Credit Building Options for Students

Students must make an effort to build personal credit history while they have the privilege to do so. When you graduate from college, you will be in a far better position to negotiate with lenders as well as prospective employers.

College students have a number of choices to build credit. Check out the following ways and choose one that suits your individual needs:

Student Credit Cards

Credit card companies offer quick approval to college students. As a matter of fact, issuers even send out flyers at campuses to entice teenagers to apply. Nevertheless, under the New Credit Card Law, such advertising campaigns will not be permitted within 1,000 feet at college campuses.

The New Law also prohibits students who are under the age of 21 from acquiring their first credit card unless they have a co-signer or they can present proof of independent income. If you are below 21 years old, you need a parent or a guardian with good credit history to co-sign your account.

Before applying for student credit cards, diligently compare your options. Evaluate the rates and fees, along with the Terms of using the card. Begin with one student credit card to avoid overspending and bad debt.

Secured Credit Cards

A secured credit card is an alternative for teenagers who can’t find a co-signer. Anyone can get a secured card even with no credit or bad credit history. Nevertheless, secured cards involve a cash deposit that may range from $200 to $500 or more. The amount of deposit you give will likely determine your borrowing limit.

Prepaid Debit Cards

These days, you’ll find prepaid debit cards that offer credit reporting to the three major credit agencies. Yes, debit cards can now be used for building or establishing credit history.

A prepaid debit card involves cash deposit as well. But as opposed to a credit card, debit cardholders are not extended a credit line. Purchases can be made as long as there is available balance in your account. When the last dollar have been spent, the debit card holder must make a new deposit or to continue using the card for payment.

Even though a prepaid debit card frees you against rates and late penalties, there are other fees that you need to know about. Take note that some debit cards have more fees than a credit card. For instance, fees that you should look out for are application fees, maintenance fees (monthly and yearly), per transaction charges, etc.

Department Store Cards or Gas Credit Cards

You may also obtain a department store card or a gas card. All you have to do is sign up a form and pay the processing fee to be issued the card. You do not need to submit a deposit to start using your card.

Then again, these credit cards can only be used for charges made from the department store or gasoline company that issued your card. Furthermore, you are required to pay your full balance at the end of each month to prevent deactivation of your debit account.

About the Author

Samantha Wilson is a consultant for credit cards for students. For years she has written student credit card articles that would help build student credit.

Copyright 2010

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