The most compelling reason for students to use credit cards whilst in college is to establish a credit rating that will stand them in good stead in the future. Capital One has introduced the Journey Student Rewards Visa card that is available to students with fair credit. If used responsibly the Journey card can help to build a credit history, whilst offering a number of attractive perks.
Capital One are offering 1% cash back on all purchases, plus an additional 15% cash back when the Journey card is used to make purchases from Perk Central retail. A good feature of the card is an extra reward for making all monthly payments on time, in the form of an additional 25% of the cash back earned that month.
Cash back offers can be tempting but only benefit the cardholder if the full balance is cleared each month. Any student who carries a balance will be charged interest at 19.8% APR, immediately wiping out any cash back benefit. There are tiered APRs on the card which students should be aware of.
Cash advances attract an APR of 24.9% which is charged immediately from the moment cash is withdrawn. Only purchases qualify for the 25 day grace period. Additionally there is a cash advance fee of 3%. Making use of cash advances should be avoided at all costs as the charges and interest ensure such a move is an expensive one.
The penalty APR of 29.4% is applied if the student fails to pay in a timely fashion or exceeds the credit limit. Students who find themselves paying the penalty APR will not be released from this hefty rate for six months. However penalty rates can be avoided completely by ensuring payments are made on time, thus benefiting from the reward for paying on time.
There is no limit to the amount of cash backs that can be earned on the Journey card, and they are redeemable as checks, statement credits, or gift cards. They are however only redeemable whilst the account is in good standing, emphasizing once again the importance of paying on time and remaining within ones credit limits.
At almost 20% the APR is on the high side, so students that plan to carry a balance should comparison shop to compare rates. The ideal use of credit cards always means that the full balance is paid in full each month, in which case the APR is immaterial. The best way to build credit through a student card is to never carry a balance and use the card consistently each month. Students that can manage a credit card in this way can benefit from the cash back offers and rewards for paying on time that the Journey rewards card offers.