Choosing your first card as a college student is never easy. To be honest, most of them suck! However the Discover student card offers definitely don’t suck – they are in a league of their own. Here’s why…

There are currently two different Discover cards for students. This review covers both of them:

Discover student card with 5% cash back

With this credit card you get 5% cash back on a wide variety of rotating categories. For 2012 the 5% categories are:

• Jan 1st thru March 31st: gas stations, museums, movies
• April 1st thru June 30th: restaurants, movies
• July 1st thru Sept 30th: gas stations, theme parks, movies
• Oct 1st thru Dec 31st: department stores, electronics stores, toy stores

Each year the categories change slightly, but for the past 4 years they have been very similar to this. As expected, there is a cap on the maximum amount of 5% cash back that can be earned during a quarter but as a college student you probably won’t be spending much anyway.

This Discover student credit card also gives cash back on your other purchases, too! Each year you get a quarter-percent on the first $3,000 spent and an unlimited 1% on spending beyond that (of course this applies to the spending that’s not part of the 5% categories).

The rewards programs offered on this card is impressive when you consider that many credit cards for college students give you no rewards at all. Last but not least, there is no annual fee.

Apply for this Discover student card w/ 5% cash back

Discover Open Road card student version

The other Discover credit card for college students has a great year-round rewards program for gas and groceries.

• 2% cash back at every gas station
• 2% cash back at every restaurant
• 0.25% to 1.00% cash back on all other purchases (following the same terms mentioned above)

This is a great choice too, because after all when you’re in college you (1) spend a lot on gas on your back and forth trips from home and school (2) you eat out a lot!

With this card you get 2% on up to $250 spent in those categories each billing period… so over the course of a year that could equal some serious cash back. There is no annual fee.

Apply for the Discover Open Road

Three important tips for using your card
Here are some things you may not know about credit cards. In fact a lot of old people don’t even know these things!

#1 – Build credit without a balance
One of the reasons people start getting into debit is because they think it’s actually good for their credit score to have a balance. But this is completely wrong and doing so can actually harm your credit!

When your billing cycle closes each month, the amount due is what’s reported to the credit bureaus. So whether those charges were from just this month or carried over from the past, it doesn’t matter as far as credit scoring is concerned – the full amount due each month is what’s reported.

So if you are regularly using your Discover card you have the ability to build your credit… carrying a balance on it offers absolutely no benefit to your credit score.

#2 – Carrying a balance may hurt your credit
Besides the pain of paying high interest (and all college student credit cards have high APRs) you may actually harm your credit score. Here’s why…

The percentage of your credit limit you use – known as credit utilization – is factored into your FICO credit score. Having high utilization is actually bad. Yes, ironically banks like people that have a lot of credit but don’t use it! With the FICO formula, using above 30% of your credit limit may negatively affect your credit core.

The simple solution? Once you get your student credit card, always stay below 30% of your credit limit.

#3 – A better score means cheaper student loans
Let’s be honest here… college tuition is out of control! If you’re going to be taking out more loans to finish your degree, of course you want to get the best interest rate possible. Well, whether you get a good rate or bad rate depends on your credit score and history.

This is why it’s so important to not screw up your new Discover student credit card, or any credit account for that matter. Use them responsibly – pay your bills on time and in full, keep your credit utilization in check (as discussed above). Doing this will help build up your credit and you will be thankful for that when it comes time to get a loan.

Apply for the Discover student card w/ 5% cash back

Apply for the Discover Open Road student version