Young college students aren’t exactly credit card happy these days. But credit card issuers and banks woo college students with attractive deals that are designed to put more plastic into backpacks.

Story Highlights

• Banks offer rewards for paying credit card bills on time.
• Some cards offer a range of rates based on creditworthiness; some student’s won’t qualify for a low 10.99% rate.
• Better rewards programs on credit cards mean higher interest rates.
• Choose a rewards card only if you pay the balance off in full each month.

Credit card issuers aren’t rushing campuses with t-shirts and freebies. But some issuers have rewards cards for college students and other deals.

If you’re a college student shopping for a credit card, it’s possible to find some better rates and terms than cards that were marketed to college students before card regulations went into place in February 2010, according to an analysis by CreditCards.com.

“Today’s student cards tend to have competitive rates and rewards,” said Matt Schulz, senior industry analyst for CreditCards.com.

A sampling indicated that the average student card interest rate is about 13.4% now, down from about 16% before the Credit CARD Act went into effect in February 2010, according to CreditCards.com.  The student card average is about 2 percentage points lower than the national average, as well.

The Credit Card Accountability Responsibility and Disclosure Act of 2009 put rules into place to protect young consumers.

Now, card issuers cannot send pre-approved offers to students who are younger than age 21 without the consumer’s consent. Consumers under 21 years old can qualify for credit cards if they have a source of income, such as a part-time job, or a co-signer who has the means to pay the bill

Card issuers cannot use gifts or goodies to market credit cards to students on campus or near campus and at school-sponsored events.

No surprise, perhaps, but only 14.4% of consumers ages 18 to 20 had opened at least one credit card in 2012. That compares to 33.6% in 2007, according to data from the Consumer Financial Protection Bureau Consumer Credit Panel.

But we are seeing more efforts now to market to college students by some issuers. Discover, for example, launched an offer for new student card members that includes an extra $20 bonus if their grade point average is 3.0 or equivalent or higher each year they are enrolled in school for the first five years after opening the account. The deal is for students who apply after July 23, 2015. Other rewards exist as well on purchases.

What should you look for when shopping for a credit card for college? Here are five tips:

1) Don’t get wowed by the signing bonus.

Yes, some credit cards are offering what’s seen as a signing bonus to college students.  The BankAmericard Cash Rewards Credit Card for Students, for example, has an online deal for a $100 bonus, if you make at least $500 in purchases in the first 90 days of opening your account.

How are you going to spend $500 on that card? Maybe, you’re thinking you’d charge your tuition?

Nope, won’t work here. I went online to the Bank of America site and asked that very question via an online chat.

The online rep’s answer: “Tuition fees wouldn’t be counted. Only purchases made at retail store or online are counted.”

Don’t be tempted to spend more than what’s within your budget to get a bonus.

2) Pay attention to the limits of 0% offers.

Student credit cards are offering some introductory rates of 0% on cards. But some of those intro offers can range from six months to 12 months. Many of the 0% offers are on purchases; only a few offer 0% on balance transfers.

When you get busy on campus with term papers and tests, it’s way to easy to forget that your 0% rate is no longer available at spring break.

3) Credit unions could have great rates for students, too.

Banks are trying to build long-term relationships with college students with some of these deals. But it’s wise to shop at credit unions, such as those connected to various universities, to see if you could get a lower credit card rate and a better deal.

The University of Michigan Credit Union, for example, has a Visa Platinum OptimUM card with a rate of 8.9% that’s offered to all credit union members. The rewards card version of this card has a rate of 12.9%. There is no annual fee and no charge for balance transfers.  But there is a 1% fee to convert foreign transactions into U.S. dollars.

4) Pay attention to fees and rates.

Some cards marketed to students do not have a penalty APR, meaning your annual percentage rate won’t go up for missing payments. But there might be other fees. Discover It Chrome for Students, which does not have a penalty interest rate, will waive your first late payment fee. But after that, the late payment fee can be up to $35.

You want to review potential late fees, as well as interest rates.

Rates on some cards could be variable rates and set to go up after the prime rate heads higher. It’s not a small point, especially since most economists expect the Federal Reserve to boost rates in the next few years.

The Capital One Journey Student Credit Card lists a rate of 19.8% but it’s a variable rate that would go up with the prime rate. The card does have a credit tracker to help students monitor their credit score, as well as other tools to help students use credit wisely. It also offers 1% cash back on purchases, plus an extra 0.25% cash back if payments are made on time.

You want to review potential late fees, as well as interest rates.

Rates on some cards could be variable rates and set to go up after the prime rate heads higher. It’s not a small point, especially since most economists expect the Federal Reserve to boost rates in the next few years.

The Capital One Journey Student Credit Card lists a rate of 19.8% but it’s a variable rate that would go up with the prime rate. The card does have a credit tracker to help students monitor their credit score, as well as other tools to help students use credit wisely. It also offers 1% cash back on purchases, plus an extra 0.25% cash back if payments are made on time.

Andrew K. Johnson, a spokesman for GreenPath Financial Wellness, a nonprofit credit counseling agency, said too often college students won’t shop for interest rates on credit cards. Instead, they’ll take whatever is offered. But it’s easy for debt to build when rates are higher and when students don’t effectively manage their money.

5) A wide range of interest rates can be given on student credit cards.

Your friend might qualify for super-low rate of 11% or so on a student credit card, but you might get a rate of 19% or 22% on some cards.

The Citi ThankYou Preferred Card for College Students, for example, offers a range of rates of 13.99% or 18.99% or 23.99% on purchases depending on your creditworthiness.

Again, those rates will vary with the prime rate. The card has a 0% intro rate on purchases for seven months from the date of opening the account. The penalty APR is up to 29.99%.

The keys to building a strong credit score are to keep credit card balances low and pay bills on time every time for a very long time, said Schulz at CreditCards.com. Experts say it’s best to sign up for mobile alerts to stay on top of when the bills are due, as well.

“The No. 1 job for anyone with a credit card is to pay your balance off as soon as you can,” Schulz said.

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