Earning cash back when you spend is a simple way to save on purchases. That’s something college students living on a tight budget can appreciate.
But there’s more than one way to accumulate cash rewards in college. Students can earn cash back by:
- Opening a cash rewards credit card.
- Earning rewards on a parent’s cash back card as an authorized user.
- Opening a cash back checking account.
- Downloading cash back apps.
Students can use any or all of these methods to put cash back in their wallet or bank account. But first, it helps to know how they compare.
How Cash Back Credit Cards Work
With a cash back credit card, you make a purchase and your card pays a percentage of that purchase back to you in cash.
The amount of cash back earned varies by card. Some, for example, may offer a flat 1 to 2 percent back on every purchase. Others may tier cash back rewards, offering a higher percentage on certain purchases and a lower rate on others.
Depending on the card and how the rewards program is structured, cash back can be applied to the balance as a statement credit, transferred to a linked checking or savings account, or redeemed for something other than cash, such as gift cards, merchandise or travel.
Tori Dunlap, founder of Her First $100K, a money and career advice platform for women, says cash back credit cards are great for college students seeking versatility.
“You can use the cash back on everything from a spring break trip to a textbook you need for class,” Dunlap says. “Other cards, like mileage rewards cards, might not make sense for someone who isn’t spending frequently, since racking up miles usually takes putting quite a lot of money on the card.”
She says choosing a card with a flat cash back rewards rate may be easier to manage if you’re just getting the hang of using credit cards.
“Find a card that gives consistent cash back instead of rolling categories,” Dunlap says. “As long as you’re paying off your card in full every month, maximize your cash back by putting every purchase you can on your card.”
Getting a Cash Back Credit Card in College
Students first need to qualify for a cash rewards credit card to earn cash back, however.
Under the Credit CARD Act of 2009, college students must be at least 21 to qualify for a credit card in their name. There are two exceptions to the rule. Students younger than 21 may qualify for a credit card if they can either:
- Show they have sufficient income to make their card payments.
- Open their account with co-signer who is at least 21 or can show sufficient income.
Assuming students clear that hurdle, the next step is choosing a cash rewards card.
There are cash back credit cards just for college students. These cards are typically designed for young adults who may have limited or no credit history. The catch is that compared with general cash back rewards cards, student credit cards may yield a lower rewards rate. Additionally, they may come with lower credit limits.
A regular cash back rewards card could be a more attractive option.
“Student cash back cards are a great way to build credit, but many ‘big kid’ cards will accept students with no prior credit history,” Dunlap says. Her first credit card was a regular cash back card, which she opened at age 18.
Even if you have limited credit, you may still qualify for a rewards card. For example, the Capital One QuicksilverOne Cash Rewards Credit Card earns a flat 1.5 percent cash back reward on all purchases. The issuer recommends average, fair or limited credit to qualify.
Once you’ve established good or excellent credit, with a FICO credit score of 670 or higher, you may qualify for credit cards that offer greater rewards.
Piggyback on a Parent’s Credit Card to Earn Cash Back
Being an authorized user on someone else’s credit card means having charging privileges, without being legally responsible for the card balance. Authorized users can use their card to spend and earn cash rewards. It’s also a way for college students to build credit, since the card’s account history will show up on their credit report.
The tricky part can be negotiating how cash rewards will be shared between students and the primary cardholder. But it may be as simple as reviewing the card’s monthly statement.
“Arrangements can be unique for every family, but in general, the card should list the expenses that have earned cash back, so it shouldn’t be hard to separate who has earned what,” says Uri Abramson, co-founder of OverdraftApps.com, a comparison site that reviews overdraft and other financial apps.
Some cards may denote authorized user purchases automatically, making it easier to track earnings. College students should also be clear on the rules for using a parent’s card.
Dunlap says, “Setting clear boundaries and expectations is important.” Specifically, students need to know “what the card can be used for and what it can’t.”
Also, it’s important to talk about repayment expectations. While the primary cardholder is ultimately responsible for the debt, he or she might expect authorized users to pay for what they charge. Knowing that ahead of time can help students keep credit card purchases under control.
Get Cash Back From Your Checking Account
Cash back checking accounts, also called rewards checking accounts, can deliver cash back to students when they spend with their debit card, along with other perks, such as:
- Earned interest on account balances.
- Special discounts from partner merchants.
- ATM fee reimbursements.
- Introductory cash rewards bonuses.
- Travel benefits, including airline miles.
Student rewards checking accounts and regular rewards checking accounts can be offered by larger banks, as well as smaller community banks and credit unions. To open a student account, you have to be enrolled in school and/or be under a certain age.
A cash rewards checking account could be a good choice for students who don’t have or aren’t ready to open a credit card account. Purchases are made with a debit card using funds in the checking account, so students aren’t at risk of creating debt. And earning cash rewards is often as simple as using your debit card to make a qualifying purchase.
If you’re considering a cash rewards checking account, compare them based on:
- Amount of cash back you can earn per purchase and per month.
- Purchase or other account requirements to earn cash back.
- Additional account benefits or special features.
“Try to avoid accounts with monthly fees,” Abramson says, “or accounts that make you jump through hoops to avoid monthly fees.”
Most importantly, Abramson says, avoid overdrawing your account since that could trigger overdraft or insufficient funds fees. The typical overdraft charge is $34, according to the Consumer Financial Protection Bureau, and even one of those fees could wipe out any cash back earned for the month.
Put Cash Back Apps and Online Shopping Tools to Work
Cash back apps and websites can work differently, but they all allow users to earn cash back when they shop.
Usually, that involves downloading a cash back app or a browser extension tool that’s connected to the app if you’re shopping online. From there, you can shop through the app or your browser and earn cash back automatically.
Some cash back apps that students may want to consider include:
- Dosh. Dosh lets users earn cash back when they shop at hundreds of thousands of partner merchants with a connected debit or credit card.
- Ebates. Ebates offers multiple ways to earn cash back, including by shopping through the Ebates app or browser extension, getting cash back in-store at more than 2,500 partner retailers, using the Ebates Cash Back Visa Credit Card, and referring friends to the app.
- Earny. Instead of offering cash back at checkout, Earny provides refunds if something drops in price after you purchase it. The app makes it easy to take advantage of retail and credit card price protection policies by scanning your purchases and submitting refund requests when there’s an eligible price difference.
- Drop. The Drop app gives you points when you shop with your debit or credit card. You can redeem the points for gift cards from various retailers.
- Ibotta. Ibotta offers three ways to earn cash: through mobile in-app purchases, through linked loyalty rewards programs and by scanning receipts when you shop. Once you hit $20 in cash, you can transfer your rewards to PayPal or Venmo, or convert it to a gift card.
Students don’t need a cash rewards credit card to use these apps, although that can be an advantage. Shopping through a cash back app with a cash back credit card makes it possible to stack rewards, meaning you get cash back from the app and your card for the same purchase……..Read more>>