How to Get a Credit Card as a College Freshman
March 22, 2018
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Going to school and being away from your parents for the first time can be scary. With all of the changes, students have to worry about how to handle simple emergencies like a flat tire or a medical bill.
A credit card can be an essential safeguard, but getting one as a freshman isn’t easy. Read on to learn about what you need to get approved for a credit card and your top three options.
The key to getting approved for a credit card as a freshman
Credit card companies aren’t purposefully making it difficult for new college students to get a credit card. In fact, if you were to go back in time 15 to 20 years, you’d probably see several credit card issuers handing out credit card applications like candy on your college campus.
So what happened? In 2009, Congress passed the Credit CARD Act, prohibiting credit card issuers from marketing their products to students on or near any college campus. They’re also required to consider your ability to repay the debts you’d incur with a credit card.
As a result, it’s critical that you have enough income to qualify. Unfortunately, there’s no universal minimum amount to give you a benchmark. But the good news is that you can count more than just earned income from a job.
Until you reach age 21, you can count the following as income on your credit card application:
- Earned income
- Regular allowances from parents or another source
As long as you have a decent amount of income from these sources, you may have a good chance of getting approved for certain types of credit cards. If not, you may need to go another route, which we’ll discuss in a minute.
3 credit card options for college freshmen
If you have enough income to get approved for a credit card on your own, you have two options: a student credit card or a secured credit card.
Student credit cards
There are a handful of major credit card issuers that have cards designed specifically for college students. They usually don’t have any credit history requirements, and you can get decent rewards and other perks while you learn how to use credit responsibly.
Student credit cards are preferable to secured credit cards because they don’t require a security deposit.
One student credit card to consider is the Journey® Student Rewards from Capital One®. The card offers 1% cash back on all your purchases. The card also helps you develop good credit habits by offering an extra 0.25% if you pay your bill on time every month.
What’s more, you can get access to a higher credit limit if you pay your bill on time for the first five months. And if you want to study abroad, the card skips foreign transaction fee, which is usually 3% of each purchase you make overseas.
Secured credit cards
As we mentioned earlier, secured credit cards require that you make an upfront security deposit. The issuer holds onto your deposit in case you rack up a balance and never pay it back. Most secured credit cards keep the deposit until you close your account.
Your security deposit is typically equal to the credit limit you want. But with the Capital One® Secured Mastercard®, you may be able to get an initial credit limit with a deposit as little as $49, $99, or $200, depending on your creditworthiness. You can also get a higher credit limit when you make your first five payments on time.
Unlike many secured cards, this one doesn’t have an annual fee. It also has no foreign transaction fees, so it’d be a good one to take if you study abroad.
If you don’t have enough income to qualify for a credit card on your own, not all is lost. At this point, your best chance of building your credit and having access to an emergency credit line is to get added to someone else’s credit card.
For example, if your parents have a credit card, they can add you as an authorized user. By doing this, you’ll not only be able to use the card whenever you need it, but you’ll also get the benefit of their payment history on the card on your credit report.
As a result, you should do this only if your parents (or another trusted family member or friend) have good credit. Otherwise, it could hurt your credit. Also, talk with your parents about when you can use the card and stick to their boundaries.
Build credit now for future financial success
When you graduate from college, your credit history will be an important part of your financial profile. It can help you secure a loan or credit card at a low interest rate, and it can make it easier to get an apartment and even a job.
But if you wait until you’re in the real world to start building credit, you’re already late to the party. So, the sooner you start building credit, the better. If you can get approved for a credit card on your own, start using regularly to develop good credit habits.
For example, pay your balance on time and in full each month. This way, you can build credit without paying a dime in interest. Also, create a budget to help you avoid overspending. As you establish these habits early, it will be harder to break them down the road.