College Students and Recent Grads, Reviews, Student Loan ReFi

LendKey Student Loan Refinance Review

Editorial Disclaimer: The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

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LendKey Student Loan Refinance Review

Updated April 13, 2017

Could you imagine trying to find the best student loan refinancing rate from community banks and credit unions on your own? How would you do it? Would you call every bank and credit union and ask for help? What a nightmare.

LendKey has relationships with 300+ community banks and credit unions all over the United States. LendKey* can issue loans to residents in any of the 50 states. This keeps you from having to pound the pavement by your lonesome. LendKey’s website will show you the best rate for refinancing your student loans.

Since 2007, LendKey has been a one stop shop for student loan refinancing. It also offers other types of loans. But for the sake of this review we’ll be focusing on how LendKey takes care of graduates looking to improve their debt situation. Fixed APRs range from 3.25% – 7.26%. Variable rates start as low as 2.52%. (All of these rates include the auto-pay discount). LendKey is one of the top four lenders in MagnifyMoney’s survey of where to refinance your student loan.

Who can benefit from using LendKey? Anyone hoping to refinance their student loans should consider LendKey. It is easy to apply:

Lendkey

Apply Now

 

If you’re on the fence about refinancing, here are some of the benefits to be gained:

Lower Payments

Refinance your way to a more manageable monthly payment.

Lower Rates

Spend less on interest by getting a lower rate than the aggregate of all individual student loans.

Simplified Finances

Making payments on multiple loans to multiple institutions at different times of the month can be quite the hassle. It’s much easier to remember just one payment. Many lenders even let you consolidate both private and federal loans.

Different Repayment Options

Different lenders offer different repayment options. It’s wise to explore all the options to determine what makes the most sense for your particular situation.

Pros of Using LendKey

A Unified Application Process

This is hugely important. With LendKey, you’re not shuffled through tons of screens on different domains – all using different logons and different (confusing!) user interfaces. Within 5 minutes, a person can navigate through LendKey’s application process. This means after 5 minutes, you can see how much you can save by refinancing. You can even choose what loan you want.

Cosigner Release Available

Yes, you can secure a low interest rate and then cut loose your cosigner. Once you prove you are responsible – LendKey no longer needs a cosigner tied to your account. This may help convince a cosigner to work with you initially. They won’t need to be on the hook for long. Once you’ve made 12 full and consecutive on-time payments, your cosigner may be released. LendKey does a credit check and examines your income to see if you are free to go it alone.

No Origination Fee

This is helpful since it means you are free to shop around without feeling committed.

Further Interest Rate Reduction

1% interest rate reduction once 10% of the loan principal is repaid during the full repayment period. This is subject to the floor rate.

0.25% ACH Interest Rate Reduction

Many lenders reduce interest rates by a quarter percent for borrowers who agree to automatic payments.

Federal and Private Loans Can Be Consolidated Together

However, you lose some federal benefits in doing so. Things like free insurance (provided with federal loans if you are killed or severely disabled), public service forgiveness and military service forgiveness as well as income-based repayment plans. Grace periods will likely be omitted when writing the new consolidated loan.

Over 40,000 Borrowers Serviced

As of January 2016, 40,000 people have used LendKey’s services.

Excellent Customer Support

According to cuStudentLoans (which LendKey owns so take this with a grain of salt), 97% of customers are satisfied. Customer support comes out of New York and Ohio. Phone support is available each day from 9AM to 8PM EST.

For what it’s worth, I called into support 5 times at random. The support I received from the sales team was really great. Even the gentleman with only 6 months of experience was quite knowledgeable.

Eligible Schools

This list of eligible schools is 2,200 and growing. Chances are your school is on the list. However, LendKey doesn’t encourage students to submit eligibility requests as other student loan refinancers do.

Return Policy

Yes, you can ‘return’ your loan. LendKey offers a 30 day no-fee return policy to allow you to cancel the loan within 30 days of disbursement without fees or interest. That’s pretty incredible.

Cons

LendKey Doesn’t Give You the Complete Picture

LendKey doesn’t help a lot with stacking institutions against each other. I suppose this is meant to not to play favorites. However, it would be nice to be able to read about each institution within the LendKey interface. I’d still advise opening up another tab to research the banks you are considering.

The Fine Print You May Miss

Since LendKey is a loan matchmaker, there isn’t a lot of fine print on the site. This means a person still needs to review the fine print of each institution before finalizing his or her loan as mentioned before. LendKey does a fantastic job of getting you 90% of the way. But that last 10% of fine print is between you and your lending institution. Read through everything before signing up for a new loan.

I read the Better Business Bureau complaint log for LendKey. There are only 11 complaints in the past 3 years. SoFi (a competitor) has 18 and another competitor, Earnest, has no complaints. These complaints were mostly small misunderstandings between the LendKey support team and the borrowers.

The Application Process

There are four steps to the simple application process. Step 1 is for estimating monthly payments for a private student loan. It’s simple. You identify the amount you’d like to borrow and fill in a radio button indicating your credit is fair, good, or excellent. The last part is where you enter which state you live in. This is because many programs are state specific. Step 1 takes 1 minute.

Step 2 takes 2 minutes. This is the step where you compare the rates and offers available to you. Choose what works best for your unique situation.

Step 3 again only takes 1 minute. This is the actual application. As mentioned earlier in this article, this process is done through the LendKey interface. And don’t worry, information inputted into LendKey is safe (privacy policy).

Step 4 takes 10 minutes. This is the step where a person verifies identity, school, and income (screenshots/pictures work so there’s no hassle with scanning!). You will know if you are approved during this step.

As with any company, there are competitors. Here are two worthy rivals also worth considering:

Alternatives to LendKey

SoFi

SoFi stands out with a job placement programs, free wealth management for borrowers and even a dating app. More importantly, SoFi has low interest rates, with variable rates starting at 2.615% and fixed rates starting at 3.35%.

SoFi logo

Apply Now

Earnest

If you have a low credit score but have potential to earn a good income, Earnest will treat you well. Earnest looks beyond a simple credit score. The application process examines employment history, future earning potential and overall financial situation.

Earnest seems to take a very personal approach to each customer. A customer states an amount they can pay each month and Earnest will give them a loan, accordingly. Earnest also lets borrowers skip a payment each year. This could come in handy if money gets tight around the holidays. Just keep in mind, this can increase your future payments to compensate for the missed on.

Fixed interest rates start at 3.35% and variable interest rates start at 2.61%.

However, Earnest isn’t available for all US residents.

Earnest

Apply Now

Final Thoughts

LendKey runs a fantastic student loan refinancing division. The company offers many, many customizable options with very few downsides. With no application fee, it’s worth seeing what this student loan refinancing powerhouse can do for you.

Lendkey

Apply Now

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 *We’ll receive a referral fee if you click on offers with this symbol. This does not impact our rankings or recommendations. You can learn more about how our site is financed here.

Will Lipovsky
Will Lipovsky |

Will Lipovsky is a writer at MagnifyMoney. You can email Will at will@magnifymoney.com

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College Students and Recent Grads, Pay Down My Debt, Reviews

CommonBond Student Loan Refinance Loan Review

Editorial Disclaimer: The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

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CommonBond Grad Student Loan Refinance Loan Review

Updated June 26, 2017

CommonBond was founded by three Wharton MBAs who felt the sting of student loans after they graduated. The founders decided to provide a better solution for graduates, as they thought the student loan system was broken and in need of reform. As a result, they strive to make the refinance (and borrowing) process as simple and straightforward for graduates as possible.

CommonBond* began by servicing students from just one school, and has rapidly expanded. Today, CommonBond loans are available to graduates of over 2,000 schools nationwide. Although the business started servicing only students with graduate degrees, today CommonBond is also available to refinance undergraduate degrees as well.

CommonBond is one of the top four lenders identified by MagnifyMoney to refinance student loans.

As you might be able to tell by the name, CommonBond thinks of its community as family. There is a network of alumni and professionals within the community that want to help borrowers. This alone sets it apart from other lenders, as members often meet for events.

While these are all great things, we know you’re more interested in how CommonBond might be able to help you make your student loans more affordable. Let’s take a look at what terms and rates they offer, eligibility requirements, and how they compare against other lenders.

Refinance Terms Offered

CommonBond offers low variable and fixed rate loans. Variable rates range from 2.61% – 6.54% APR, and fixed rates range from 3.35% – 6.74% APR.

Note that these rates take a 0.25% auto pay discount into consideration.

There is no maximum loan amount. CommonBond will lend what you can afford to repay. CommonBond offers fixed and variable rates with terms of 5, 10, 15, and 20 years.

The hybrid loan is only offered on a 10 year term – the first 5 years will have a fixed rate, and the 5 years after that will have a variable rate.

CommonBond has a great chart listing repayment examples based off of borrowing $10,000, which can be found on its rates and terms page.

To pull an example from that, if you borrow $10,000 at a fixed 4.74% APR on a 10 year term, your monthly payment will be $104.80. The total amount you will pay over the 10 year period will be $12,575.90.

The Pros and Cons

CommonBond is available to graduates of 2,000 universities. While that is a very long list, not all colleges and universities are included.

One pro to consider is the hybrid loan option available. It might seem a little confusing at first – why would someone want a variable rate down the road?

If you’re confident you’ll be able to make extra payments on your loan and pay it off before the 5 years are up, you might be better off going with the hybrid option (if you can get a better interest rate on it).

This is because you’ll end up paying less over the life of the loan with a lower interest rate. If you were offered a 10 year loan with a fixed rate of 6.49% APR, and a hybrid loan with a beginning rate of 5.64%, the hybrid option would be the better deal if you’re intent on paying it off quickly.

What You Need to Qualify

CommonBond doesn’t list many eligibility requirements on its website, aside from the following:

  • You must be a U.S. citizen or permanent resident
  • You must have graduated

CommonBond doesn’t specify a minimum credit score needed, but based on the requirements of other lenders, we recommend having a score of 660+, though you should be aiming for 700+. The good news is CommonBond lets you apply with a cosigner in case your credit isn’t good enough.

Documents and Information Needed to Apply

CommonBond’s application process is very simple – it says it takes as little as 2 minutes to complete. Initially, you’ll be asked for basic information such as your name, address, and school.

Once you complete this part, CommonBond will perform a soft credit pull to estimate your rates and terms.

If you want to move forward with the rates and terms offered, you’ll be required to submit documentation and a hard credit inquiry will be conducted. CommonBond lists the following as required:

  • Pay stubs or tax returns (proof of employment)
  • Diploma or transcript (proof of graduation)
  • Student loan bank statement
  • ID, utility bills, lease agreement (proof of residency)

CommonBond also notes it can take up to 5 business days to verify documents submitted, so the loan doesn’t happen instantaneously.

Once your documents are approved, you electronically sign for the loan, and CommonBond will begin the process of paying off your previous lenders. It notes this can take up to two weeks from the time the loan is accepted.

Who Benefits the Most from Refinancing Student Loans with CommonBond?

Borrowers who are looking to refinance a large amount of student loan debt will benefit the most from refinancing with them.

Common Bond

Apply Now

Keeping an Eye on the Fine Print

CommonBond does not have a prepayment penalty, and there are no origination fees nor application fees associated with refinancing.

As with other lenders, there is a late payment fee. This is 5% of the unpaid amount of the payment due, or $10, whichever is less.

If a payment fails to go through, you’ll be charged a $15 fee.

It’s also noted that failure to make payments may result in the loss of the 0.25% interest rate deduction from auto pay.

Transparency Score

Getting in touch with a representative is simple and there is a chat and call option right on the homepage. Some lenders have this hidden at the bottom, or they don’t offer a chat option at all.

CommonBond also lets borrowers know they can shop around within a 30 day period to lessen the impact on their credit.

It does not list its late fees on its website, unlike other lenders. However, after making a chat inquiry, the question was answered promptly.

CommonBond does offer a cosigner release and is ranked with a A+ transparency score.

Alternative Student Loan Refinancing Lenders

The student loan refinancing market continues to get more competitive, and it makes sense to shop around for the best deal.

One of the market leaders is SoFi. It’s always worth taking a look to see if SoFi* offers a better interest rate.

The two lenders are very similar – CommonBond offers “CommonBridge,” a service that helps you find a new job in the event you lose yours. SoFi offers a similar service called Unemployment Protection.

SoFi’s variable rates are currently 2.615% – 6.54% APR with autopay, and its fixed rates are currently 3.35% – 6.74% APR, which is in line with what CommonBond is offering.

SoFi also doesn’t have a limit on how much you can refinance with them.

SoFi logo

Apply Now

Another lender to consider is Earnest. There is no maximum loan amount, and Earnest has a very slick application process. Interest rates start as low as 2.61% (variable) and 3.35% (fixed).

Earnest Credit Card

Apply Now

Lastly, you could check out LendKey. It offers student loan refinancing through credit unions and community banks, but only offers variable rates in most states and fixed rates in a select few. The maximum amount to refinance with an undergraduate degree is $125,000, and the maximum amount to refinance with a graduate degree is $175,000.

All three of these options provide forbearance in case of economic hardship and offer similar loan options (5, 10, 15 year terms).

Lendkey

Apply Now

Don’t Forget to Shop Around

As CommonBond initially conducts a soft pull on your credit, you’re free to continue to shop around for the best rates if you’re not happy with the rates it can provide. As the lender states on its website, if you apply for loans within a 30 day period, your credit won’t be affected as much.

Since CommonBond does have strict underwriting criteria, you should continue to shop around and don’t be discouraged if you are not approved. The market continues to get more competitive, and a number of good options are out there.

Customize Your Student Loan Offers with MagnifyMoney Comparison Tool

 

*We’ll receive a referral fee if you click on offers with this symbol. This does not impact our rankings or recommendations. You can learn more about how our site is financed here.

 

Erin Millard
Erin Millard |

Erin Millard is a writer at MagnifyMoney. You can email Erin at erinm@magnifymoney.com

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College Students and Recent Grads, Pay Down My Debt

19 Options to Refinance Student Loans in 2017 – Get Your Lowest Rate

Editorial Disclaimer: The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

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19 Options to Refinance Student Loans - Get Your Lowest Rate

Updated: June 26, 2017

Are you tired of paying a high interest rate on your student loan debt? You may be looking for ways to refinance your student loans at a lower interest rate, but don’t know where to turn. We have created the most complete list of lenders currently willing to refinance student loan debt.

You should always shop around for the best rate. Don’t worry about the impact on your credit score of applying to multiple lenders: so long as you complete all of your applications within 14 days, it will only count as one inquiry on your credit score. You can see the full list of lenders below, but we recommend you start here, and check rates from the top 4 national lenders offering the lowest interest rates. These 4 lenders also allow you to check your rate without impacting your score (using a soft credit pull), and offer the best rates of 2017:

LenderTransparency ScoreMax TermFixed APRVariable APRMax Loan Amount 
SoFiA+

20


Years

3.35% - 6.74%


Fixed Rate*

2.615% - 6.54%


Variable Rate*

No Max


Undergrad/Grad
Max Loan
apply-now
earnestA+

20


Years

3.35% - 6.49%


Fixed Rate

2.61% - 6.28%


Variable Rate

No Max


Undergrad/Grad
Max Loan
apply-now
commonbondA+

20


Years

3.35% - 6.74%


Fixed Rate

2.61% - 6.54%


Variable Rate

No Max


Undergrad/Grad
Max Loan
apply-now
lendkeyA+

20


Years

3.25% - 7.26%


Fixed Rate

2.52% - 6.06%


Variable Rate

$125k / $175k


Undergrad/Grad
Max Loan
apply-now

We have also created:

But before you refinance, read on to see if you are ready to refinance your student loans.

Can I Get Approved?

Loan approval rules vary by lender. However, all of the lenders will want:

  • Proof that you can afford your payments. That means you have a job with income that is sufficient to cover your student loans and all of your other expenses.
  • Proof that you are a responsible borrower, with a demonstrated record of on-time payments. For some lenders, that means that they use the traditional FICO, requiring a good score. For other lenders, they may just have some basic rules, like no missed payments, or a certain number of on-time payments required to prove that you are responsible.

If you are in financial difficulty and can’t afford your monthly payments, a refinance is not the solution. Instead, you should look at options to avoid a default on student loan debt.

This is particularly important if you have Federal loans.

Don’t refinance Federal loans unless you are very comfortable with your ability to repay. Think hard about the chances you won’t be able to make payments for a few months. Once you refinance, you may lose flexible Federal payment options that can help you if you genuinely can’t afford the payments you have today. Check the Federal loan repayment estimator to make sure you see all the Federal options you have right now.

If you can afford your monthly payment, but you have been a sloppy payer, then you will likely need to demonstrate responsibility before applying for a refinance.

But, if you can afford your current monthly payment and have been responsible with those payments, then a refinance could be possible and help you pay the debt off sooner.

Is it worth it? 

Like any form of debt, your goal with a student loan should be to pay as low an interest rate as possible. Other than a mortgage, you will likely never have a debt as large as your student loan.

If you are able to reduce the interest rate by re-financing, then you should consider the transaction. However, make sure you include the following in any decision:

Is there an origination fee?

Many lenders have no fee, which is great news. If there is an origination fee, you need to make sure that it is worth paying. If you plan on paying off your loan very quickly, then you may not want to pay a fee. But, if you are going to be paying your loan for a long time, a fee may be worth paying.

Is the interest rate fixed or variable?

Variable interest rates will almost always be lower than fixed interest rates. But there is a reason: you end up taking all of the interest rate risk. We are currently at all-time low interest rates. So, we know that interest rates will go up, we just don’t know when.

This is a judgment call. Just remember, when rates go up, so do your payments. And, in a higher rate environment, you will not be able to refinance to a better option (because all rates will be going up).

We typically recommend fixing the rate as much as possible, unless you know that you can pay off your debt during a short time period. If you think it will take you 20 years to pay off your loan, you don’t want to bet on the next 20 years of interest rates. But, if you think you will pay it off in five years, you may want to take the bet. Some providers with variable rates will cap them, which can help temper some of the risk.

Places to Consider a Refinance

If you go to other sites they may claim to compare several student loan offers in one step. Just beware that they might only show you deals that pay them a referral fee, so you could miss out on lenders ready to give you better terms. Below is what we believe is the most comprehensive list of current student loan refinancing lenders.

You should take the time to shop around. FICO says there is little to no impact on your credit score for rate shopping as many providers as you’d like in a single shopping period (which can be between 14-30 days, depending upon the version of FICO). So set aside a day and apply to as many as you feel comfortable with to get a sense of who is ready to give you the best terms.

Here are more details on the 5 lenders offering the lowest interest rates:

1. SoFi: Variable Rates from 2.615% and Fixed Rates from 3.35% (with AutoPay)*

sofiSoFi (read our full SoFi review) was one of the first lenders to start offering student loan refinancing products. More MagnifyMoney readers have chosen SoFi than any other lender. Although SoFi initially targeted a very select group of universities (it started with Stanford), now almost anyone can apply, including if you graduated from a trade school. The only requirement is that you graduated from a Title IV school. You need to have a degree, a good job and good income in order to  qualify. SoFi wants to be more than just a lender. If you lose your job, SoFi will  help you find a new one. If you need a mortgage for a first home, they are there  to help. And, surprisingly, they also want to get you a date. SoFi is famous for  hosting parties for customers across the country, and creating a dating app to  match borrowers with each other.

Go to site

2. Earnest: Variable Rates from 2.61% and Fixed Rates from 3.35% (with AutoPay) 

EarnestEarnest (read our full Earnest review) offers fixed interest rates starting at 3.35% and variable rates starting at 2.61%. Unlike any of the other lenders, you can switch between fixed and variable rates throughout the life of your loan. You can do that one time every six months until the loan is paid off. That means you can take advantage of the low variable interest rates now, and then lock in a higher fixed rate later. You can choose your own monthly payment, based upon what you can afford (to the penny). Earnest also offers bi-weekly payments and “skip a payment” if you run into difficulty.

Go to site

3. CommonBond: Variable Rates from 2.61% and Fixed Rates from 3.35% (with AutoPay)

CommonBondCommonBond (read our full CommonBond review) started out lending exclusively to graduate students. They initially targeted doctors with more than $100,000 of debt. Over time, CommonBond has expanded and now offers student loan refinancing options to graduates of almost any university (graduate and undergraduate). In addition (and we think this is pretty cool), CommonBond will fund the education of someone in need in an emerging market for every loan that closes. So not only will you save money, but someone in need will get access to an education.

Go to site

4. LendKey: Variable Rates from 2.52% and Fixed Rates from 3.25% (with AutoPay)

lendkeyLendKey (read our full LendKey review) works with community banks and credit unions across the country. Although you apply with LendKey, your loan will be with a community bank. If you like the idea of working with a credit union or community bank, LendKey could be a great option. Over the past year, LendKey has become increasingly competitive on pricing, and frequently has a better rate than some of the more famous marketplace lenders.

Go to site

In addition to the Top 4 (ranked by interest rate), there are many more lenders offering to refinance student loans. Below is a listing of all providers we have found so far. This list includes credit unions that may have limited membership. We will continue to update this list as we find more lenders. This list is ordered alphabetically:

  • Alliant Credit Union: Anyone can join this credit union. Interest rates start as low as 4.00% APR. You can borrow up to $100,000 for up to 25 years.
  • Citizens Bank: Variable interest rates range from 2.60% APR – 8.39% APR and fixed rates range from 3.74% – 8.24%. You can borrow for up to 20 years. Citizens also offers discounts up to 0.50% (0.25% if you have another account and 0.25% if you have automated monthly payments).
  • College Avenue: If you have a medical degree, you can borrow up to $250,000. Otherwise, you can borrow up to $150,000. Fixed rates range from 4.75% – 7.35% APR. Variable rates range from 3.00% – 6.25% APR.
  • Credit Union Student Choice: If you like credit unions and community banks, we recommend that you start with LendKey. However, if you can’t find a good loan from a LendKey partner, this tool could be helpful. Just check to see if you or an immediate family member belong to one of their featured credit union and you can apply to refinance your loan.
  • Laurel Road (formerly known as DRB) Student Loan: Laurel Road offers variable rates ranging from 3.89% – 6.54% APR and fixed rates from 4.45% – 7.54% APR. Rates vary by term, and you can borrow up to 20 years.
  • Eastman Credit Union: Credit union membership is restricted (see eligibility here). Fixed rates start at 6.50% and go up to 8% APR.
  • Education Success Loans: This company has a unique pricing structure: your interest rate is fixed and then becomes variable thereafter. You can fix the rate at 4.99% APR for the first year, and it is then becomes variable. The longest you can fix the rate is 10 years at 7.99%, and it is then variable thereafter. Given this pricing, you would probably get a better deal elsewhere.
  • EdVest: This company is the non-profit student loan program of the state of New Hampshire which has become available more broadly. Rates are very competitive, ranging from 3.94% – 7.54% (fixed) and 2.92% – 6.54% APR (variable).
  • First Republic Eagle Gold. The interest rates are great, but this option is not for everyone. Fixed rates range from 2.35% – 3.95% APR. Variable rates range from 2.50% – 4.30%. You need to visit a branch and open a checking account (which has a $3,500 minimum balance to avoid fees). Branches are located in San Francisco, Palo Alto, Los Angeles, Santa Barbara, Newport Beach, San Diego, Portland (Oregon), Boston, Palm Beach (Florida), Greenwich or New York City. Loans must be $60,000 – $300,000. First Republic wants to recruit their future high net worth clients with this product.
  • IHelp: This service will find a community bank. Unfortunately, these community banks don’t have the best interest rates. Fixed rates range from 4.75% to 9% APR (for loans up to 15 years). If you want to get a loan from a community bank or credit union, we recommend trying LendKey instead.
  • Navy Federal Credit Union: This credit union offers limited membership. For men and women who serve (or have served), the credit union can offer excellent rates and specialized underwriting. Variable interest rates start at 3.27% and fixed rates start at 4.00%.
  • Purefy: Only fixed interest rates are available, with rates ranging from 3.50% – 7.28% APR. You can borrow up to $150,000 for up to 15 years. Just answer a few questions on their site, and you can get an indication of the rate.
  • RISLA: Just like New Hampshire, the state of Rhode Island wants to help you save. You can get fixed rates starting as low as 3.49%. And you do not need to have lived or studied in Rhode Island to benefit.
  • UW Credit Union: This credit union has limited membership (you can find out who can join here, but you had better be in Wisconsin). You can borrow from $5,000 to $60,000 and rates start as low as 2.61% (variable) and 4.04% APR (fixed).
  • Wells Fargo: As a traditional lender, Wells Fargo will look at credit score and debt burden. They offer both fixed and variable loans, with variable rates starting at 4.24% and fixed rates starting at 6.24%. You would likely get much lower interest rates from some of the new Silicon Valley lenders or the credit unions.

You can also compare all of these loan options in one chart with our comparison tool. It lists the rates, loan amounts, and kinds of loans each lender is willing to refinance. You can also email us with any questions at info@magnifymoney.com.

 

Nick Clements
Nick Clements |

Nick Clements is a writer at MagnifyMoney. You can email Nick at nick@magnifymoney.com

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College Students and Recent Grads, Reviews

Review: Journey Student Rewards from Capital One

Editorial Disclaimer: The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

Advertiser Disclosure

If you are a college student looking to build credit, Capital One’s Journey Student Credit Card could be a good option. Most important, there is no annual fee and Capital One is willing to accept people with limited (or no) credit history. Although your credit limit will start out very low, Capital One promises a review of the limit after a short five short months — and good behavior can be rewarded with a higher credit limit. Cash back rewards are a nice added bonus, making this a good first credit card choice. Just make sure you don’t borrow with this card — at 20.74%, the interest rate is high.

Journey Student Credit Card from Capital One

APPLY NOW Secured

On Capital One’s Website

Journey Student Credit Card from Capital One

Annual fee
$0
Cashback Rate
up to 1.25%
APR
20.74%
Credit required
Average Credit
  • Earn 1% cash back on all your purchases. Pay on time to boost your cash back to a total of 1.25% for that month
  • There’s no limit to the amount of cash back you can earn, and rewards don't expire
  • Get access to a higher credit line after making your first 5 monthly payments on time
  • Pay no annual or foreign transaction fees
  • Fraud coverage if your card is lost or stolen
  • Pick the monthly due date that works best for you

How the Card Works

Capital One is one of the largest credit card issuers in the country. With Journey it has created a credit card specifically designed for students looking to build their credit score and have access to the convenience of paying by credit card.

Capital One created the concept of “low and grow.” That means you will receive a very low credit limit at first (that could be as low as $500). If you demonstrate good behavior, your credit limit will grow over time. Capital One promises a review after just five months. If you make your first five monthly payments on time, you will be rewarded with a higher credit limit quickly.

The card also comes with a decent cash back rewards proposition. You will earn 1% cash back on all of your purchases. So long as you make your payments on time, you will get a bonus of 0.25%. That means responsible cardholders will earn 1.25% cash back. In general, MagnifyMoney does not get excited about rewards for student cards. Because the limit is so small, the amount of cash back that you can earn will be limited. However, 1.25% cash back on all purchases is a nice added bonus for students.

There are a few extra perks with this card. There is no foreign transaction fee, which is great for any student looking to study abroad or backpack across Europe. You will also be able to see your CreditWise credit score for free. CreditWise offers free access to your TransUnion VantageScore 3.0 credit score. Almost every credit card issuer now offers access to a free credit score (making the benefit less exciting). However, because the goal of a student card is to build your credit score, being able to watch it improve in real time is a nice benefit. We also like that, with CreditWise, you have access to interactive tools that let you see how your behavior will impact your score over time.

Just remember: your goal with a student card is to have an excellent score (above 700) when you graduate from college. To do that, you should focus on three steps. First, use your card every month. Second, try to keep your statement balance below 10%-20% of your credit limit. That means if you have a $500 credit limit, don’t spend more than $50-$100 a month on the card. That keeps your utilization low. Third, pay your statement balance in full and on time every month. By doing this, you avoid paying any interest. With this card — you also get the full 1.25% cash back. And, most important, you build a strong credit history.

How to Qualify for the Card

Although this card targets students, you do not actually need to be a student in order to get the card. Capital One makes it clear that this card is for people with “average credit.” In particular, people with average credit have limited credit history. If you have had a credit card for less than three years, you would be considered “average.” If you have no credit or are new to the country, you would also be considered average by Capital One.

In order to be approved, you will need to have income. Because students are being targeted with this card, the income requirements will be much lower than for a normal card. However, if you don’t have a way of repaying your card, you will not be able to get one. And a parental allowance is not considered income.

Just remember: Because Capital One will accept people with limited or no credit history, the credit limit will be low and the interest rate will be high.

What We Like About the Card

We believe this card could be a great choice for a college student looking to build credit. Here is what we like most.

No annual fee.

As a college student, every penny counts. And no college student should have to pay a fee to build their credit score. Fortunately, there are a number of credit card companies willing to offer student credit cards with no annual fee, and Capital One Journey is one of them.

No foreign transaction fees.

Although the primary reason you get a student card is to build your score, having a card can be particularly helpful — especially if you are studying or traveling abroad. Foreign transaction fees of 3% or more can end up costing a lot of money. Fortunately, Capital One does not charge foreign transaction fees, and you can use your card overseas without worrying about annoying fees.

Rewards good behavior.

With your first credit card, it is important to start building responsible money habits. This card rewards good behavior. If you make your payments on time, you get a 25% boost in the cash back that you earn. And if you consistently make your payments on time, your credit limit will be increased (which can help you with your credit score, when used responsibly).

And yes, you get rewards.

When selecting a credit card, paying no annual fee is the most important feature. Although we wouldn’t recommend selecting a student credit card based upon cash back or miles, it is a nice added perk for the Capital One card. If you have a $500 limit and do not spend more than $100 a month on the card, you will only earn $15 of cash back per year (at the 1.25% rate). And we do not recommend spending more money to get more cash back — that is a bad strategy.

What We Don’t Like About the Card

Very high interest rate.

The credit card charges a 20.74% interest rate to everyone who is accepted. College students have enough to worry about with student loans — they shouldn’t be taking on additional debt as very high, double-digit rates of interest. If you max out a $500 limit and pay only the minimum due, you would end up spending $84 of interest during the first year alone, and would still have a $284 balance remaining. In other words, most of your money would go toward the interest. Just beware: a student credit card is a very expensive way to borrow.

Expensive late fees.

If you miss a payment, you will be hit with a late fee of up to $35. That is a steep price to pay for anyone, let alone a college student. To avoid late fees, make sure you set up automatic monthly payments.

Alternatives to the Card

There are a number of other options out there. We think you should avoid any student card that charges an annual fee. But here are two good options that don’t charge a fee.

If You Want to Earn More Rewards

If you want to earn more cash back, Discover is our favorite option. Discover it® for Students does not charge an annual fee and provides free access to your FICO score. And it does something we really like: it offers a “Good Grades Reward.” You will get $20 cash back each school year your GPA is 3.0 or higher for up to the next 5 years. That is on top of a cash back rewards program that pays 5% cash back in rotating categories each quarter like Amazon.com, restaurants, ground transportation and more, up to the quarterly maximum each time you activate. Plus, unlimited 1% cash back on all other purchases. And you can get a dollar-for-dollar match of all the cash back you’ve earned at the end of your first year, automatically.

If You Want an Intro Bonus

If you would like to earn a nice intro bonus, consider the Citi ThankYou Preferred Card for College Students. You will earn 2,500 ThankYou points after spending $500 during the first three months. You will also be able to earn 2 points for every $1 you spend on dining and entertainment. Plus, you get 1 point for every $1 spent on everything else. Depending on how you redeem, 100 points could equal $1.

Who Benefits Most from the Card

If you are a college student looking to build your credit history, this is a great card. You do not have to pay an annual fee, and your credit limit will increase after just five months of on-time payments. The card also has a decent reward structure and no foreign transaction fee, making this a solid choice. You could probably earn more rewards at Discover (with its good grade bonus) or at Citi (at least in the first year with its sign-on bonus), but any of these would be solid options so long as you keep your balance low and pay it in full and on time every month.

Student Credit Card FAQs

Yes, you will need to demonstrate that you have income in order to qualify for the credit card. The credit card company needs to know that you will be able to make the monthly payment.

No — there is not a limitation based upon which school you attend.

Yes — it is never a good idea to max out your credit card, even if the credit limit is very low. As a general rule, never use more than 10%-20% of the credit limit. You can make payments before the statement date to help keep your statement balance low.

You should work hard to make sure you make payments on time every month. A missed payment will lead to a late fee. It could also lead to interest accruing on the balance and ultimately a negative mark on your credit report.

When you graduate from college and get a job, you should (if you used your card wisely) have a good credit score. At that time, you will have plenty of options available to you.

Brynne Conroy
Brynne Conroy |

Brynne Conroy is a writer at MagnifyMoney. You can email Brynne at brynne@magnifymoney.com

TAGS:

College Students and Recent Grads, Reviews

Wells Fargo Student Credit Card Review: 3% Cash Back

Editorial Disclaimer: The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

Advertiser Disclosure

Wells Fargo has a student credit card — but applying online is only available to people who already have an existing relationship (a checking account) with the bank. The card has no annual fee, which we like a lot. If you pay your monthly cellphone bill with the card, you get free cellphone protection insurance, with generous coverage up to $600 per incident (subject to a $25 deductible and limited to $1,200 per year). There is a decent cash back intro bonus — you can earn 3% on gas, grocery, and drugstore spending for the first six months. However, the rest of the card leaves us underwhelmed. A steep 3% foreign transaction fee makes traveling abroad more costly than it needs to be. A flat 1% cash back rate is very low. And with interest rates up to 21.90% this is not a cheap way to borrow.

Wells Fargo Cash Back College℠ Card

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On Wells Fargo’s Website

Wells Fargo Cash Back College℠ Card

Annual fee
$0
Cashback Rate
up to 3%
APR
11.90%-21.90%
Credit required
Fair Credit
  • Build Credit history while you are in college
  • Earn 3% cash back on gas, grocery and drugstore net purchases (purchases minus returns/credits) for 6 months and 1% cash back on all other net purchases.
  • Earn unlimited cash rewards with no complicated calculations, no minimum purchase requirements and no expiration dates.
  • Flexible rewards redemption options. Cash rewards are redeemed in $25 increments and you can choose to have them automatically deposited into your Wells Fargo savings account or apply rewards as a credit to a qualifying Wells Fargo product. Request a paper check or redeem in $20 increments at a Wells Fargo ATM with a Wells Fargo Debit or ATM card. Redeem rewards for travel, gift cards, and more
  • Extra cash rewards earning potential and deals at your favorite stores when you shop the Earn More Mall®
  • Free access to Wells Fargo Online® credit education and tools

How the Card Works

In order to apply online, you need to be an existing Wells Fargo customer — which means you should have a checking account. (Note: If you have a Wells Fargo student checking account, you could probably get a much better deal somewhere else, especially from internet-only banks — you can find our list of the Best Online Checking Accounts here — which pay much higher interest rates and charge much lower fees than Wells Fargo.)

You can still apply for the Wells Fargo student card if you don’t have a checking account with them, but you will need to go to a branch in person to apply for the card. Just be prepared for them to try to sell you a checking account while you’re there.

The credit card is fairly straightforward. It has no annual fee, and it offers a mediocre cash back rewards program. During the first six months, you will earn 3% cash back for all gas, grocery, and drugstore purchases. There is no limit to the bonus. However, you only earn the bonus cash back at merchants which are coded as gas stations, drugstores, or grocery stores. If you buy your gas at Costco or your groceries at Wal-Mart, you will not get the bonus — because these “big box” retailers do not have that merchant code.

With all other purchases, you will earn 1% cash back. After the six-month intro period, all of your purchases will get you 1% cash back.

Our favorite feature is the free cellphone insurance. If you pay your monthly cellular telephone bill with your Wells Fargo credit card, you will get up to $600 of protection (with a $25 deductible). This is great coverage for damage or theft of your cellphone, and you can make a claim up to two times each year. Just remember that this does not cover lost phones. This is a great, free way to protect your phone and avoid the financial pain of replacing or buying a new phone after an accident.

Like most student credit cards, Wells Fargo’s is a very expensive way to borrow. In fairness, Wells Fargo does offer a range of APRs (from 11.90% to 21.90%). However, given that most college student will have no or limited credit history, they can expect to pay much closer to 21.90%.

And if you are looking to study abroad or backpack across Europe, your Wells Fargo card is an expensive way to do it. With a 3% foreign transaction fee, the costs of using your card abroad could add up quickly.

How to Qualify for the Card

This card is for college students. However, you will need to have sufficient income to pay your bill each month — so be prepared during the application process to be asked about where you study and how much you make from campus (or other) jobs. Because this card is targeting college students, you are not expected to have a long history of credit, a great score, or high income.

However, if you have already defaulted or missed payments on other accounts, you will likely find it difficult to get approved at Wells Fargo. This card is targeting people who are new to credit, not people with bad credit histories. And if you don’t have any income (or just an allowance from your parents), you will also find it difficult to be approved.

What We Like About the Card

Although this is a relatively simple credit card, there are two standout features to the card.

No annual fee.

We strongly believe that building your credit while in college should be free. Fortunately, this card charges no annual fee — making the card a safe choice. So long as you pay your statement balance in full and on time every month (avoiding interest charges), the card can be completely free.

Free cellular phone coverage.

This feature is unique — and a great asset for college students. So long as you make your monthly cellphone payment with your Wells Fargo credit card, you will get free cellphone coverage. You can get up to $600 (with a $25 deductible) if your cellphone is stolen or damaged. You can make up to two claims per year, for up to $1,200. We know that every college student has a phone — and wants to avoid the steep expense of fixing a broken phone or replacing a stolen phone. This insurance policy is a great feature.

Rewards (Kind Of)

You have the opportunity to earn cash back. We don’t think you should select a credit card based upon cash back — and Wells Fargo does not pay the best cash back rate on the market. But it is still a nice bonus to have.

What We Don’t Like About the Card

You have to be a Wells Fargo customer to apply online.

If you do not have a checking account, you will need to go to a Wells Fargo branch, where they will likely try to sell you a checking account. Because of this feature, Wells Fargo is really limiting the card to their existing customers.

Very high interest rates.

Credit cards come with high interest rates. Wells Fargo is not alone (in fact, the low end of its APR range is actually better than a lot of the competition). However, the rates are still double-digit. And if you end up going into debt, interest expenses will be high.

“Gotcha” fees are very high.

If you miss a payment, expect to pay up to $37. If you travel overseas, you will be hit with a 3% foreign transaction fee. And cash advance fees are equally painful. If you make a purchase in the U.S. (and pay it off in full and on time), you will get a good deal. Any other purchase or mistake will cost you dearly.

Alternatives to the Card

Wells Fargo offers a decent student credit card. But it does not offer the best cash back rewards, and it charges a steep foreign transaction fee. Here are some other options.

If You Want to Earn More Rewards

If you want to earn more cash back, Discover is our favorite option. Discover it® for Students does not charge an annual fee and also provides free access to your FICO score. And it does something we really like: it offers a “Good Grades Reward.” You will get $20 cash back each school year your GPA is 3.0 or higher for up to the next 5 years. That is on top of a cash back rewards program that pays 5% cash back in rotating categories each quarter like Amazon.com, restaurants, ground transportation and more, up to the quarterly maximum each time you activate. Plus, unlimited 1% cash back on all other purchases. And you can get a dollar-for-dollar match of all the cash back you’ve earned at the end of your first year, automatically.

If You Want to Travel Abroad

If you want to travel abroad, you should find a Visa or MasterCard option that does not charge a foreign transaction fee or annual fee. Capital One does just that with its Journey Student credit card. In addition to no annual fee and no foreign transaction fees, you can earn up to 1.25% cash back. You earn 1% when you spend, and another 0.25% if you make your payment on time.

Bottom Line: Who Benefits Most from the Card

If you are a college student and existing Wells Fargo checking account customer, this could be a good option. By charging no annual fee, it is cheap and easy to build your score. And with the cellphone benefit on top, you can get some great value. If your goal is to earn rewards or travel abroad, there are better options out there.

FAQs

Yes, you will need to demonstrate that you have income in order to qualify for the credit card. The credit card company needs to know that you will be able to make the monthly payment.

No — there is not a limitation based upon which school you attend.

Yes — it is never a good idea to max out your credit card, even if the credit limit is very low. As a general rule, never use more than 10%-20% of the credit limit. You can make payments before the statement date to help keep your statement balance low.

You should work hard to make sure you make payments on time every month. A missed payment will lead to a late fee. It could also lead to interest accruing on the balance and ultimately a negative mark on your credit report.

No, you do not need to be an existing Wells Fargo customer. However, only existing Wells Fargo customers can apply online. Otherwise, you will need to go to a branch to apply.

Brynne Conroy
Brynne Conroy |

Brynne Conroy is a writer at MagnifyMoney. You can email Brynne at brynne@magnifymoney.com

TAGS:

College Students and Recent Grads, Reviews

Review: Citi ThankYou Preferred Card for College Students

Editorial Disclaimer: The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

Advertiser Disclosure

Citi ThankYou Preferred Card for College Students is a decent credit card that can help you build your credit history and earn rewards without having to pay an annual fee. It has a nice bonus offer (2,500 points after spending $500 in the first three months) and has a decent ongoing rewards proposition (2 points on restaurant and entertainment purchases, with 1 point on everything else). Unfortunately, ThankYou points don’t have great redemption value, and Citi charges a 3% foreign transaction fee when you use the card overseas. And with a high APR range of 14.99%-24.99%, you would want to avoid borrowing on this card.

 

Citi ThankYou® Preferred Card for College Students

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On Citibank’s Website

Citi ThankYou® Preferred Card for College Students

Annual fee
$0
Rewards
up to 2 points per dollar spent
APR
14.99%-24.99%
Credit required
Good Credit
  • Earn 2,500 bonus ThankYou® Points after spending $500 within the first 3 months of cardmembership.
  • 2 ThankYou® Points per dollar spent on purchases for dining at restaurants and entertainment.
  • 1 ThankYou® Point on other purchases.
  • Points earned with this card do not expire and there is no limit to the amount of points you can earn.
  • Travel with ease and enjoy global acceptance with Chip Technology
  • No annual fee*

How the Card Works

This credit card charges no annual fee and reports to all three credit reporting agencies. If you handle the card responsibly, you should be able to build your credit history while in school and have a good credit score by the time you graduate. We recommend using the credit card every month, but never spending more than 10%-20% of the credit limit. Make sure you pay your statement balance in full and on time every month — and you will see your score improve over time.

The card comes with an intro offer. You will be charged 0% interest on purchases for the first seven months, and there is no retroactive interest penalty (this is not deferred interest). If you were already planning on making a big purchase, the 0% interest rate can help you minimize or reduce the cost of borrowing. However, you should be careful. Sometimes a 0% purchase rate can encourage people to spend more than they should — and you don’t want this to be a temptation to go into debt. After the intro offer, the interest rate increases dramatically, to a high double-digit rate. Student cards are great ways to build your credit, but they are terrible ways to borrow money.

With this card, you have the chance to earn ThankYou points from Citibank. With ThankYou, you can turn your points into gift cards or cash, or even use the points to book travel. ThankYou points are not particularly valuable. Here are a few examples of how ThankYou points can be redeemed:

  • For cash back: 100 points = $0.50, minimum redemption is 10,000 ($50) or 20,000 ($100).
  • For a statement credit: 100 points = $0.50, minimum redemption is 2,000 points ($10).
  • For gift cards: you can get up to 100 points = $1 (although it can vary by gift card), minimum redemption is 2,500 points ($25).
  • You can transfer your points to airline and hotel partners. However, as a college student, you might not have a lot of frequent flier miles, making this option a waste.

You can earn 2,500 ThankYou points if you spend $500 within the first three months of opening the card. In addition, you will earn 2 points on purchases for dining at restaurants and 1 ThankYou point on all other purchases. If you use those points for cash, you are only getting 0.5% on your everyday purchases — a pretty lousy deal. You can do much better elsewhere.

How to Qualify for the Card

Citi is targeting students with this card, which means they do not expect you to have excellent (or any) credit. However, they do expect that you will have a job and income. You need to be able to prove that you can afford to make your monthly payment on time, and a parental allowance is not sufficient.

Citi will likely approve people with a thin or no credit history. However, if you already have negative items on your credit report — like missed payments or unpaid medical or mobile phone bills — it could be harder to get approved. If that is the case, you might need to start your credit-building journey with a secured credit card.

What We Like About the Card

No annual fee.

Students should not have to pay a fee to build their credit score. Fortunately, with Citi there is no annual fee. And so long as you pay your statement balance in full and on time every month, you will never pay any interest either.

A nice ThankYou bonus offer.

You can earn 2,500 bonus points when you spend $500 within the first three months of opening the card. If you turn that into cash, it would be worth $12.50. With some gift cards, you could get up to $25 of value. That is not terribly exciting — but it is still free money.

What We Don’t Like About the Card

The ongoing rewards proposition is weak.

For most college students, cash is king — and earning cash back is a nice benefit of a credit card. Cards from competitors can earn from 1.25% up to 5% cash back (in some categories). If you use your ThankYou points for cash, you will only get 50 cents for every 100 points earned. Plus, cash back can only be redeemed in increments of $50.

There is a foreign exchange fee.

If you plan on studying abroad, a credit card is very useful. Unfortunately Citi will charge you 3% every time you use your card abroad — making this the wrong card for international travel.

The interest rate is high.

After the intro period is over, you will be stuck with a high, double-digit rate. Unfortunately that is the case with most student credit cards — so you would be very wise to avoid credit card debt completely.

Alternatives to the Card

We like that the Citi card has no annual fee. However, if you want rewards or a card for overseas travel, there are much better options out there. Here are two of our favorites.

If You Want to Earn More Rewards

If you want to earn more cash back, Discover is the best option. The Discover it card for students does not charge an annual fee and also provides free access to your FICO score. But it does something we really like: It offers a $20 cash back bonus every year (for up to five years) for good grades. If you get a 3.0 GPA or higher, you will get a $20 bonus. That is on top of a cash back rewards program where you can earn 5% cash back in rotating categories each quarter like Amazon.com, restaurants, ground transportation and more, up to the quarterly maximum each time you activate. Plus, unlimited 1% cash back on all other purchases. And you can get a dollar-for-dollar match of all the cash back you’ve earned at the end of your first year, automatically.

If You Want to Travel Abroad

If you want to travel abroad, you should find a Visa or MasterCard option that does not charge a foreign transaction fee or annual fee. Capital One does just that with its Journey Student credit card. In addition to no annual fee and no foreign transaction fees, you can earn up to 1.25% cash back. You earn 1% when you spend, and another 0.25% if you make your payment on time.

Bottom Line: Who Benefits Most from the Card

If all you care about is building credit, and all of your spending is in the U.S., this is a good card. With no annual fee, Citi reports to all three credit bureaus — which should help you build your score quickly. However, if you want to earn rewards or travel overseas, you can find better deals elsewhere.

Student Credit Cards: FAQs

A student card is a credit card specially designed by a lender to get college students started with credit. The major difference between a student credit card and a regular credit card is that the student card will likely have a higher interest rate. Regular cards tend to average about 15% annual interest. In a recent MagnifyMoney study, we found the average student credit card carries an interest rate of 21.4%.

Your goal with your student credit card is to build your credit so that by the time you graduate, you have a healthy credit score in the high 600s to mid 700s. That way, when you graduate, you’ll be in a great position to make larger purchases like a new car or your first home. At that point you may actually want to earn rewards, and you’ll qualify for the best cards because you have a great score.

You should really only get a credit card if you want to build your credit score, not because you need extra money to make ends meet. If you can’t afford your monthly expenses as it is, a credit card might only make things worse.

The easiest strategy is this: Set up one recurring bill (like your Netflix or Spotify account) on your card. And pay it off in full each month. Follow that advice while you’re in school and you will absolutely graduate with a great credit score.

You can still build up your credit without having to open a card on your own. Ask you parents if you can become an authorized user on their account. All of their good credit behavior will be reported on your credit report as well. Also, consider opening a secured credit card. It’s a tool that’s meant precisely to help build credit but doesn’t have the same risks as a regular credit card. Read more about secured cards here.

Lindsay VanSomeren
Lindsay VanSomeren |

Lindsay VanSomeren is a writer at MagnifyMoney. You can email Lindsay here

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College Students and Recent Grads, Reviews

BankAmericard Credit Card for Students Review: 15 Month Balance Transfer Offer

Editorial Disclaimer: The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

Advertiser Disclosure

The BankAmericard Credit Card for students is a plain vanilla card. There is no annual fee, which we like. But there are also no rewards (neither cash back nor miles). And there is a foreign transaction fee of 3%, making this an expensive way to travel abroad. The only place where this card really shines: its balance transfer offer. If you already have credit card debt on another card, you might want to take advantage of the fantastic 0% for 15-month balance transfer option, which is the longest balance transfer we have found for students. We certainly hope you don’t have credit card debt — but, if you do, this card could help you get out of it faster.

BankAmericard® Credit Card for Students

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On Bank Of America’s Website

BankAmericard® Credit Card for Students

Annual fee
$0
APR
12.74%-22.74%
Credit required
Fair Credit, Limited Credit History
  • 0% for 15 billing cycles: Applies to purchases and to any balance transfers made within 60 days of opening your account
  • $0 Intro Balance Transfer fee: Applies to balance transfers made within 60 days of opening your account. After that, the fee for future balance transfers is 3% (min. $10).
  • Fixed payment due date so you'll always know when your payment is due
  • Mobile banking, text or email alerts to keep you on top of your finances, quick access to your account information with text banking
  • ShopSafe® - add an extra layer of protection when you shop online
  • Overdraft protection - An optional service to help prevent declined purchases, returned checks or other overdrafts when you link your Bank of America® checking account to your credit card
  • $0 Liability Guarantee

How the Card Works

This is a very simple credit card. There is no annual fee, and the card does not offer rewards. Because the card reports to all three credit bureaus, it is a good way for you to build your credit score and credit history.

The card does come with an intro offer: 0% APR for the first 15 months on balance transfers that are made within 60 days of opening the card. There is also no balance transfer fee during the 60 days, after it will increase to 3%. If you have already built up credit card debt with a bank other than Bank of America, this can be an effective way to reduce your interest rate and get out of debt faster. However, after the 15 month intro offer, the APR will revert to the standard APR, which ranges from 12.74% to 22.74%.

Borrowing on credit cards is very expensive, and should be avoided at all costs — especially if you are a college student. But we know that some college students do already have credit card debt — and a 15-month 0% interest rate can help save a lot of money. If you currently have a $2,000 balance on your card with a 24% interest rate, you would be paying up to $560 of interest if you make only the minimum payment. By choosing the BankAmericard 15-month balance transfer offer, you can save $560 in interest and use it to pay off your debt.

Other than the balance transfer offer, the card has standard credit card benefits. You will have a chip, although it will be chip-and-signature instead of chip-and-pin, which can make using the card overseas more difficult. You will also have the standard $0 fraud liability guarantee that comes with all Bank of America cards.

How to Qualify for the Card

This card is targeting college students — which means Bank of America does not expect you to have excellent (or any) credit. You will need a job with income. It can be a part-time campus job, but it can’t be an allowance from your parents. The bank needs to know that you can afford to make the credit card payments with your own money.

Limited or no credit history is fine. However, if you already have missed payments and collection items (for example, from doctor bills), it could be much more difficult to get approved. If you have already made some mistakes with credit — you should consider a secured credit card instead.

What We Like About the Card

Although this is a very simple card, there are a few features that we really like.

No annual fee.

When making a student credit card recommendation, we believe the most important consideration is avoiding an annual fee. Fortunately, with this card, you will never need to pay an annual fee.

Great balance transfer option.

If you have already built debt on other credit cards, this card has the longest balance transfer that we could find for college students. You can get a 0% APR for 15 months, with no balance transfer fee within 60 days of opening the card. If used wisely, this balance transfer can help you get out of debt much faster. But, before getting another card, you really need to ask yourself how you got into debt in the first place — and don’t take another card unless you are certain that your budget has been solved and you can focus on reducing your debt.

What We Don’t Like About the Card

High interest rate after the 0% intro offer.

The standard purchase APR is high. This is not unique to Bank of America — all student credit cards offer high interest rates. But that means you should avoid borrowing money on a credit card. It is a great tool for shopping online and renting a car — but a terrible way to borrow money.

High foreign transaction fee.

If you plan on studying abroad or backpacking through Europe, this card charges a steep 3% foreign transaction fee. This can really add up, and there are other cards out there that do not charge the fee.

No rewards.

Although we do not think rewards are particularly important for student cards (because the limits are small to begin with), it is rather disappointing that this card offers no rewards at all. As a student, you should be earning at least 1.25% — and could be earning more (including 1.5% if you take out the BankAmericard Travel Rewards for Students).

Alternatives to the Card

If You Want to Earn More Rewards

If you want to earn more cash back, Discover is the best option. The Discover it card for students does not charge an annual fee and also provides free access to your FICO score. But it does something we really like: It offers a $20 cash back bonus every year (for up to five years) for good grades. If you get a 3.0 GPA or higher, you will get a $20 bonus. That is on top of a cash back rewards program where you can earn 5% cash back in rotating categories each quarter like Amazon.com, restaurants, ground transportation and more, up to the quarterly maximum each time you activate. Plus, unlimited 1% cash back on all other purchases. And you can get a dollar-for-dollar match of all the cash back you’ve earned at the end of your first year, automatically.

If You Want to Travel Abroad

If you want to travel abroad, you should find a Visa or MasterCard option that does not charge a foreign transaction fee or annual fee. Capital One does just that with its Journey Student credit card. In addition to no annual fee and no foreign transaction fees, you can earn up to 1.25% cash back. You earn 1% when you spend, and another 0.25% if you make your payment on time.

Bottom Line: Who Benefits Most from the Card

The only reason to get this credit card is if you already have credit card debt, and you need a balance transfer to help you get out of debt faster. With 0% interest for the first 15 months, this is the longest balance transfer targeting students that we could find and is a good tool to save serious money. If you are looking to build credit and earn rewards along the way, there are much better options out there.

Student Credit Cards: FAQs

A student card is a credit card specially designed by a lender to get college students started with credit. The major difference between a student credit card and a regular credit card is that the student card will likely have a higher interest rate. Regular cards tend to average about 15% annual interest. In a recent MagnifyMoney study, we found the average student credit card carries an interest rate of 21.4%.

Your goal with your student credit card is to build your credit so that by the time you graduate, you have a healthy credit score in the high 600s to mid 700s. That way, when you graduate, you’ll be in a great position to make larger purchases like a new car or your first home. At that point you may actually want to earn rewards, and you’ll qualify for the best cards because you have a great score.

You should really only get a credit card if you want to build your credit score, not because you need extra money to make ends meet. If you can’t afford your monthly expenses as it is, a credit card might only make things worse.

The easiest strategy is this: set up one recurring bill (like your Netflix or Spotify account) on your card. And pay it off in full each month. Follow that advice while you’re in school and you will absolutely graduate with a great credit score.

You can still build up your credit without having to open a card on your own. Ask you parents if you can become an authorized user on their account. All of their good credit behavior will be reported on your credit report as well. Also, consider opening a secured credit card. It’s a tool that’s meant precisely to help build credit but doesn’t have the same risks as a regular credit card. Read more about secured cards here.

Brynne Conroy
Brynne Conroy |

Brynne Conroy is a writer at MagnifyMoney. You can email Brynne at brynne@magnifymoney.com

TAGS:

College Students and Recent Grads, Reviews

Discover it for Students Review: Earn Cash Back and Build Credit

Editorial Disclaimer: The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

Advertiser Disclosure

If you are a student, a credit card can be a great way to build your credit score. It can also be a useful tool when shopping online or renting a car. But credit cards also come with a temptation — to spend too much. We recommend getting a student credit card as long as: (a) there is no annual fee, and (b) you have the self-discipline to pay your statement balance in full every month and use the card wisely.

Discover it is one of our favorite credit cards for students — largely because it charges no annual fee, offers generous cash back and rewards the right behavior. There are some other nice perks — like a free FICO score.

Discover it® for Students

APPLY NOW Secured

On Discover’s Website

Discover it® for Students

Annual fee
$0
Cashback Rate
up to 5%
APR
13.74%-22.74%
Credit required
Fair Credit, New to Credit
  • Get a dollar-for-dollar match of all the cash back you’ve earned at the end of your first year, automatically.
  • Earn 5% cash back in rotating categories each quarter like Amazon.com, restaurants, ground transportation and more, up to the quarterly maximum each time you activate.
  • Good Grades Rewards: $20 cash back each school year your GPA is 3.0 or higher for up to the next 5 years.
  • No annual fee. No late fee on first late payment. No APR change for paying late.
  • Get 100% U.S. based customer service & your FICO® Credit Score for free on monthly statements, on mobile & online.
  • Freeze It® on/off switch for your account that prevents new purchases, cash advances & balance transfers in seconds.
  • 0% intro APR on purchases for 6 months, then the standard variable purchase APR of 13.74% - 22.74%.
  • Click "APPLY NOW" to see rates, rewards, FICO® Credit Score terms, Cashback Match™ details & other information.

What We Like About the Discover it for Students Card

You can easily build your credit history and score.

This credit card reports to all three credit bureaus, which will help you establish credit and improve your score with wise use over time. Our tip: never use more than 10%-20% of the available credit, so you keep your utilization low. Pay your bill on time every month (ideally, automate the payment). By the time you graduate, you should have an excellent score.

No annual fee.

We believe that you should be able to build your credit score without paying an annual fee. Fortunately, Discover does not charge an annual fee on its student cards. Discover does not charge an annual fee on any of its cards.

You will be able to see your FICO score for free.

It is getting much easier to get your credit score for free — you do not need to take out a credit card to have access. However, we do like that you will be able to see your FICO score on your statement and online. This will help you keep tabs on your credit as you learn about it and (hopefully) see it increase over time. Having a good credit score when you graduate can be very helpful – especially if you want an auto loan, mortgage or apartment.

Interesting feature: rewards for good grades.

This credit card also has a sweet bonus: you can get $20 cash back each school year your GPA is 3.0 or higher for up to the next 5 years. This is a nice feature to reward what really matters in college — getting good grades and graduating.

And, yes — there is cash back.

Discover invented the concept of cash back in the 1980s, and they are regularly generous with the rewards that they offer. On this card, you can earn 5% cash back in rotating categories each quarter like Amazon.com, restaurants, ground transportation and more, up to the quarterly maximum each time you activate. Plus, unlimited 1% cash back on all other purchases.

There is another bonus.

At the end of your first year as a cardholder, you will get a dollar-for-dollar match of all the cash back you’ve earned – automatically. That will be a really nice one year anniversary gift.

Watch Out for These Pitfalls

Interest rates are not low.

This is not unique to Discover — but most student cards charge higher interest rates because students are higher risk. Your goal with a student card is to build your credit history — not to go deeper into debt. So long as you pay your statement balance in full and on time every month, you should not have to worry about the interest rate.

Limited acceptance overseas — especially in Europe.

If you plan on studying abroad or backpacking across Europe, you might find it difficult to use your Discover card. In Asia, you get better coverage with JCB (Japan) and China UnionPay. However, in Europe you will be relying upon the Diners Club International network, which is limited.

Who the Card is Best For

If you are a responsible student looking to build your credit while earning rewards along this way, this card could be appropriate for you. With no annual fee and up to 5% cash back, this is a great first card.

Alternatives

While the Discover it for Students card is a great choice, there may be better options depending on your situation.

Spend a lot at Gas Stations and Restaurants?

If you’re a commuter student, the Discover it Chrome for Students card may make more sense. This card offers many of the same perks as the Discover it for Students card, like the Good Grades Rewards program, no annual fee, and a cash back match at the end of your first year. But the Discover it Chrome offers a higher 2% cash back rewards rate on gas and restaurant purchases, up to $1,000 in combined purchases per quarter. After that, you’ll earn 1% cash back — and you don’t need to activate these rewards categories like with the Discover it for Students card.

If You Want to Travel Abroad

If you plan on traveling abroad, consider the Capital One Journey Student Credit Card. Because the card is a Visa, it will have more acceptance overseas. And Capital One does not charge foreign transaction fees – making this a great travel companion. In addition, you can earn 1% cash back on all purchases, plus an extra 0.25% cash back when you pay your bill on time.

Student Credit Cards: FAQs

A student card is a credit card specially designed by a lender to get college students started with credit. It helps them build a relationship with customers early on and helps you build your credit score.

The major difference between a student credit card and a regular credit card is that the student card will likely have a higher interest rate. That’s because the bank has no way to prove you are a reliable borrower yet since you have little to no credit history. Regular cards tend to average about 15% annual interest. In a recent MagnifyMoney study, we found the average student credit card carries an interest rate of 21.4%.

Your goal with your student credit card is to build your credit so that by the time you graduate, you have a healthy credit score in the high 600s to mid 700s. That way, when you graduate, you’ll be in a great position to make larger purchases like a new car or your first home. At that point you may actually want to earn rewards, and you’ll qualify for the best cards because you have a great score.

You should really only get a credit card if you want to build your credit score, not because you need extra money to make ends meet. If you can’t afford your monthly expenses as it is, a credit card might only make things worse.

Let’s say you charged $300 to your student card for books at the start of the semester. If you made a minimum monthly payment of $9, it would take four years and four months to pay off a card with a 21.4% annual percentage rate (APR). At that point you would have paid a total of $460, assuming your books were your first and only charge on the card.

The easiest strategy is this: set up one recurring bill (like your Netflix or Spotify account) on your card. And pay it off in full each month. Follow that advice while you’re in school and you will absolutely graduate with a great credit score.

You can still build up your credit without having to open a card on your own. Ask your parents if you can become an authorized user on their account. All of their good credit behavior will be reported on your credit report as well. Also, consider opening a secured credit card. It’s a tool that’s meant precisely to help build credit but doesn’t have the same risks as a regular credit card. Read more about secured cards here.

Lindsay VanSomeren
Lindsay VanSomeren |

Lindsay VanSomeren is a writer at MagnifyMoney. You can email Lindsay here

TAGS:

College Students and Recent Grads, Reviews

Discover it Chrome for Students Review: Build Credit and Earn Cash Back

Editorial Disclaimer: The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

Advertiser Disclosure

Discover has created one of our favorite credit cards for students, the Discover it® Chrome for Students. You can build your credit without worrying about an annual fee. You can get a $20 cash back bonus every year if your GPA is above 3.0. And you can earn some serious cash back. Discover pays 2% on spending at gas stations and restaurants, up to $1,000 in combined purchases each quarter. Plus you can earn 1% cash back on all other purchases. There is also a generous bonus for new customers: At the end of your first year, all of the cash back that you earned will be matched.

Discover it® chrome for Students

APPLY NOW Secured

On Discover’s Website

Discover it® chrome for Students

Annual fee
$0
Cashback Rate
up to 2%
APR
13.74%-22.74%
Credit required
Fair Credit, New to Credit
  • Get a dollar-for-dollar match of all the cash back you've earned at the end of your first year, automatically.
  • 2% cash back at restaurants and gas stations on up to $1,000 in combined purchases every quarter - no sign-ups needed. 1% cash back on all your other purchases.
  • Good Grades Rewards: $20 cash back each school year your GPA is 3.0 or higher for up to the next 5 years.
  • No annual fee. No late fee on first late payment. No APR change for paying late.
  • Get 100% U.S. based customer service & your FICO® Credit Score for free on monthly statements, on mobile and online.
  • Freeze It® on/off switch for your account that prevents new purchases, cash advances & balance transfers in seconds.
  • 0% intro APR on purchases for 6 months, then the standard variable purchase APR of 13.74% - 22.74%.
  • Click "APPLY NOW" to see rates, rewards, FICO® Credit Score terms, Cashback Match™ details & other information.

How the Card Works

Discover is famous for cash back. In the 1980s, when all credit cards charged an annual fee and offered no rewards, Discover changed everything by offering a credit card with no annual fee that actually paid its customers cash back. Discover has continued to innovate and has one of the better cards on the market for college students.

Discover it chrome charges no annual fee and reports to all three credit bureaus. As a college student, building your credit history is the primary reason to get a credit card. And you should never have to pay an annual fee to build your credit score. To get the best results, try to keep your balance low and make your payment in full and on time every month.

Discover has one of the most flexible cash back programs on the market. With most credit cards, you have to earn a minimum amount of cash back before you can redeem. Fortunately, that is not the case with Discover. Even if you only have $1 of cash back, you can redeem it. And with this card, there are multiple ways to earn.

If you spend a lot of money at gas stations and restaurants, this card is a great choice. You can earn 2% cash back at gas stations and restaurants on up to $1,000 in combined purchases each quarter. In addition, you get 1% cash back on all other purchases.

Our favorite feature is that Discover offers a bonus: cash back for good grades. For the next five years, every year your GPA is 3.0 or higher, you can get $20 cash back.

On top of all of this, Discover will match whatever cash back you earn during the first year. To do this, Discover will add up all the cash back you’ve earned on your student card and match every bit of it at the end of the first year.

All of this put together can make the card very lucrative. Imagine you spend $300 a month — with $200 of it at gas stations and restaurants. During the first year:

  • $200 a month of spending in gas stations and restaurants would earn $48 cash back during the first year.
  • $100 a month of spending in all other categories would earn $12 cash back.
  • Altogether, you will have earned $60 cash back. Discover would then match that cash back at the end of your first year, meaning you could earn another $60.
  • And, if you have a 3.0 or higher GPA, you could get the “Good Grade Reward” on top.

There are a few other nice perks that come with the card. You will get a 0% intro APR for the first six months on purchases. You will have access to your FICO score for free, so that you can watch your score evolve. And Discover has invested heavily in some nice features, including the ability to freeze your account with the push of the button if you don’t want it used (for example, while traveling).

How to Qualify for the Card

Discover knows that you are a college student — so you do not need to have a long credit history or a high credit score. You will need to have a job with income, so that you can prove that you can afford the card.

Having a limited credit history is just fine. However, it will be much more difficult to get approved if you have missed payments or have collection items. Limited history is good, but bad history is difficult.

What We Like About the Card

At MagnifyMoney, this is one of our favorite student credit cards. Here is why.

No annual fee.

When reviewing student credit cards, the first (and most important) thing we consider is the annual fee. Fortunately, Discover does not charge an annual fee on this card. You can build your credit with all three credit bureaus without worrying about fees.

Generous cash back (that rewards the right behavior).

Discover has always been a leader in cash back, and this card is no exception. 2% cash back at gas stations and restaurants is the highest rate we have found for college students. No other card that we could find offers $20 for good grades — and we like that Discover rewards a 3.0 GPA with extra cash back.

No foreign transaction fee.

The good news is that Discover does not charge a foreign transaction fee. Unfortunately, it can be difficult to use Discover in some parts of the world.

What We Don’t Like About the Card

Interest rates are not low.

This is not unique to Discover — but most student cards charge higher interest rates because students are higher risk. Your goal with a student card is to build your credit history — not to go deeper into debt. So long as you pay your statement balance in full and on time every month, you should not have to worry about the interest rate.

Limited acceptance overseas — especially in Europe.

If you plan on studying abroad or backpacking across Europe, you might find it difficult to use your Discover card. In Asia, you get better coverage with JCB (Japan) and China UnionPay. However, in Europe you will be relying upon the Diners Club International network, which is limited.

Alternatives to the Card

Discover it Chrome is one of our favorite cards — however, it is not for everyone. Here are some other options to consider:

If You Don’t Spend Money in Gas Stations or Restaurants

The 2% cash back sounds great — but if you don’t own a car and eat all of your meals in the dining hall, Chrome might not be your best bet. You actually might want to consider another card offered by Discover, the Discover it for Students. It has all of the benefits that we like in Chrome, including Good Grade Rewards, no annual fee, and a free FICO score. With this card, earn 5% cash back in rotating categories each quarter like Amazon.com, restaurants, ground transportation and more, up to the quarterly maximum each time you activate. Plus, unlimited 1% cash back on all other purchases. With rotating categories, there is a better chance that you can earn more cash back in a category where you spend money.

If You Want to Travel Abroad

If you want to travel abroad, you should find a Visa or MasterCard option that does not charge a foreign transaction fee or annual fee. Capital One does just that with its Journey Student credit card. In addition to no annual fee and no foreign transaction fees, you can earn up to 1.25% cash back. You earn 1% when you spend, and another 0.25% if you make your payment on time.

Bottom Line: Who Benefits Most from this Card

If you are a college student with good grades (3.0 GPA or higher) who wants to build your credit score and earn some cash back along the way, this is a good card. If you spend most of your money on gas and restaurants, this becomes a great card.

Student Credit Cards: FAQs

A student card is a credit card specially designed by a lender to get college students started with credit. The major difference between a student credit card and a regular credit card is that the student card will likely have a higher interest rate. Regular cards tend to average about 15% annual interest. In a recent MagnifyMoney study, we found the average student credit card carries an interest rate of 21.4%.

Your goal with your student credit card is to build your credit so that by the time you graduate, you have a healthy credit score in the high 600s to mid 700s. That way, when you graduate, you’ll be in a great position to make larger purchases like a new car or your first home. At that point you may actually want to earn rewards, and you’ll qualify for the best cards because you have a great score.

You should really only get a credit card if you want to build your credit score, not because you need extra money to make ends meet. If you can’t afford your monthly expenses as it is, a credit card might only make things worse.

The easiest strategy is this: Set up one recurring bill (like your Netflix or Spotify account) on your card. And pay it off in full each month. Follow that advice while you’re in school and you will absolutely graduate with a great credit score.

You can still build up your credit without having to open a card on your own. Ask your parents if you can become an authorized user on their account. All of their good credit behavior will be reported on your credit report as well. Also, consider opening a secured credit card. It’s a tool that’s meant precisely to help build credit but doesn’t have the same risks as a regular credit card. Read more about secured cards here.

Lindsay VanSomeren
Lindsay VanSomeren |

Lindsay VanSomeren is a writer at MagnifyMoney. You can email Lindsay here

TAGS:

College Students and Recent Grads, Retirement, Strategies to Save

Why the ‘Save 10% for Retirement’ Rule Doesn’t Always Work

Editorial Disclaimer: The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

Advertiser Disclosure

To keep saving simple, many retirement experts and financial planners tout a general 10% rule for most savers: If you start saving at least 10% of your income in your 20s, you should have plenty saved up by the time you’re ready to retire.

Why save for retirement?

Social Security might not be around to help you make ends meet in retirement; that’s even more likely for millennials and the cohorts that follow. With the nation’s current birth and death rates, it’s estimated that Social Security funds will be exhausted by 2034.

Whether or not the future retirees of America will have Social Security to rely on, their benefit check alone likely won’t be enough to meet all of their needs in retirement.

According to the U.S. Bureau of Labor Statistics, retired households need to bring an average $42,478 to meet their annual expenses.

And yet, as of March 2017, the average monthly Social Security benefit for retirees was $1,365.35, or about $16,384 annually. That’s only slightly more than the U.S. Census Bureau’s 2016 poverty threshold for two-person households 65 and older ($16,480). Even in households where two spouses are receiving Social Security income, that’s still less than $32,000 per year.

That’s why it’s so important for workers to set additional income aside during their working years. When Social Security falls short, those extra savings will be essential.

Who does the 10% retirement rule work best for?

It’s likely that 10% became the rule of thumb simply because it’s easy to remember and makes the mental math a lot easier. But it’s important to understand who the rule is targeting: younger workers.

Since younger workers have more time to let their money grow, they can afford to save a bit less in their early days. But the advice changes as workers’ savings windows narrow with age. A 40-something worker, for example, who never saved for retirement may be encouraged to save twice as much for retirement since they have a shorter timetable.

“Ten percent may be enough, it may not be enough, and it may even be too much,” depending on your age and financial picture, says Amy Jo Lauber, a certified financial planner in Buffalo, N.Y. Someone paying off student loans or high-interest credit cards simply may not be able to put away 10% of their income.

It gets increasingly complicated when you consider your personal income and ability to save as well as your retirement goals.

“Typically, younger clients do not have complex situations and can get by with simple strategies. Once there are competing priorities, such as saving for a home, kids, and kids’ college, then things get complicated and more sophisticated strategies are required,” says Howard Pressman, a certified financial planner and partner at Egan, Berger & Weiner.

As Pressman suggests, you might need to tweak the rule if you’re starting to stash away retirement funds at an earlier or later age or want to put more money away now for a more lavish retirement.

Timing is everything

This chart from JP Morgan’s 2017 Guide to Retirement demonstrates the power of saving early for retirement.

At a modest 6% annual growth rate, Consistent Chloe, a 25-year-old who puts away $5,000 a year until she reaches age 65 should have a retirement account balance of more than $820,000, according to the bank. And when all’s said and done, only $200,000 would have come out of her own pocket — the rest would have resulted from the power of compounding interest.

In comparison, Nervous Noah, a more timid 25-year-old saver, could put away the same $5,000 a year in a savings account earning far less annual interest on his cash. After the same 40-year period, he would only have a balance of $308,050.

Investing earlier can bring even greater success. If a person starts putting away $5,000 a year at 20, growing at 6%, their balance at 65 would be about $1,132,549, which we calculated using the U.S. Securities and Exchange Commission’s compound interest calculator. That’s more than $300,000 added to Consistent Chloe’s retirement balance for beginning just two years earlier.

The final balance at 65 drops below $1 million for anyone starting after 25. As you can see above, those who begin saving will have less and less to live on in retirement.

7 retirement savings tips

  1. Start early

The emphasis of this rule is starting early. The earlier you save, the more you can take advantage of compound interest.

“Compounding is earning interest on interest earned in prior periods and is the most powerful force in all of finance,” says Pressman. To make the most of this rule, start saving 10% of your income for retirement by the time you turn 25.
Start by maxing out your 401(k) or IRA contribution limits for the year. If you still have additional funds, it might be time to meet with a financial planner to find out how to best invest your surplus.

  1. Know your options

The best place to stash retirement savings is either an IRA or a 401(k). Your money simply won’t grow enough to beat inflation if you leave it in a low-interest-bearing account like a checking or savings account.

  1. Make debt and emergency savings a priority

“Before anyone starts focusing on retirement saving, the first thing they should do is to establish an emergency cash reserve. This is to protect them from a job loss, a health emergency, or even an expensive car repair,” says Pressman. He recommends saving three to six month’s worth of expenses in a savings account.

If placing 10% of your income in a retirement account is too much of an ask because you have more pressing financial obligations like higher-interest debts, or don’t earn enough to cover your expenses, you should address those before increasing your retirement contribution.

Generally speaking, if the interest rate on any debts you owe is higher than what you’d earn on your retirement savings, you’ll make more progress toward your financial goals by addressing the higher-interest debt first.

  1. Plan differently if you have irregular income

Lauber says those who are freelancing and cobbling together a living may need to put several financial policies in place to help them navigate with irregular income.

“The 10% rule works for them but only if other measures are in place for the immediate day-to-day needs,” says Lauber. You can still create a budget with irregular income, but you might need to approach retirement saving more aggressively when income is higher, and strategize your saving to compensate for months when income is nonexistent or low. Find more tips on how to manage irregular income here.

  1. Make the most of your match

Don’t leave free money on the table. If your employer offers to match your contribution, Kristi Sullivan, a certified financial planner with Sullivan Financial Planning in Denver, Colo., advises individuals to save as much as your employer matches immediately or 6% if there is not a match. That way, you won’t miss out on free additions to your retirement nest egg.

  1. Automate your contribution

Out of sight, out of mind. Automate your retirement contribution to ensure you pay yourself first.

“Typically, once it’s done through payroll deduction, the person seldom misses it,” says Lauber.

  1. Check in regularly

Don’t just “set it and forget it.” Mark R. Morley, certified financial planner and president of Warburton Capital Management, stresses “clients must be ‘invested’ in their own plan.”

He says to check periodically on your retirement account and make adjustments where necessary. If you have a financial adviser, you may want to schedule regular progress meetings.

“When a client is engaged in their own plan and can see real results, we can work on the two variables that affect the retirement accounts: time and money,” says Morley.

Brittney Laryea
Brittney Laryea |

Brittney Laryea is a writer at MagnifyMoney. You can email Brittney at brittney@magnifymoney.com

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