Wells Fargo Student Credit Card Drawbacks and Benefits

The financial puzzle facing all students is how to establish credit when they don’t have a credit history. One way is to apply for a credit card designed specifically for students. Typically these cards have lower credit limits with fewer requirements. This is perfect for the responsible student who wishes to begin establishing a credit history.

A credit history is the basis for all future financial transactions. A good (or bad) credit history will determine if you can obtain a mortgage, and if so, at what rate. You need credit history to make any major purchase or to lease an apartment. Even your future employer may check your credit rating.

Benefits of a Wells Fargo Student Credit Card

Wells Fargo has a credit card program designed for students. The Wells Fargo Student Credit Card is a no annual fee rewards program that will pay cash back on qualified purchases. For the first six months you earn 3% back on select purchases. After that (and on non-qualifying items) you earn 1%. This occasional boost is a nice perk for a college student. You can choose to have the reward ($25 minimum) deposited into your checking or saving account, or you can receive a credit on your credit card. And this can be set up automatically each time you hit the $25 minimum. No monitoring your rewards balance.

Along with your credit card Wells offers tools to help you budget and monitor your spending by using their My Money Map program. They also offer credit education courses online at Wellsfargo.com.

Drawbacks of a Wells Fargo Student Credit Card

There are good and bad aspects to any credit card. For the Wells Fargo Student Credit card, the drawbacks are few.

Unfortunately, the 3% cash back is only for a short six months. And even at 3% it is limited purchases. All others receive the typical 1%. While it is still ‘cash back’, a college student will have a hard time seeing any of that cash add up quickly. Coupled with the $25 minimum to receive your reward and it could be years before the average student meets those requirements.

If you don’t already have a credit rating or if you are not employed, you may need an adult co-signer. If you do have a credit rating, it must be at least 660 to qualify. The interest rate is higher on a Student Credit Card and will depend on your current creditworthiness. Late fees are also steep at $35.

The last disadvantage is not unique to Wells Fargo, but rather to credit cards in general. Obtaining your first credit card gives you the freedom to make purchases and payments on your own accord. This new found freedom sometimes is a challenge for students. It is easy to take on too much debt and the cost, between interest and late fees, can be high. This defeats the purpose of trying to establish a good credit rating.

If you don’t qualify for a Student Credit card, you may want to check into a secured credit card. These require an initial deposit which is held in a separate account. Should you miss a payment, the money is deducted from your account. As you establish a good payment history, you may qualify for an unsecured card and a return of your deposit.

Maintaining a good credit history is easy if you keep two things in mind. First, use credit judiciously. Don’t spend more than you can afford to pay. And second, do not miss a payment. Even one missed payment will lower your rating and it can take months, possibly years, to overcome the setback.