Capital One made a serious bid to capture more student spending Tuesday with the launch of a pair of no-annual-fee credit cards that reward students either with a solid flat cash-back rate on all purchases, or bonus cash back for purchases in popular student spending categories. But while the rewards-earning rates are an improvement over the issuer’s existing Journey Student Rewards card, they come with the same hefty interest rate.
The new Quicksilver Student credit card is a student version of Capital One’s Quicksilver Cash Rewards credit card and offers a flat 1.5% cash back on all purchases without limit. The Savor One Student credit card, meanwhile, offers 3% cash back on entertainment, dining, groceries, and streaming services, as well as 1% back on everything else. Cardholders also earn 8% back on purchases from concert and event ticket-vendor Vivid Seats through January 2023.
“Being new to credit and being able to enjoy rewards don’t have to be mutually exclusive,” said Daniel Mouadeb, head of Mainstreet Card, Capital One’s line of credit-building cards in a news release.
That benefit does come with a cost, however. Capital One’s student offerings charge a 26.99% annual percentage rate (APR), which is high. That APR is 6.74 percentage points higher than the average rate of 20.25% charged by all credit cards, according to our analysis of credit card interest rates. In fact, Capital One’s student card rate is 8.26 percentage points higher than the 18.73% average APR for the student cards we track in our database. Students who want to cash in on their purchases will need to be vigilant about paying off their balances in full every month. Otherwise, the interest costs will soon swamp the rewards earnings.
Capital One isn’t the only issuer to reward students for their spending. The Chase Freedom Student card offers 1% cash back on all purchases, while the Discover it Chrome for Students offers a 2% return on the first $1,000 spent each quarter at gas stations and restaurants (including delivery and takeout). The nearest competitor to Capitol One’s offering may be the Bank of America Travel Rewards for Students card, which earns 1.5 points per dollar on all purchases. These points can be redeemed at a rate of 1 cent each when used for travel purchases, but worsen significantly to a value of just 0.6 cents each when traded in for cash back.
Capital One’s new cards join one other student card in the issuer’s lineup. The Journey card offers up to 1.25% in cash back, along with up to $60 in streaming entertainment credits each year, when you pay on time.
All three cards come with no foreign transaction fees and the ability to redeem cash back for purchases at Amazon, statement credits, gift cards, and more. To be considered for any of the three cards, applicants need only fair credit. FICO scores of 580 to 669 are considered fair.