Students who are applying for their first credit card are going to run into a lot more scrutiny in the bad economy. Since they do not have a credit history, and because the lending institutions are low on money, they are no longer accepting every cash-strapped student.

economic downturn

Do you remember the days when the credit card companies would send pre-approved credit cards in the mail to everybody in the country? Well, back then I didn't need a credit card so I missed that opportunity. Even though I knew the economy was bad after 2008, I still assumed that credit cards would still be fairly easy to obtain.

Credit card companies in the past loved handing out credit cards especially to college students since they were prime targets for overspending and racking up a huge balance. So I was more than a little surprised when I found out I was denied student cards from the major companies. I thought it would have been a breeze and I would have some choices. I had applied to Chase, Citi, and Capital One. Well it turns out that all the companies have stopped their reckless habits and have made credit card applications a lot more restrictive. They all explained to me in their email that their current policy has changed due to the economic downturn.

At this point I decided to give Discover and Bank of America a try. I never applied to them in the first place because I didn't think I would have this much trouble. Well, my own bank turned me down despite having accounts with them for quite some time. At this point I thought that there was no chance of me getting approved anywhere, if my own institution wont take me. So I was pleasantly suprised when I found out I was approved for the Discover Card.

The Discover student card came with lots of great features like 5% back on select catagories. The way it works is that every season (3 months), they choose a theme such as grocery stores and convenience stores, and any purchases made within those kinds of stores you get 5% back. At first I didn't think it was that big a deal, but 5% back is a huge amount and is higher than what most other credit card companies that I saw offered. Also by default, every single purchase is 1% back. That means that if you buy things that are not in the seasonal category, you still get 1% back. Also, I later found out that through the discover store, they have huge percentage back on a bunch of online merchants. Lastly, the card has no annaul fees or charges as long as you don't overdraw the account or make a late payment. As an additional bonus, for those who like personalizing their cards, you can choose from a variety of different designs. I opted for a clownfish in anemone which looks pretty cool.

Here's the cons though. The card originally came with 6 months of 0% interest and a credit limit of around $2000 (it was different according to differnet sources). Mine came with only a $250 limit and 3 months of 0% APR. With prices of textbooks alone costing $250 each I was pretty dissapointed at the low limit. They explained that the reasoning for such a low limit was to see if I was a dependable user since they couldn't risk losing tons of money to bad credit card use and that if I maintained a good standing with them, they would increase the limit. Well, a couple of months later, they stayed true to their word and increased it to $500 limit. Which to be honest, still kind of sucks but there really aren't that many choices out there in the current economy and you can still use it to build a credit score.

So to recap, if you are having trouble applying for credit cards, I would highly suggest Discover card since they seem to still be accepting students, although expect to have a miniscule credit limit. The good things about the card, however, is that it comes with no fees as long as you maintain it well, and the percent back bonuses are some of the best that I've seen. The most important thing of all however, is that this card will help you establish a credit score early and will aid you in any kind of credit application or loans in the future.