Discover it® Student chrome Review: A Beginner Card That Packs on the Perks

The Discover it® Student chrome is Discover’s young-people version of its Discover it® chrome. Like its big sibling, this card earns cash-back rewards on qualifying purchases, and gives cardholders a potentially rich bonus with double cash back in the first year.

It also has perks and bonuses directly aimed at its target audience of students. Yet the combination of a good core feature set, plus those unique Discover perks, makes this a compelling choice not only for that demographic. Let’s explore why.

Double cash back in the first year -- A huge selling point of some Discover credit cards is the issuer’s Cashback Match™ Program. Discover will match a cardholder’s annual cash-back earnings 1-for-1 after the first year of ownership.

2% cash back on restaurants and gas -- Cardholders can earn this elevated cash-back rate for up to $1,000 in combined spending on those two categories every quarter. All other purchases earns 1% cash back.

No annual fee -- This is very helpful for those on a student-sized budget.

Six month 0% into APR on purchases -- That might not be long compared to the longest 0%intro APR cards, but it’s a long period for student credit cards. The got-to variable rate applies after the promo.

$20 Good Grades credit -- This bonus is unique to Discover’s two student cards (the other being the Discover it® Student Cash Back). The issuer bestows $20 in statement credit each school year to student cardholders that deliver a GPA above 3.0. The $20 Good Grades credit is good for up to the next five years after the account is opened.

FICO® Score for free -- It’s critical for early-stage credit card holders to learn the importance of a credit score. Helpfully, Discover provides this number as a free service. They can access it via their online account management page or through the Discover app. Additionally, it’s published in every account statement.

No penalty APR -- You should never be late with a credit card payment, but in case you’re tardy with Discover it® Student chrome debt, it’s not the end of the world -- Discover won’t raise your APR, as is common with many other card issuers.

No foreign transaction fee -- Purchasing goods from overseas or during travel outside of the U.S. won’t incur any additional fees.

Free Discover Identity Alerts -- This opt-in service keeps an eye on your credit report, looking for new, unauthorized accounts being opened. It also monitors a host of websites that list social security numbers. You will receive an alert if the service detects suspicious activity.

Base cash back rate -- We probably shouldn’t lean too hard on Discover for this modest rate on purchases that aren’t gas or dining; it’s a card aimed at young consumers after all. Still, it would be nice to see more product/service categories in the 2% band, or even some rotating bonus categories earning higher rates (as with other cash-back cards).

Acceptance -- Discover cards are less commonly accepted than those of Visa, Mastercard, and American Express, particularly abroad. The card’s no foreign transaction fee can be hard to utilize for that reason.

Although student cards are not a particularly large sub-category in the credit card world, there are enough of them to draw distinctions. So what should a student -- or a person looking to rebuild their CREDIT -- look for in a student card? We can break this down into a few characteristics.

• No annual fee and low other costs -- A student card should be appropriate for a student-sized budget and I consider no annual table stakes in this category. It’s also good if the issuer goes easy on the penalties, as Discover does by not raising the APR after late payments on this card.
  
• Monitoring services -- Owning and managing a credit card is a big responsibility. It helps greatly to have the tools that monitor the effect your management is having on that all-important credit profile. Look for cards that include such extras as a free credit score tool, or fraud prevention services.
  
• Perks and bonuses -- No student card is aimed at high-end big spenders, so you won’t score free airport lounge access and rich hotel booking bonuses with one. Still, there is enough competition that issuers need to include a few sweeteners, although these tend to be modest. Consider cards that offer high cash back earnings or specials like the Good Grades credit.

Discover it® Student chrome is intended for cardholders with no or limited credit histories. It’s designed to be your first credit card. Accordingly, few cardholders will have anything more than a “thin” credit history.

The key thing to remember with student cards is that they’re stepping stones, whether in the hands of first-time credit card owners, or older customers looking to rebuild shaky credit. The idea is to build or improve your credit profile so you can get fuller-featured cards higher up the ladder.

With that in mind, here are a few tips for good credit card management and enhancement for what’s likely a first credit card for many:

• Make timely payments -- For obvious reasons, potential creditors tend to weigh this factor heavily when deciding whether to grant you a card (or a bank loan, while we’re at it). They want to see that you’re responsible enough to take care of at least part of your debt when the statement comes due.
  
• Keep limited-to-no utilization -- This might be tricky with student cards, as they tend to start out with very low limits (often in the $300 to $500 range). Regardless, another credit decision factor is utilization, i.e. how much of your allotted credit limit you’re using. Experts say this should be no more than 30% to 35% to not ding your credit score. Yes, spending on a credit card is easy; do try to avoid too much temptation. 0% credit utilization is actually a better practice and can be achieved when paying your credit card bills on time.
  
• Complimentary use -- For those with the means to do so, it’s often worthwhile to try to obtain a second credit card that compliments the first -- one that, say, has different elevated cash back categories.

In such a situation you can maximize your cash back earnings between the two by using the two strategically. In other words, always paying with the card that earns the most for the good or service you’re purchasing.

Over the past few years, Discover has launched a range of rather competitive credit cards in various categories. The Discover it® Student chrome, exactly half of its student card lineup, is a very muscular product in its category.

Its list of perks and benefits is fairly extensive for what’s essentially a beginner card -- particularly the inclusion of Discover’s money perk, Cashback Match™. Even the most tight-budgeted student can rack up some serious payback with that one.

So I’d say that Discover it® Student chrome is not only a fine starting-out card for students, it’s also a good choice for others with a limited credit history, or with a credit score that lands in the Fair category.