Borrowing

New Sallie Mae cash-back credit cards appeal to student loan borrowers — here's how they stack up

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Private student loan servicer Sallie Mae, with Mastercard, recently introduced three new cash-back credit cards aimed at students and specifically the 44 million Americans who have student loans.

The cards are unique, according to Sallie Mae, because they reward good financial choices: They encourage students to pay down debt, offering a 25% bonus on any cash-back rewards put towards student loans. Although the three cards — the Ignite, Accelerate, and Evolve — vary in terms of the rewards offered for purchases, they're similar in that they're no-fee and offer 0% APR for 6-12 months.

Here's a look at the pros and cons, and how Sallie Mae's new cards measure up to others.

Interest rates

After the initial welcome period, interest rates will fall between 15.24% and 25.24%, depending on which Sallie Mae card you choose. Those APRs are on the high end because these are rewards cards: The average credit card interest rate for general purpose cards is 17.35%.

Having a high-interest-rate card could land you in even more debt if you aren't able to pay your bills on time and in full each month.

"When you're selecting a card, you want to consider the interest rate and think about whether you intend to carry a balance," Neal Solomon, managing director of WealthPro LLC in Gloversville, New York, told Grow earlier this year, noting that "for more established borrowers who are able to pay off their balance in full, the rate might not matter as much." Overall, he says, "you have to think about the features you plan to use."

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Rewards

"When you start out, the best feature to look for is any kind of cash-back incentive," Erika Safran, a certified financial planner with Safran Wealth Advisors in New York City, told Grow earlier this year. "If you can earn some kind of percentage on what you're already spending money on, it's probably the most efficient feature."

When it comes to cash back, Anthony Moschella, senior director for credit cards at Sallie Mae, says that the "product adapts to the consumer." By that he means that the Ignite card gives a 25% cash-back bonus on your cash-back rewards after six consecutive, on-time payments. The Accelerate card offers a similar bonus when cash-back rewards are used to pay down student loans, and the Evolve card promises a 25% bonus on cash-back rewards earned from your top two purchase categories each month.

The cards offer 1%-1.25% cash back on everyday purchases, which is pretty typical of student credit cards. You can find cash-back cards that offer better rates, though: For instance, the Citi Double Cash offers cardholders 2% cash back on all purchases, though it is easier to get once you have an established credit history.

Overall value

Sallie Mae is "definitely appealing to people who are, no doubt, stressed about their student loan payment and trying to figure out how they're going to pay it," says Gerri Detweiler, education director for Nav, an organization that helps business owners manage their credit and get access to financing.

Overall, she says, the Sallie Mae cards are "not the number one card that college students can get, but they're certainly very competitive with what's being offered to college students."

Detweiler recommends credit card issuers like Discover, which offers cash-back incentives geared towards students, like a $20 credit for every year they earn a 3.0 GPA or higher. Other cards, like Capital One's My Journey card, offer rewards to students for making payments on time. On that card, every on-time payment boosts your cash back, up to a maximum 1.25% for that month.

For students or recent graduates who are just starting to build credit, having a credit card, keeping your utilization rate low, and paying your balance in full each month can help you, even if you're paying down debt at the same time.

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