credit card advice
As exciting a time as college can be, it can also be a stressful one, and not simply due to the exams. Part of what makes college a less-than-carefree experience is that the average college student is typically broke. Indeed, without any real skills — that’s what you’re in college to learn, after all — the income opportunities for a college student aren’t exactly lucrative, and that’s not to mention the potential impacts to your student aid.
And a lack of income can be a pain for more than just the obvious reasons (like a diet of nothing but mac and cheese). Not having an income will also impact your ability to obtain and establish credit, putting you at a financial disadvantage after graduation. Thankfully, one skill you learned in college can help you here: research. Opportunities to build credit as a student are out there, you just have to know where to find them.
How It Works | Student Cards | Secured Cards | Prepaid Cards
Students with No Income Need Cosigners to Get Credit
Once upon a time, a stack of bright, shiny credit card offers would grace your mailbox just about the moment you turned 18, opening the world of consumer credit to young people everywhere. For better or worse, those days are history — and the CARD Act of 2009 is responsible for their demise.
Designed to enact a range of protections for consumers, such as mandating rate increase alerts, the CARD Act also introduced new restrictions on when and how credit card companies can send offers to young people. One example is the minimum age for obtaining a credit card, which was originally set at 18. Thanks to the CARD Act, individual credit card applicants must be at least 21 years of age unless they meet specific conditions.
In particular, consumers between the ages of 18 and 21 must have a verifiable income source — beyond that monthly “stipend” from your folks — to qualify for a credit card. This is to ensure you have a reasonable means of paying down your balance, as racking up a debt with no way to repay it isn’t good for you or your credit card issuer.
For the most part, the only way to avoid the income requirement for credit card applicants under the age of 21 (or, really, any age, as most issuers will prefer you to have an income) is to apply with a qualified cosigner.
This means someone over the age of 21, who has a good credit score and a well-established credit profile. Since not all card issuers allow cosigners, you’ll have to choose carefully.
Additionally, before you run off and start asking relatives to cosign your credit card application, you should understand the implications. Agreeing to cosign someone’s debt could have potentially serious consequences, particularly if the primary applicant doesn’t have a steady income source.
Essentially, cosigners act as guarantors for the line of credit and, thus, will be responsible for repaying the debt should the primary borrower be unable to do so — and issuers aren’t shy about hounding the cosigner for repayment if it comes to that.
Additionally, the card will show up on the credit reports of both the primary cardholder and the cosigner. This means any negative events — like missed payments or, worse, default — will impact the credit score of both parties. Not only can this mean you have poor credit before you even turn 21, but it can also tank the good credit of your cosigner.
Student-Focused Cards Can Be Easier to Obtain
While you can’t even think about getting your own credit card without an income or cosigner until you turn 21, obtaining a new line of credit won’t be a picnic at any age if you don’t have money coming in. Even with a modest income, without an established credit history, most credit card issuers will still consider you to be a risky bet.
On the plus side, a variety of issuers are willing to take that bet. With a little research, you can find a range of student-centered credit cards with flexible credit requirements that can help you start building your credit profile. You don’t have to sacrifice perks, either. Many student cards will also let you earn cash back rewards on your purchases, including our favorites below.
- INTRO OFFER: Discover will match ALL the cash back you've earned at the end of your first year, automatically. There's no signing up. And no limit to how much is matched.
- Earn 5% cash back at different places each quarter like gas stations, grocery stores, restaurants, Amazon.com and more up to the quarterly maximum, each time you activate. Plus, earn unlimited 1% cash back on all other purchases – automatically.
- Good Grades Rewards: $20 statement credit each school year your GPA is 3.0 or higher for up to the next 5 years.
- No annual fee. No late fee on first late payment. No APR change for paying late.
- Get 100% U.S. based customer service & get your free Credit Scorecard with your FICO® Credit Score, number of recent inquiries and more.
- Freeze It® on/off switch for your account that prevents new purchases, cash advances & balance transfers in seconds.
Intro (Purchases) | Intro (Transfers) | Regular APR | Annual Fee | Credit Needed |
|---|---|---|---|---|
0% for 6 months | 10.99% for 6 months | 15.24% - 24.24% Variable | $0 | Fair |
- INTRO OFFER: Discover will match ALL the cash back you've earned at the end of your first year, automatically. There's no signing up. And no limit to how much is matched.
- Earn 2% cash back at gas stations and restaurants on up to $1,000 in combined purchases each quarter. Plus, earn unlimited 1% cash back on all other purchases - automatically.
- Good Grades Rewards: $20 statement credit each school year your GPA is 3.0 or higher for up to the next 5 years.
- No annual fee. No late fee on first late payment. No APR change for paying late.
- Get 100% U.S. based customer service & get your free Credit Scorecard with your FICO® Credit Score, number of recent inquiries and more.
- Freeze It® on/off switch for your account that prevents new purchases, cash advances & balance transfers in seconds.
Intro (Purchases) | Intro (Transfers) | Regular APR | Annual Fee | Credit Needed |
|---|---|---|---|---|
0% for 6 months | 10.99% for 6 months | 15.24% - 24.24% Variable | $0 | Fair |
- Earn 1% cash back on all your purchases. Pay on time to boost your cash back to a total of 1.25% for that month
- Enjoy no annual fee and no foreign transaction fees
- Get a head start and build your credit with responsible use
- Get access to a higher credit line after making your first 5 monthly payments on time
- Monitor your credit profile with the CreditWise® app, free for everyone
- $0 fraud liability if your card is ever lost or stolen
Intro (Purchases) | Intro (Transfers) | Regular APR | Annual Fee | Credit Needed |
|---|---|---|---|---|
N/A | N/A | 26.96% (Variable) | $0 | Average, Fair, Limited |
When comparing student cards, it’s important to understand exactly how your new card will work. This includes understanding the specific interest rates you’ll be charged, as different types of transactions may charge different rates. You’ll also want to determine any applicable fees, such as annual fees and late fees, as well as the various transaction fees, like balance transfer or foreign transaction fees.
Secured Credit Cards May Only Require a Deposit
Arguably the easiest credit card to get, secured cards require an initial deposit to open your account. That deposit acts as collateral against potential default, meaning if you become seriously delinquent (more than 180 days late), the issuer can use your deposit to cover your outstanding balance. This results in lower risk to the issuer, and, thus, looser credit requirements for the applicant.
The nature of secured cards also makes them a lower risk for cosigners, which is good because secured cards are not immune to the CARD Act requirements, so you’ll still need to show income or have a cosigner if you’re under 21. A limited credit history will be less important, however, as secured credit cards, such as the expert-rated options on our list, tend to have more flexible credit requirements — some cards won’t even require a credit check.
- No annual fee, and all the credit building benefits with responsible card use
- Unlike a prepaid card, it builds credit when used responsibly, with regular reporting to the 3 major credit bureaus
- You will get an initial $200 credit line after making a security deposit of $49, $99, or $200, determined based on your creditworthiness
- Get access to a higher credit line after making your first 5 monthly payments on time with no additional deposit needed
- Easily manage your account 24/7 with online access, by phone or using our mobile app
- It's a credit card accepted at millions of locations worldwide
Intro (Purchases) | Intro (Transfers) | Regular APR | Annual Fee | Credit Needed |
|---|---|---|---|---|
N/A | N/A | 26.99% (Variable) | $0 | Limited, Bad |
- No Annual Fee, earn cash back, and build your credit with responsible use.
- It's a real credit card. You can build a credit history with the three major credit bureaus. Generally, debit and prepaid cards can't help you build a credit history.
- Establish your credit line by providing a refundable security deposit from $200-$2500 after being approved. Bank information must be provided when submitting your deposit.
- Automatic reviews starting at 8 months to see if we can transition you to an unsecured line of credit and return your deposit.
- 2% cash back at gas stations and restaurants on up to $1,000 in combined purchases every quarter, automatically. Plus, earn unlimited 1% cash back on all other purchases.
- Get 100% U.S. based customer service & get your free Credit Scorecard with your FICO® Credit Score
Intro (Purchases) | Intro (Transfers) | Regular APR | Annual Fee | Credit Needed |
|---|---|---|---|---|
N/A | 10.99% for 6 months | 25.24% Variable | $0 | Please refer to issuer's website |
- Fund your new MasterCard® secured credit card with your tax refund today!
- Receive Your Card More Quickly with New Expedited Processing Option
- No Credit History or Minimum Credit Score Required for Approval
- Good for Car Rental, Hotels; Anywhere Credit Cards are Accepted!
- Monthly Reporting to all 3 Major Credit Bureaus to Establish Credit History
- Credit Line Secured by Your Fully-Refundable Deposit of $200 - $2,000 Submitted with Application
Intro (Purchases) | Intro (Transfers) | Regular APR | Annual Fee | Credit Needed |
|---|---|---|---|---|
N/A | N/A | 20.24% (Variable) | $29 | Bad Credit |
For a secured credit card, your initial deposit is more than simply collateral. The size of your deposit will also determine the size of your available credit line — i.e., your credit limit — typically at a rate of 90% to 100% of your deposit, up to the card’s maximum. If you can’t afford a large deposit initially, most cards will allow you to add to your deposit over time.
Prepaid Cards Don’t Require Approval
Offering all the shopping perks of a credit card — including the ability to make online purchases — prepaid cards aren’t actually associated with a consumer credit line, but are, instead, prepaid by the cardholder before use. Not only does this mean your lack of credit history won’t be an issue, it also means the CARD Act won’t be a problem, either — income or no income.
In addition to being usable pretty much anywhere credit is accepted, prepaid cards also have a few features your credit card doesn’t, including the ability to accept direct deposits. Individual features (and fees) typically vary by card, so compare your options before making a selection. You can start with our expert-rated options to explore the market.
- With Netspend Direct Deposit, you can get paid faster than a paper check
- No late fees or interest charges because this is not a credit card.
- Use the Netspend Mobile App to manage your account on the go and get text message or email alerts (Message & data rates may apply).
- Get your tax refund direct deposited to your account and no more waiting in line to cash your check!
- Card issued by MetaBank®, Member FDIC. Card may be used everywhere Visa Debit cards are accepted. "Apply Now" for full details.
Intro (Purchases) | Intro (Transfers) | Regular APR | Annual Fee | Credit Needed |
|---|---|---|---|---|
N/A | N/A | N/A | Variable Monthly Fee | No Credit Check |
- Brink's gives you the peace of mind you deserve. Securing cash and valuables since 1859.
- With Brink's Direct Deposit, you can get paid faster* than a paper check.
- No late fees or interest charges because this is not a credit card.
- Use the Brink's Money Prepaid Mobile App to manage your account on the go and get text message or email alerts (Message & data rates may apply.)
- Get your tax refund direct deposited to your Card Account and no more waiting in line to cash your check!
- *Card issued by BofI Federal Bank, Member FDIC. Card may be used everywhere Mastercard Debit cards are accepted. "Apply Now" for full details.
Intro (Purchases) | Intro (Transfers) | Regular APR | Annual Fee | Credit Needed |
|---|---|---|---|---|
N/A | N/A | N/A | Variable Monthly Fees | No Credit Check |
- With Netspend Direct Deposit, you can get paid faster than a paper check
- No late fees or interest charges because this is not a credit card.
- Use the Netspend Mobile App to manage your account on the go and get text message or email alerts (Message & data rates may apply).
- Get your tax refund direct deposited to your account and no more waiting in line to cash your check!
- Card issued by MetaBank®, Member FDIC. Card may be used everywhere Visa Debit cards are accepted. "Apply Now" for full details.
Intro (Purchases) | Intro (Transfers) | Regular APR | Annual Fee | Credit Needed |
|---|---|---|---|---|
N/A | N/A | N/A | Up-to $9.95 monthly | No Credit Check |
The fact that prepaid cards aren’t associated with a credit line can be helpful for those with troubled or nonexistent credit profiles, but it isn’t all good news. The same way your credit has no impact on your ability to obtain a prepaid card, your prepaid card will have no impact on your credit.
In other words, prepaid cards can’t be used to establish, rebuild, or repair your credit reports or scores. So, if you’re only looking for a way to make easy purchases, a prepaid card can work. If you want purchasing power and credit-building credit reporting, stick with an unsecured or secured credit card.
Only Charge What You Can Afford to Repay
Despite the nightmares of showing up to your final in your birthday suit, college can be a great deal of fun. But like many things in life, getting the most out of your time at college will also require a great deal of hard work.
Of course, of all the lessons you’ll likely learn in college, some of the most important won’t occur within the walls of a classroom. No, some of your key discoveries will be made through trial — and through error. You can reduce the impact of many of those hard lessons with the right bit of research, and that applies to your financial lessons, as well. As the old saying goes, “forewarned is forearmed.”
In particular, understand the importance of your credit report and score, including the factors that influence your credit score calculation. This will ensure you have the skills and knowledge to use your new card wisely, allowing you to come out of college well prepared to face the next stage of your financial journey.
Editorial Note: Opinions expressed here are the author's alone, not those of any bank, credit card issuer, airline or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.
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