(MoneyWatch) The long-standing banking lament is that the only people who can get credit are the people who don't need it. Students and consumers with some credit scars can certainly relate. Even while people with long and pristine credit histories are getting inundated with credit card offers, credit card companies turn up their noses at those with less illustrious backgrounds.
Then, too, the Card Act made it more difficult for students to get credit by demanding that issuers stop granting credit to people without the means to repay. That initially stopped credit card companies from giving plastic to students unless they had jobs, although some issuers now look at "means to repay" far more holistically, giving kids credit as long as they have allowances and even student loans.
The credit card options for the young and credit-scarred are far less attractive than they are for those with perfect credit ratings. But there are still some decent deals. Here are your best bets, according to a panel of a half-dozen seasoned experts.
If you're going to carry a balance, the best card is BankAmericard for Students, says Odysseas Papadimitriou, CEO of CardHub.com. The reason? The card offers a zero APR for the first 15 months and there's no annual fee. So, if you ended up buying a computer and books on the card and needed some time to pay that off, you could pay $50 or $100 monthly and never face any cost for buying on credit. After the intro period, the interest rate will range from 10.99% to 19.99%, depending on your credit rating.
If you can pay the balance every month, Papadimitriou favors no-fee cards that pay a reward. His three favorites for students are:
Journey Student Rewards from Capital One, which pays 1.25% cash back of every purchase, as long as you pay the bill on time. In addition, this is one of the few cards that does not charge foreign transaction fees, which is a particular plus for students planning to study abroad. The interest rate on this card is 19.8% for revolving balances.
Citi Forward Card for College students has a more generous payout rate on "entertainment" expenses (and, importantly, considers fast food and textbooks purchased at the school book store entertaining). The cash-back rate is 1% for everything else, but the card pays bonus points for good behavior. You get 100 bonus points every time you pay your bill before the due date, and you get 1,000 bonus points for signing up for electronic statements. The interest rate on the card will vary based on credit rating between 13.99 and 21.99%.
Citi Dividend Platinum Select Card for College students offers a 5% rebate on supermarket, gas station and utility purchases for the first 6 months; and 1% thereafter. It also has a 2% bonus rate on a rotating group of expenditures for those who sign up for it. The interest rate on the card, like the other Citi offering, will vary between 13.99% and 21.99%.
Capital One also has a spectrum of credit cards for people with just so-so credit, says Ben Woolsey, director of marketing and consumer research at CreditCards.com. His favorite is the Capital One Platium MasterCard, which has a high APR -- 24.9% -- but a relatively low, $19, annual fee. If you can manage to pay off your credit card balance each month, this card's low annual fee can make it a relatively cheap way to build credit. But there are also options for people new to the U.S.; those who want lower rates, but don't mind a higher fee. You can find all the available products and details here.
If your credit is really bad, your only option is going to be a secured card. These cards require consumer to deposit money with their banks in exchange for getting plastic that has roughly the same credit limit as the deposit. That way, if you don't pay, they can seize the security deposit.
Several experts, including LowCard.com's Bill Hardekopf, Next Advisor's Erik Larson and Gerri Detweiler from Credit.com, concurred that the best option among secured cards is also from Capital One.
The reason the Capital One Secured MasterCard stands out is because the annual fee is relatively low -- $29 - and the security deposit is modest. For a card with a credit limit of $200, Capital One would require a deposit ranging between $49 and $200 - depending on the level of misery in your credit rating. The interest rate on the account is 22.9%. However, if you maintain the card in good standing, you're likely to be able to move up to a better option in a year or two.