Financial Advice

The Credit Card That’s Giving You Cash for Good Grades

Twenty bucks may not be enough to motivate some students to study more, but what college student wouldn’t want some extra money, just for getting decent grades?

For students looking to get a credit card, that may be an option. Discover recently announced a $20 cash-back bonus for new student cardholders who get at least a 3.0 GPA (or their school’s equivalent) for every year they’re enrolled in school. The promotion applies to students who open a Discover it Chrome for Students or a Discover it for Students after July 23, 2015, and the bonus is available within the first five years of opening the account. Both cards require only fair credit (read more about how to get a credit card with fair credit) and already offer cash-back rewards on everyday purchases, regardless of the cardholder’s grades, though cardholders have to apply to redeem the good-grades bonus.

This program can be a nice perk for students, but only if the credit cards are used responsibly. The cards have a promotional 0% APR on purchases within the first six months, and an APR between 12.99% to 21.99% after that (your APR depends on your credit standing). The cash-back rewards and that good-grades bonus aren’t worth it if you’re carrying a balance and racking up interest charges on those transactions. As is the case with most rewards credit cards, you can wipe out any rewards you earn if you carry a balance. Before you apply for a new credit card (or any credit), take a look at where your credit stands. You can get two free credit scores every 30 days on Credit.com.

It’s easy to get excited about credit card rewards, because they can be quite valuable, but it’s also really easy to slip into credit card debt and let it get out of control. Once you get into credit card debt, it can take years to get out, and you may never get to recoup the money you’ve spent financing all those little purchases. If you’re in credit card debt, you can use this credit card payoff calculator to see how long it will take you to pay down your balances and how much money you can save by paying them off faster.

On the other hand, credit cards can serve students extremely well, because they’re often the first form of credit a student can get, which helps establish a credit history. If you keep your credit card balance as low as possible relative to your credit limit and make the bill payments on time, you’re creating a positive credit history, which can help you later on when you’re applying for an apartment, financing a car or buying your first home.

Note: It’s important to remember that interest rates, fees and terms for credit cards, loans and other financial products frequently change. As a result, rates, fees and terms for credit cards, loans and other financial products cited in these articles may have changed since the date of publication. Please be sure to verify current rates, fees and terms with credit card issuers, banks or other financial institutions directly.

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This article originally appeared on Credit.com.

This article by Christine DiGangi was distributed by the Personal Finance Syndication Network.

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