom apartment 5-7 hrs $400-$700 3 bedroom house 7-10 hrs $560-$1,000 4 bedroom house 10+ hrs $800-$2,000+

How to pay for your relocation

Personal loans

It’s ideal to pay for your move upfront, but that’s not always possible. If you need to finance some or all of your move, applying for a personal loan is one of the best options to consider. Personal loans are either secured or unsecured loans that are paid off in equal installments (what’s known as installment debt), usually over two- to five-year terms. The monthly payments include both principal and interest.

The main benefit for using a personal loan for your move is the interest rate. Borrowers with excellent credit can score rates around 10 percent. Those with good credit fall in the 13 – 15 percent range. With a credit card, good credit could get you a rate around the lower 20s. Over the lifetime of a loan, just a few points can make a big difference in the amount of interest you’ll pay.

Personal loans can be obtained from banks, credit unions, and online lenders. The application process is usually easiest with online lenders, but overall they’re much quicker than other loans. Sometimes the approval process might just take a few days.

 Credit cards

A credit card (sometimes multiple cards) might seem like a good way to pay for your move quickly. You might even be thinking about the potential to earn rewards in the process. But it’s not always the best idea.

Credit cards offer revolving debt, which means that, unlike personal loans, you don’t have to re-apply for credit when you need more money. The downside to that, however, is a higher interest rate. A good credit score will get you a credit card with an APR around 18 percent to 20 percent, while a personal loan can be closer to 10 percent.

Personal loan

Monthly payment Details Term Interest Paid $98.22 11% APR 36 months $535.78

Credit card loan

Monthly payment Details Term Interest Paid $120

12-month 0% intro APR, then 21%

36 months $979.92

Credit card loan

Monthly payment Details Term Interest Paid $300

12-month 0% intro APR, then 21%

10 months $0

Let’s say you’ve crunched the numbers, and you expect your total expense to be $3,000. (That’s pretty conservative, even for an intrastate move.) And the largest monthly payment you can afford is around $100. A personal loan with an 11 percent APR and 3-year term will get you a monthly payment of $98.22. Over the life of the loan, you’ll pay around $536 in interest.

Most zero percent introductory credit card offers run from 12 to 18 months. So if you could afford to pay around $300 toward your balance every month, you could benefit from a credit card because you wouldn’t incur any interest. If not, a personal loan offers a lower payment and saves more than $400 over the life of your loan. Plus, you can’t be tempted to swipe a personal loan at the department store and add to your debt.

Here’s the bottom line: You should only use a credit card with a zero percent introductory interest rate offer for larger expenses, like relocation, when you can afford to pay several hundred dollars on your balance every month. (Ideally, you should pay it off completely before the 0% intro period ends.)

Don’t forget to ask about relocation assistance

If you’re relocating for work, don’t forget to ask about relocation assistance. It can be difficult to ask for help for fear of sounding demanding or greedy, but remember, the worst your employer can say is no.

 

Weighing the costs: Should you transfer a car loan to credit card?

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It makes financial sense to seek the lowest interest rate possible when borrowing money, right? You might be tempted to transfer a car loan to a credit card if you get a zero percent introductory APR for a top rewards credit card.

If you qualify, you’ll get a lower interest rate, plus rewards you can redeem for a dream vacation, cash back, or even a statement credit.

But is transferring a car loan to a credit card a smart choice? The answer depends on several factors – starting with how you initiate the transfer.

How to transfer a car loan to a credit card

If you can transfer your car loan to a credit card and then pay in full, you’ll get the intro APR without any balance transfer fees.

But some loan issuers only permit payments via check, cash, ACH direct transfer or money order. In that case, you can use the balance transfer checks that came with your new credit card.

You can also do a balance transfer direct from your car loan company to your credit card issuer. You’ll need to provide your issuer with your loan account number, the address where you’d mail payments and the name of the loan company. If you’re used to making online payments, it’s a good idea to call your loan provider to confirm this information.

When you use a balance transfer check or initiate the transfer through your credit card issuer, you could pay balance transfer fees.

Before you make the transfer, get answers to these questions:

• Will the creditor that holds your car loan permit you to use a credit card to pay the loan balance?
• If you can’t use your credit card, can you use a balance transfer check to pay the balance?
• Are there any penalties for paying the car loan early?
• How much will you pay in balance transfer fees?
• How long does the intro APR last?

How to calculate the credit card interest rate

Before you decide to transfer your car loan to a credit card, calculate how much your new payments will be.

To calculate your monthly payments at zero percent interest, just divide the amount left on your loan with the terms of your intro APR offer. If you have to pay a balance transfer fee, add that to the loan amount.

If you owe $5,000 on your car, with a three percent balance transfer fee, add $150 to the $5,000. Then divide $5,150 by 18 months, for example, if those are the terms of your intro APR. You’d pay $287 per month, which is most likely lower than any car loan that doesn’t carry a zero percent APR.

If you intend to own your car for several years, extending your loan by nine months to free up working capital to pay down higher interest debt, put in a high interest savings account, or even pay for emergency expenses can be a wise choice.

The impact on your credit score

Your credit score could suffer if you exchange a secure installment loan for unsecured, revolving credit. If you don’t have other installment loans in your profile, you are reducing your credit diversity. And if putting the balance of your vehicle loan on your card brings you closer to your credit limit, you will also reduce your credit score due to high credit utilization.

These are significant factors that make up your credit score, so if you are looking to secure a mortgage or another car loan within the next year, transferring your car loan may not be a wise financial choice.

If you already have another installment loan in your credit profile and the balance transfer doesn’t approach 30 percent of the available credit on your card, the effect on your credit score will be minimal and you can move ahead with the transfer.

Otherwise, you may consider other options, such as refinancing your car loan.

Getting an auto loan vs. getting a credit card

If you have poor-to-average credit, it’s easier to get an auto loan than a credit card. Car dealers will often make deals with banks to extend credit to customers with credit scores of 640 and below. Even if you have declared bankruptcy, you can find a car loan – but the interest rates will be high.

Similarly, you can get a secured credit card with a low credit score. But the best zero percent interest APR rewards credit card offers are typically extended to those with a credit score of 720 and above.

If your credit score was below 720 at the time you purchased your vehicle, but you’ve since qualified for a zero percent APR credit card, your payments will be less than your car loan for the duration of the zero percent offer. You’ll save on interest charges, too.

Pros and cons of transferring a high interest car loan to a low interest credit card

Pros

• You could save hundreds of dollars in interest over the life of the loan.

• You may reduce your monthly payments.

• You can earn credit card rewards with the new charge or balance transfer.

• The loan company will release the lien on your car and sign the title over to you.

Cons

• Your credit score may drop due to taking on more revolving debt and increasing your credit utilization ratio.

• If you miss a payment on the credit card, your APR could skyrocket.

• If you can’t pay off the balance transfer or new charge during the introductory period, your interest rate may be higher than it was on your vehicle loan.

Bottom line

If you do choose to transfer your car loan to a credit card with a low introductory interest rate, be sure to have a good understanding of your credit card company’s policy for doing so, as well as the requirements to get the introductory rate with no penalties.

Best Student Credit Cards of 2019

Editorial disclosure: All reviews are prepared by Bankrate.com staff. Opinions expressed therein are solely those of the reviewer and have not been reviewed or approved by any advertiser. The information, including card rates and fees, presented in the review is accurate as of the date of the review. Check the data at the top of this page and the bank’s website for the most current information.

Author: Bankrate Staff

Have questions for our credit cards editors? Feel free to send us an email, find us on Facebook, or Tweet us @Bankrate.

What you need to know about student credit cards

It’s easy to dismiss student credit cards as having limited benefits, because they are reserved for people who are new to credit. In reality, they’re just as valuable as general rewards cards – but with some functionality specifically tailored to students’ credit-building interests. Here’s a deeper dive into our top picks for 2019 and insight on how you should be approaching credit as a student.

Table of contents:

How we chose the best student cards

There are a bunch of factors that power our proprietary Bankrate Score, but some credit card features are weighted more than others. The best student cards make it easy to build credit: They have no annual fee or penalty APR. Here’s a list of the top factors we used to evaluate and score student cards, in order of importance:

• APR rates: Variable APR and penalty APR (the interest you pay if you miss a payment) can be high and compound quickly.
• 0% Intro APR offer term length: A long period at 0% APR means that you can charge a large expense (such as a new laptop) to your credit card and pay it off over time without incurring interest.
• Intro bonus and card perks: Great student cards should offer useful perks, like cash back on certain categories like gas and groceries.

Recap of our top picks for the best student cards for 2019 spring semester

Card Name Best for Discover it® Student chrome Gas, dining & large purchases Journey® Student Rewards from Capital One® Flat-rate cash back and studying abroad Discover it® Student Cash Back Rotating cash back bonus categories Citi Rewards+℠ Student Card For everyday spending Deserve® Edu Mastercard for Students Best for Amazon Prime membership Self Lender — Credit Builder Account Best for credit building

Deeper details on each of the best student credit cards

Discover it® Student Cash Back

This student card can produce an extremely lucrative first year of cash back for savvy spenders. Earn 5% cash back in rotating categories each quarter, such as gas stations, grocery stores and restaurants, up to the quarterly maximum each time you activate. Earn 1% unlimited cash back on all other purchases. Any student can benefit, since there’s no annual fee and a $20 reward for each year you maintain a 3.0 GPA up to the next 5 years. But those who don’t mind putting in a little strategy can really earn big. Maxing out the quarterly bonuses before the rewards rate drops from 5% to 1% will result in $75 in rewards each quarter.

Why recommend this card to other students?

This card is essentially the same as the Discover it® Cash Back. But students don’t have to worry about having a credit history to be approved. And Cashback Match, where Discover will automatically match all of your cash back earnings from your first year, is a great bonus.

Journey® Student Rewards from Capital One®

The Journey card has no annual fee and offers 1% cash back on all purchases, but you can boost that to 1.25% if you pay your bill off on time. That’s a pretty sweet deal for those who spend on school supplies and gas, while also being fairly new to building credit. On top of that, enjoy Eno®, your Capital One® assistant, to manage your account via text, receive alerts, and shop safer online.

Why recommend this card to other students?

Paying no foreign transaction fees on this card really sets it apart for student value. Take it abroad, pay your bill in full every month—your credit limit may even increase after 5 months of on time payments.

Discover it® Student chrome

Discover’s chrome card for students earns 2% cash back on up to $1,000 in purchases at gas stations and restaurants per quarter. For everything else, you’ll earn 1%. Although that may not seem like a huge rewards rate, keep in mind that if you’re a student looking to build credit, the roughly $20 in rewards you earn every quarter will be a pleasant surprise you can count on for as long as you’re using the card (and reaching the spend cap of $1,000 per quarter).

Why recommend this card to other students?

Similar to the Discover it Student Cash Back, this card is essentially identical to the Discover it® chrome, only you receive a good grades reward that stretches over 5 years. And your cash back earnings will automatically be matched at the end of your first year with the card.

Citi Rewards+℠ Student Card

With the Citi Rewards+ Student Card, you’ll receive 2 ThankYou® Points per dollar at supermarkets and gas stations (for the first $6,000 spent each year, then 1 point) and 1 ThankYou® Point per dollar on everything else. Enjoy paying zero percent APR for 7 months on new purchases (then 16.74% – 26.74% variable).

Why recommend this card to other students?

While this card does call for good/excellent credit, you get a 10-point round up on every purchase you make (meaning your $2 coffee can earn you 10 points rather than 1). One of the coolest perks of the card is its 10% Points Back feature – you’ll get 10% of your ThankYou® Points back on the first 100,000 points redeemed each year.

Other notable options for students looking to build credit:

Deserve® Edu Mastercard for Students

Students earn an unlimited 1% cash back on every purchase made with this card. Although that’s a modest rewards rate, it’s a nice benefit in the context of every other perk this card offers. Cardholders are eligible for up to $49 (lifetime total) for Amazon Prime Student, as well as ID theft protection, price protection, and other Mastercard Platinum benefits. It’s also another card without foreign transaction fees, so take it abroad with you.

Self Lender — Credit Builder Account

Self Lender’s Credit Builder Account is a unique offering in the student credit category. It doesn’t offer cash back or perks on category purchases, but instead offers help in securing a small loan to deposit in a Certificate of Deposit (CD) bank account. For college students in their second or third year especially, this is a huge asset when it comes to unlocking a nice fund upon graduation. Your loan will sit in the CD account for 12 or 24 months, and after that, you will be able to withdraw more than you initially put in.

What are student credit cards and how do they work?

It’s common for young people, especially college students with mounting loan debt, to be apprehensive about applying for credit cards. In fact, 47% of college students age 18-24 don’t have a credit card simply because they want to avoid debt as much as possible, according to research from Sallie Mae and Ipsos. With a better understanding of credit and how a student credit card can benefit you in the long run, you’ll see that if you are a good candidate, applying for a student credit card is a wise first step in long-term financial wellness.

Student credit cards provide you with a line of credit, usually $1,000 or less. When you use the card, money isn’t directly drawn from your bank account. Instead, the issuer (Capital One, Discover, etc.) pays for the expense and records the amount you charged. The total amount you owe to the issuer is called a balance.

If you pay off the balance in full and on time every month, you’ll never owe more than what you spent. Though, credit card issuers allow you to make small “minimum payments” and carry the rest of the balance month-to-month. When you carry a balance, you’ll have to pay interest on the total amount. Your interest rate is also known as the Annual Percentage Rate or APR. APRs vary across all credit cards, but with a student card, you can expect your rate to be 14-25%.

Why get a student credit card?

Some people start out using their parent’s cards as an authorized user, in order to ease into the credit world and kickstart a credit history. However, that’s not an option for everyone. Getting your own student credit card allows you to take a step toward financial independence. The best part is you don’t have to be a big spender. You can start by paying your rent or internet bill – or even buy next semester’s books.

Here are some good use-cases for your student card:

Build good habits

Using your credit card to buy a meal or your morning coffee throughout the week will get you in the habit of using your credit card regularly, paying your bill on time and accruing rewards.

Grab perks for making larger purchases

Charging larger expenses to your credit card, such as flights for a spring break vacation, can be a great way to earn travel rewards and benefit from some of the perks (such as rental car collision insurance and lost luggage insurance). These benefits are great, so long as you have the income to pay your bill. Incurring interest will vastly negate the travel rewards or cash back you would earn by using your card.

Cushion for emergencies

A credit card can be a great resource in your wallet in the case of emergencies. It’s good to establish clear boundaries for what constitutes an emergency and what doesn’t. (No, the late night pizza craving isn’t an emergency.) If your car breaks down, you need a hotel room after your flight gets canceled or you need to pay a medical bill after a trip to the ER – your student card can be a much needed cushion. Just make sure to pay your bill before you begin incurring interest.

Credit card terms students should know

• Annual Percentage Rate (APR): Interest rate paid on balances carried from one billing period (month) to the next.
• Penalty APR: The highest APR that will be applied to your account. Penalty APR is usually applied after you miss consecutive payments. To return to your original APR, you’ll need to make 6 consecutive on-time payments.
• Credit Utilization Ratio: This ratio is a measurement of how much of your available credit you are using. If you have a $5,000 credit limit and usually stick to a $500 per month budget, your ratio is at 10%. The lower your ratio is, the better. If you use up a large chunk (or all) of your available credit every month, your credit score may decrease.
• Annual fees: Some credit cards have annual fees of $50 or more, though most student cards do not. Be sure to check for fees before applying for any card.
• Credit bureau: Research entities that compile all of your credit history reporting to generate your credit score. In the US, there are 3 major bureaus—Equifax, Experian, and TransUnion.
• FICO: The entity that creates the scoring model used to create credit scores. FICO credit scores range from 300 to 850, with 850 being the best. Credit scores are one factor in determining your creditworthiness.

How students can avoid getting into credit card debt

If you’re spending time gathering information on credit cards for college students, you’re already using the first good strategy for avoiding credit card debt:

• • 1. Do your research. Credit cards have a lot of terms and conditions. It’s wise to understand exactly what kind of card you need and find a card that best meets those needs. If you don’t own a car and you rarely dine out, it’s probably not in your best interest to apply for a rewards card that offers cash back on gas and dining purchases.
    2. Pay off your balance in full every month. It may seem obvious, but the only way to avoid paying more than you have to is by paying in full every month. Some credit cards will let you choose your own due date, others will establish one for you. Make sure you note when your credit card bill is due and stick to your payment schedule.
    3. Exercise caution when paying tuition with your credit card. It’s best to not use your credit card to pay for tuition, but some schools will allow you to do so. However, be aware that you’ll be charged a convenience fee of about 3% that’s added to your bill. You risk getting into credit card debt when these extra charges affect your everyday spending and eventually dismantle your budget.
    4. Look for introductory offers. If you absolutely need to make a larger purchase, and you carry a balance, look for a student card with a 0% introductory APR. Some cards have zero percent APR for the first several months. During that time, you can make one large purchase and gradually pay it off without any interest.
    5. Use your card for everyday convenience. Don’t just focus on the big purchases. Use your card to pay for food, utility bills, movie tickets, and other small purchases. Having a credit card is incredibly convenient and a positive thing when you use it properly.

Expenses for college students obviously go far beyond tuition. The College Board reports that the average on-campus student at a public, four-year, in-state university spent $1,250 on books and supplies in 2017-18. With the aid of a student credit card, the burden of those secondary expenses can be lessened and fit within a budget and schedule that works for you.

Steps to applying for a student credit card

The first thing to consider before applying for a student credit card is your credit history. Start by answering the following questions:

• • • Have you ever had a credit card?
    • Have you ever taken out a loan?
    • Do you have a steady work/income history?

If you have never had a credit card and you currently have no loans or steady income, your best option for getting your own credit card account is to become an authorized user on a pre-existing account. An authorized user is in a good position to benefit from the cardholder’s (usually parents) habits, while not having to carry the responsibilities of paying the card balance.

If you already have a credit history, it’s important to know what your score is. Determining your credit score will let you know which cards you are likely to be approved for. Every time you apply for a credit card, your score will briefly drop by about 5 points, so it’s best to do it as few times as possible. Applying for cards you are declined for will still negatively affect your score.

First, request copies of your credit report, which you can do for free once a year from each of the three credit bureaus. You can also get a free credit report and credit score here.

Also, consider the following:

• • • Credit cards usually have foreign transaction fees. If you plan on studying abroad, take a look at foreign transaction fees, which can vary from 2-4%.
    • You should only apply for one card. Applying for several cards at once indicates risk and tells credit card issuers that you are desperate for credit. Do your research and stick to one application. If you’re denied, take steps to improve your credit (pay down other cards, loans, etc.) and apply for another card in a few months.

Once you have pulled your credit report, checked your credit score, and narrowed your search to one perfect card, you’re ready to apply.

Additional reviews and research

Need to do more reading before you make a decision? No worries, choosing the right credit card as a college student is a big deal. We’ve reviewed pretty much every major student credit card on the market today, with all the latest offer information and in-depth analysis. Check out all of our latest reviews below.

How To Use Home Equity To Consolidate Your Debt

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If you feel like you’re struggling with debt, you’re not alone.

The average amount of non-mortgage household debt in the U.S. reached $24,706 in 2017, according to Experian’s State of Credit Report. The good news is that home equity interest rates are still near historic lows. Assuming you have enough equity in your home, this avenue of debt consolidation could be a better and cheaper alternative to carrying high-interest debt.

“It’s generally a good option to pay down credit card debts or personal loans, assuming it’s done responsibly,” says Andrew Weinberg, principal at Silver Fin Capital Mortgage in Great Neck, New York. “It can save a lot of money.”

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There are two ways to access home equity – a home equity loan or a home equity line of credit, or HELOC. A home equity loan offers a one-time lump sum payment of funds taken as a second mortgage on your home. A home equity line of credit is a revolving line of credit that enables you to withdraw money over time as you need it and pay back the loan as you can.

Your home’s equity is its current value minus the loan balance you still owe. Tapping too much of your equity is risky, and you could wind up underwater in your mortgage if market conditions turn. This means you might owe more on the house than it’s worth, making it difficult for you to move without putting up cash to make up the difference.

“The value of a house goes up and can go down. As a general rule, I would never recommend anyone borrow more than 80 percent of their home’s value,” says Mike Zovistoski, managing director at UHY Advisors.

Pros of using home equity to consolidate debt

Whether you use a home equity loan or HELOC, tapping your home equity to consolidate debt can offer several advantages:

1. You’ll have just one payment

If you’re juggling car loans, a personal loan, medical bills and credit card debt, you already know how challenging it can be to keep track of due dates. By consolidating your debt, you may be able to combine it all to one single payment per month, simplifying your bills and reducing the chance of missed payments.

2. You’ll know when your debt will be paid off

Assuming you don’t keep using your cards, using a home equity loan or HELOC to consolidate debt streamlines the process of paying those accounts off. With a home equity loan product, you’ll have set repayment terms and know the exact date when the loan will be repaid.

3. You can get a lower interest rate

Because the debt is secured against your property, home equity loans and HELOCs have significantly lower interest rates than credit cards. The average variable credit card interest rate was 17.87 percent as of late April, according to Bankrate data. Meanwhile, the average rate of a home equity loan was 5.9 percent and 6.75 percent on a $30,000 HELOC.

A home equity loan also enables you to lock in an interest rate, unlike a credit card that can increase at any time. Additionally, with a home equity loan, more of your monthly payment goes toward the principal rather than the interest.

“It’s almost always going to be a better deal than the rates you’ll pay on credit cards,” Weinberg says of home equity products.

4. You can save money

The ability to lock in a lower rate not only saves money in the long term, but can also equate to a lower monthly payment and help you pay down the debt faster.

For example, if you had $10,000 in credit card debt at a 16 percent interest rate, you’d pay $243 per month and more than $4,591 in interest by the time you pay it off. Consolidating that debt with a five-year home equity loan would not only allow you to pay off the debt faster, but also reduce your monthly payments to $193 and save $3,391 in interest.

“If the borrower is able to continue making the same monthly payment amounts that were originally scheduled on the high-cost debt, they would be able to repay the debt over a shorter period of time and save money,” Zovistoski says.

Use a home equity debt consolidation calculator to find out how much you could save.

Cons of using home equity to consolidate debt

While a home equity loan or HELOC can be a good way to consolidate and better manage debt, it comes with several risks and downsides:

1. It takes time

Unlike opening a credit card or filling out an application for a personal loan, applying for a home equity loan or HELOC is a more in-depth process. The bank will typically want an appraisal of your home along with two years of tax returns, W-2s and bank statements. It can typically take up to 30 days or more to close on a home equity loan or HELOC and get access to the money.

2. Your house is the collateral

HELOCs and home equity loans are forms of secured debt that use your home as collateral. This enables lenders to offer much lower interest rates and more favorable terms than credit card companies, but it presents a greater risk: losing your home if you fail to repay the loan.

While credit card companies and personal lenders can’t come after your home, a bank could foreclose on your home if you default on a HELOC or home equity loan. In other words, don’t take out a HELOC or home equity loan unless you can comfortably afford the payments, in addition to your normal monthly mortgage payment, Zovistoski says.

3. Lender fees and closing costs

Depending on the lender you choose, you’ll likely face some charges such as closing costs and appraisal fees, all of which can add to the cost of the loan. When shopping for a lender, make sure you understand the closing costs that each lender charges and how it will affect overall borrowing costs. Some may claim to offer no fees, then add them back in later as penalties if you close the account before the term ends, Weinberg says.

4. You may fall back into debt

One of the greatest risks is that you may use home equity to pay off your credit card debts only to run those same cards up again. People who have a history of debt problems can be susceptible to falling into the hole again. It’s not an uncommon scenario, Weinberg says.

“They may come back in a couple of years and be back where they were with more credit card debt,” Weinberg says. “You can only do it so many times before you run out of equity.”

5. Tax deductibility is restricted

Under previous tax laws you could deduct the interest you paid on a home equity loan or HELOC, regardless of its use. The new tax law now restricts the mortgage interest deduction on home equity loans or HELOCs to use the money to buy, build or renovate the home you’re borrowing against. Even so, the significant savings in interest rates on home equity products compared to credit card rates still make home equity borrowing a worthwhile option.

Other alternatives for consolidating debt

Tapping home equity may not be the best option for people with serious debt and credit problems. If that’s the case, or if you don’t have enough equity in your home, debt relief programs may be a better option.

One avenue is to work with a certified, non-profit credit counseling agency on a debt management plan. It won’t hurt your credit score but will require you to close all your accounts included in the plan. You’ll have to make monthly payments to the agency which in turn then makes the payments to your creditors. If you have debts with multiple credit cards or lenders, you’ll be saved the hassle of tracking multiple bills and due dates.

Another option is a debt settlement plan. While you’ll be able to reduce the balance by agreeing to settle with one or more creditors for less than what you owe, your credit score will suffer significantly. You’ll also have to pay fees and income taxes on the amount forgiven, a consideration that could make debt management less attractive.

Get pre-qualified

Answer a few questions to see which personal loans you pre-qualify for. The process is quick and easy, and it will not impact your credit score.

Get Started

Bottom line

It’s a smart idea to shop around with several different home equity lenders to ensure you get the best rates and terms. Having a plan for how you’ll attack high-interest debt — and how you’ll repay your home equity loan or HELOC — can set up your finances for a more secure future.

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