By Rachel King/Staff
College is a major transitional period for most of the young adults who attend; students have to start making important decisions regarding their futures in the adult world. One important part of this transition is building a good credit score. The way to do this is by getting a credit card of some sort.
As Thomas Sinkey, a vice president at Extraco Banks, said, “Having good credit is the foundation you’ll need for acquiring all the things that you’re going to need while you're in school and afterwards whether that be reliable transportation or a place to live.”
According to the Credit Card Act of 2009, credit cards cannot be issued to anyone under the age of 21 unless they have an independent source of income or a parent/guardian co-signs. This rule does apply to student credit cards. Some credit card issuers don’t allow for co-signers, so for many students an independent source of income or waiting until they are 21 are their only options.
One can typically apply for a credit card in person at your local bank or online via your card issuer’s website. You will need to make sure you have documents necessary to prove your identity, current enrollment status, any previous credit history and current income. When you apply for a credit card you will probably have to prove that you have sufficient income to make your monthly payments, especially if you are under 21 and applying individually or if it is your first ever credit card.
“Basically what we’re looking for is how much money is coming into your account and how much is coming out for your expenses. That means any debt you are paying off, but it also could be your rent or your mortgage payment, your cable bill, internet, car insurance, et cetera,” Sinkey said. “You basically want to ask yourself ‘how much of my income can I comfortably put towards a credit card payment every month?’ and that’s where we’re going to start.”
Eventually if and when you start making more money and you’ve built up a good payment history you can always ask your credit card company for an increase on your limit, but you don’t want to bite off more than you can chew until you know what you can handle and establish some sort of credit history.
“The credit card company probably is not thinking about you individually. I mean just imagine how many millions of credit cards and credit card holders there are out there. So you are really going to have to be thinking about yourself. When you need a higher limit or more credit or something like that you just have to ask for it,” said Sinkey. “As long as you're making your payments on time and not overspending they will probably give you whatever it is that you are asking for.”
Some things to think about when you are looking at potential credit card options are welcome bonuses, fees, rewards, perks, APR and interest rates.
“There are a lot of credit cards out there that have a lot of different features and introductory rates and things like that, so depending on what you’re looking for there are plenty of different options available for you to look at,” Sinkey said. “I mean interest rates are also important, but most of them are pretty comparable. You can shop rates if you want to, but they typically won’t vary more than a percentage or so.”
When it comes to applying for your first credit card there are many factors that may affect your decision one way or another. It’s the same as any other product you might be considering investing in.
“The thing about a credit card that a lot of people overlook is that at the root of it all they really are just products that banks and financial institutions have out there for you to buy and just like any other product that you might purchase there are many different features and prices and things. There are many different reasons why someone might go with one card versus another,” Sinkey said.
Student credit cards are credit cards that are more geared toward college students or young people who are just starting out trying to build their credit. They are typically characterized by smaller credit limits and incentives that are geared more towards those in college. The goal of these cards is to help college students bridge the gap between having little to no credit history at all and creating a credit score that will allow for more valuable credit offers in the future. None of this means, however, that these are not real credit cards. Student credit cards are made to help you start building a strong credit, but as with any credit card if bills are not paid on time they can just as easily damage your credit.
If you are new to the adult world and looking to start building up your credit score there are plenty of online resources that can help you, but it also never hurts to talk to your parents or any adults you know who have experience dealing with financial issues. You can also always go to your bank and ask someone there for help getting set up. Don’t let the world of finances and the words credit or debit or loan scare you. There is always someone around who can help you navigate these sorts of experiences.
