Student Credit Card

[Chun Liroy]

I was wondering if anyone could possibly answer some questions about student credit cards. I'm trying to get one so that I can start to build credit so that I can take out loans for school, but I've been denied for every student credit card that I've applied for. I've applied with probably about 9 different companies and I just have absolutely no idea why I can't get one. I have no job atm, it's been a pain in the ass looking for one on campus, but does anyone know any reasons why the hell it would be this difficult to get one?

Edit: I'm extremely naive to the entire subject so forgive me.

[Woozie]

Back in '05, when I was first starting school and applying for student credit cards, they were insanely easy to get. You would get pretty much any student card you applied for with a credit line of a few thousand dollars. From what I hear, things have changed a LOT since then, and you may end up having to start out with a secured credit card. If you've been rejected for 9 student credit cards already, I'm thinking a secured card may be your only option.

A secured card is a card where you make a deposit which amounts to your credit limit. For example, if you want a card with a 500 dollar credit limit, you would have to make a 500 dollar deposit. Although you're making a deposit, the card still works exactly like a regular credit card in every way (instead of working like a prepaid/debit card). Also, when you close the account, you do get your money back (minus any money you still owe them). Since this card works exactly like a credit card, it does get reported to the three credit bureaus, and will help you build a credit history. After having such a card for a year or two, you'll probably qualify for a regular card.

Edit: And in the future, never apply for 9 credit cards. Applying for lots of credit shows up on your credit report even if you're rejected (and it makes you look bad).

[Valisk]

Everytime you apply for a credit card or any financing, that also shows up on your credit report and is "frowned" upon. The more you apply and get denied, the more your already non-existent credit card takes a minor hit. Do you have a checking account with anyone. More than likely, the bank where you have a checking account will be the most willing to extend you a credit card since they have records of your activity and balance. You could maybe start with them and see where that takes you. it's usually super easy to pay the bill since it's with the same bank and you can usually just pay it from you online banking's homepage. Rule of thumb when in a building credit mode, don't purchase anything unless you can already pay it off to avoid interest. For example, if you can pay cash (debit) for something, use your credit card instead but go in and pay it off immediately with the cash (debit account) you have unless there is some type of limit where you can only pay X amount of times per month.

[Cephius]

There was a law passed a few years back that changed how credit card companies are allowed to market to college students. I think there is now a restriction on it, you have to be a certain age or have a parent co-sign for the card to get one now, IIRC. That could be your issue.

When I was in school there used to be tons of offers everywhere to get you to sign for a card, but it would get kids into financial trouble and ruin the credit for kids before they ever left school. It was a needed change.

[Chun Liroy]

I have an account with BoA, since that's also my parents bank. At the time when I was getting the card (2 years ago~), also applied for a student credit card, got denied for that also despite the person that was working with us saying that I should get it np. And yeah that's what I planned on doing Valisk, using it for stuff like books and then paying it off immediately.

[Chun Liroy]

There was a law passed a few years back that changed how credit card companies are allowed to market to college students. I think there is now a restriction on it, you have to be a certain age or have a parent co-sign for the card to get one now, IIRC. That could be your issue.

When I was in school there used to be tons of offers everywhere to get you to sign for a card, but it would get kids into financial trouble and ruin the credit for kids before they ever left school. It was a needed change.

On the websites I went to, I don't remember anything about an age or anything of the sort, and they advertised the no need for a cosigner. I'm 19, 20 in a few months, for reference.

[Valisk]

You might have to sit down with a rep at BoA and have them issue you a special case credit card. It should be customizable and they'll start your limit at something ridiculously low like $150 since you're a high risk customer, but that's a start. After 3 months of good account management, you should be able to apply for a $500 limit, then $1000, etc.

[Woozie]

Here's some information on secured cards.

http://credit.about.com/od/sv/g/securedcredit.htm

http://www.bankrate.com/finance/cred...it-card-1.aspx

Make absolutely sure that the card you apply for is "secured" and NOT "prepaid" or "debit". Prepaid/debit do not work like credit cards, do not report to credit bureaus, and do not build credit.

Also, make sure the card you apply for reports to all three credit bureaus. Apparently some of them don't.

Try to find a card with a low annual fee. Ideally, you would want a card with no annual fee, and back in '05 those were so easy to find. I don't think I've ever had a card with an annual fee.

These days, it's nearly impossible for someone without a credit history to get a card with zero annual fee and low interest. You can expect annual fees to range from 20~80 dollars. Capital One Secured Credit Card has one of the lower annual fees out of the ones I can think of off the top of my head. But I haven't done any thorough research on this, so maybe you can find a better one. Also, you may be able to get a 200 dollar credit limit with only a 49 dollar deposit (though I wouldn't count on it).

Expect to have interest at least 20 to 25%. If you plan on paying off your full balance every time you use the card, you wont really have to worry about interest. Interest only applies if you pay less than the full balance.

I've worked for Capital One and Bank of America (and MBNA before BoA bought them), and I've had cards with them (and Citi Bank) so I'm more familiar with them than other companies. If MBNA was still around, they would definitely be the ones I would recommend to you. I don't know anything about the smaller companies. They may be a better deal or they may be worse, I'm not sure.

I'd say find a card with zero/low annual fee, and pay off the entire balance every month to avoid interest. That's an easy way to build credit. If you think you're going to be revolving your balance (i.e. not paying it in full every month), then you want the lowest interest you can find (or perhaps some balance between low interest and low annual fees). Like I said, I'd recommend paying in full every month.

Read the terms on your credit card disclosures and google stuff you don't understand. There are websites that explain stuff in plain english for you. You could even post stuff here and we'll try to explain it. After reading a few disclosures you actually begin to understand stuff. When I worked for MBNA, they taught is in lots of detail what every little tiny part of the disclosures meant, which helped me a lot.

I'm on my way to class, but if I think of anything else, I'll post it when I get a chance. I'm not sure how much you already know about credit cards or if you even need things explained. I'm just assuming you don't know much because you said you never had one, but maybe I'm wrong. But if I'm not, you should try googling basic phrases like "How do credit cards work?" "How to build credit", etc, and you'll find some decent information on some sites.

[Woozie]

Valisk's advice is really good. I didn't even think of getting an account with the place you already bank at. I bank at 5/3, which sucks at pretty much everything, which is probably why the idea of going to your actual bank never crossed my mind. That's better than getting a secured card.

[aurik]

You should never run a credit card debt, the interest on those is retarded high. Annualized 20% interest when core inflation is almost zero and the interest rates are nearly zero? Retarded.

Also annual fees are the biggest scam ever. Credit companies already earn money off of every purchase you make with the card. Don't let them charge you for the privilege of you earning them money.

[archibaldcrane]

Also annual fees are the biggest scam ever. Credit companies already earn money off of every purchase you make with the card. Don't let them charge you for the privilege of you earning them money.

If your rewards are good enough, an annual fee is worth it. My Discover card http://www.discovercard.com/escape/ is 2% cash back with enough "bonus points" on top of the 2% over the first two years to get $150 cash back a year - all for a $60 annual fee. Gotten $800 back in about 18 months so far.

But yeah, other than that annual fees are really dumb.

[kyod]

Secured card, as others have said, will most likely be your only option.

Before the credit crunch and credit law reform, you would have been issued a card no problem, whether you were responsible or not. Now banks/credit card companies assume you're going to be late/bad credit person if you have no credit history.

The law is supposed to protect people, but the (un)intended consequence means it's harder to start your credit history.

Also unless you have a 2-3+ year good credit history, don't even think about applying for private student loans without a co-signer. You will be denied. Again, one of the (un)intended effects of the reform.

There was actually a big thread on BG when this first happened.

[aurik]

If your rewards are good enough, an annual fee is worth it. My Discover card http://www.discovercard.com/escape/ is 2% cash back with enough "bonus points" on top of the 2% over the first two years to get $150 cash back a year - all for a $60 annual fee. Gotten $800 back in about 18 months so far.

But yeah, other than that annual fees are really dumb.

You can get that kind of cash back deal without the annual fee. I get 1.5% (in the form of cash) on all my purchases, no annual fee. The net result: I use my credit card for everything I can, visa makes lots of money from me.

[archibaldcrane]

You can get that kind of cash back deal without the annual fee. I get 1.5% (in the form of cash) on all my purchases, no annual fee. The net result: I use my credit card for everything I can, visa makes lots of money from me.

Once the "25 months of 1,000 bonus points per month!" (which pays for the annual fee +$40 each year) is up, I'm going to discontinue it and get a different one.

And of course you know that if I'm getting 33% more rewards than you are, it can overtake the $60 annual fee easily if it's my primary card, since like you I use my card for everything I can.

[Callisto]

I had a student card for my books back in like '02, unsecured with no credit history, 4% interest, greatest thing in the history of the world...until I lost my job and missed a payment. Rate went up to 29% and I was shit-wrecked by interest, took me almost 7 years to get it taken care of lol.

[aurik]

Should just get 2 reward cards and pay them off with each other until you pay nothing at all!

I guess if you can get *better* rewards then it can be worth a fee. I haven't found that to be the case though. In fact, the first time I was to get a credit card they not only wanted to secure the card at 100%, they wanted to charge a fee too. I told them to get stuffed.

Nowadays, I get my card from my bank where I have my investments, so they treat me very nicely because they appreciate my business. With no credit history, your bank is probably the best place to look for a card, because that's the only place you'll have any leverage at all.

[archibaldcrane]

Which card do you have right now Aurik? I'll be needing a replacement for the Discover shortly - was looking at the Capital One Venture card http://www.capitaloneventure.com/#/Welcome which is pretty dope, but I'm up for others. Do you have the Fidelity Visa Signature? http://personal.fidelity.com/product...ard.shtml.cvsr

edit: this one looks pretty baller too, 2% into Fidelity IRA account, no annual fee (AMEX) http://personal.fidelity.com/misc/bu...ard.shtml.cvsr

[aurik]

Which card do you have right now Aurik? I'll be needing a replacement for the Discover shortly - was looking at the Capital One Venture card http://www.capitaloneventure.com/#/Welcome which is pretty dope, but I'm up for others. Do you have the Fidelity Visa Signature? http://personal.fidelity.com/product...ard.shtml.cvsr

No, it's a canadian credit card through my bank. It's a lot like the one you linked, though.

Basically if you have somewhat significant savings / earnings, and potentially will be using their financial services for a long term, you can generally negotiate with your bank (ie, you have leverage because they desperately want to hold your future mortgage) so I highly recommend opening a dialogue and seeing what they offer.

[Ksandra]

As someone else said, check your credit score, it has probably gotten really low just because you applied to too many cards. Those hits usually fall off after 6 months so if you can wait that long do it. Otherwise use secured credit cards. Which suck ass and as soon as your credit is high enough, get a different one.


Also note, someone mentioned going into BoA, BoA bankers have no access to the credit card system, it's a whole separate department. They can help you apply for credit cards, but the only thing that will happen is them being a middleman with you on the phone with their credit card department.

Not to say you shouldn't go to them because sometimes having a middleman is nice, just be aware of what your in for and you could be there for a long time.

[shaddix]

Hmm. My first credit card was from citi, it wasn't a student card or anything. I had no credit, they didn't charge me annual fee and it has $800 limit. I use it for gas