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Discover it Student Cash Back review: Earn 5% cash back in different categories while building credit

CNBC Select breaks down the rewards, benefits and fees associated with the Discover it Student Cash Back credit card.

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College offers countless learning opportunities, but understanding how to earn a good credit score is an underrated lesson with long-lasting implications.

Whether you are a student looking for a way to build credit or a parent preparing to send your kids to college, a student credit card can help the next generation of consumers establish good financial habits. Discover offers two credit cards geared toward college students — the Discover it® Student Cash Back and the Discover it® Student chrome.

Both Discover student cards are designed to help young adults build their credit history and learn financially responsible behaviors while in college, but they are unique in the kinds of rewards they offer.

The Discover it Student Cash Back lets cardholders earn 5% cash back in different categories that rotate every quarter up to $1,500 (then 1%), and 1% on all other purchases.

The Discover it Student chrome, on the other hand, offers 2% cash back at gas stations and restaurants on up to $1,000 in combined purchases each quarter (then 1%) and 1% on all other purchases.

No matter which of these two student credit cards you choose, Discover will match your cash-back earnings the first year, with no limit to how much cash back you can earn.

Below, CNBC Select breaks down the rewards, benefits and fees associated with the Discover it Student Cash Back to help you decide if it's the right card for you.

Discover it Student Cash Back review

  • How to qualify for the Discover it Student Cash Back
  • Rewards
  • Additional benefits
  • Fees
  • Bottom line

Discover it® Student Cash Back

Discover it® Student Cash Back
On Discover's secure site
  • Rewards

    5% cash back in different categories (gas stations, grocery stores, restaurants, Amazon and more) each quarter, up to the quarterly maximum each time you activate. Plus, earn unlimited 1% cash back on all other purchases

  • Welcome bonus

    Discover automatically matches all the cash back you earned at the end of your first year

  • Annual fee

    $0

  • Intro APR

    0% APR for the first 6 months on purchases; 10.99% APR for the first 6 months on balance transfers

  • Regular APR

    14.49% - 23.49% variable

  • Balance transfer fee

    3% intro balance transfer fee, up to 5% fee on future balance transfers (see terms)*

  • Foreign transaction fee

    None

  • Credit needed

    No credit history

Pros

  • Generous welcome bonus that doesn’t have minimum spending requirements
  • Intro 0% APR for 6 months on purchases
  • $20 Good Grade Reward when you maintain a 3.0 or higher GPA during the school year (for up to five consecutive years)
  • First late payment fee is waived

Cons

  • The cash-back program requires you to activate bonus categories in order to benefit from earning 5% cash back
  • Discover cards aren’t as widely accepted as cards from Mastercard or Visa
  • You must be a U.S. citizen and college student to apply for this card

How to qualify for the Discover it Student Cash Back

When you're just starting out, it's not always easy to know whether you will qualify for a new credit card. Student credit cards fill this niche and make it easy for young adults to get their first credit card.

To qualify for a Discover student credit card, you must be at least 18, enrolled in a two- or four-year college, be a U.S. citizen and have a social security number.

You will also need to have verifiable independent income, like a part-time job, and you may have to show proof of income.

Discover it Student Cash Back rewards

It can take years to master how to maximize your credit card rewards, but that doesn't mean that college students should miss out on opportunities to learn. The Discover it Student Cash Back gives cardholders the opportunity to earn 5% cash back on everyday purchases in categories that rotate every quarter up to the $1,500 quarterly maximum each time you activate (then 1%).

Here's how it works: Each quarter (January through March, April through June, July through September and October through December), you can earn 5% cash back on different categories, up to $1,500 (then 1%). Once each quarter is over, the program resets, and you'll have another chance to earn 5% on up to $1,500 of spending in the new categories. Discover releases its annual 5% cash-back calendar at the end of the previous calendar year. You have enroll at the beginning of every activation period to earn rewards.

Beyond the rotating 5% cash-back categories, you can earn 1% cash back on all other spending, with no limit.

It's a little extra work, but earning 5% back, as opposed to 1% to 2% like the Discover it Student chrome, usually makes it worth your while — if you are strategic.

Discover also offers a unique welcome bonus: At the end of your first year as a cardholder, it automatically matches every dollar you've accrued in cash back.

When you're ready to redeem your rewards, there are a number of ways you can cash out:

  • Statement credits
  • Electronic deposits to your bank account
  • Gift cards
  • Charitable donations to select organizations
  • Pay with points at Amazon.com and PayPal checkouts

Your rewards never expire, but if you don't use your card for 18 months, Discover will automatically apply your cash back to your account balance.

Earning cash back with your student credit card can be fun and useful, but it's crucial that you pay off your balance on time and in full each month. The points you earn are never worth more than high interest charges you'll face if you fail to pay off your balance.

When you're approved for a student credit card, your first focus should always be learning good credit card habits. Points, perks and rewards come second to building a good score. (See our methodology for more information.)

Additional benefits

Are you a good student? The Discover it Student Cash Back has a perk just for you. If you earn a GPA of 3.0 or higher, you can qualify for an annual $20 statement credit. Simply submit your grades between May and August, and the reward will be added to your cash-back balance within seven business days.

Fees

The Discover it Student Cash Back card has no annual fee and no foreign transaction fee. Currently, this card offers an intro 0% interest for six months on purchases (after 14.49% to 23.49% variable APR). This is a great perk for students who need a few extra months to pay for that new laptop.

Another noteworthy feature is that, unlike many credit cards, the Discover it Student Cash Back card charges no fee for your first late payment and making a late payment won't increase your APR.

Bottom line

The Discover it Student Cash Back credit card makes for a good first credit card that can help college students develop good financial habits so that they can one day open additional cards with better benefits.

However, just because this card is meant for young adults with limited credit history, it still delivers a lot of value with its 5% cash back on rotating spending categories and 1% unlimited cash back on all other purchases. And let's not forget that Discover automatically doubles all cash back earned in the first year, plus it celebrates good students with a once-per-year $20 reward.

Consumers who don't qualify for this student credit card should consider applying for a secured credit card. Secured credit cards are great because they let credit newcomers establish credit history by basing the card's credit limit on a refundable security deposit. The Discover it® Secured card is a great choice in this case because it offers many of the same benefits as the Discover it student credit cards.

Our methodology

To determine which cards offer the best value for students, CNBC Select analyzed popular credit cards available for college students looking to build credit.

We compared each card on a range of features, including: credit limit, rewards program, introductory and standard APR, welcome bonuses and foreign transaction fees, as well as factors such as required credit score and customer reviews when available. We also considered any special student-centric programs that offer incentives or extra rewards.

Because it's unusual for college student cards to have robust rewards programs, we did not analyze how many rewards points you can earn in the first year. For students who are looking to build their credit history and develop strong financial skills, it's more important to practice good credit card habits — spending within your means, paying your balance on time and in full — than try to optimize your points balance.

Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the CNBC Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.