<p>My 18 year old D is a college Freshman and asked our thoughts about applying for a credit card to build credit, and to have on hand in case of emergencies. We agreed that it was a good idea. Please note, we know our daughter and how meticulous she is with her finances, so we do not see this as a risk .</p>
<p>So, she went to the bank where she has her checking account (NBNA) and applied for a no fee Student Visa card, whose key benefit is advertised as 'To begin building your credit history.' Her application was rejected because the credit card company says that they contacted Equifax, and that she doesnt have enough credit references. They are correct there, as she has no credit references since she is just appliying for credit for the first time in her life. But, isn't that the purpose of the credit card she applied for?? To build credit? When challenged, the bank recommended a secured credit card (with a fee of course).</p>
<p>Has anyone else's student ever had difficulty like this in obtaining a student credit card to build credit, and then be denied because of no credit? Could it be because she doesnt have a student loan? Any suggestions as to how to circumvent this?</p>
<p>My husband called Visa and had a joint card issued with my son. I don't know if it is a student card. We did not go the way of getting a separate card for my son...it probably would have resulted in the same outcome.</p>
<p>As Achat said, you can also cosign on a credit card. It will still be in your d's name primarily. You'll just be on the hook if she goes hog wild :)</p>
<p>And not to fear- she'll be deluged with creditcard opportunities on campus when she gets to college. I don't recommend this as the best way to go, if she can help it. Better to shop around for the best deal in advance. But if all else fails, she will definitely be able to get one at school-- just watch for hidden junk fees, high interest rates and such.</p>
<p>How about the visabuxx card - not exactly the same as a usual credit card, since you have to "preload" specific amounts of money on it, but it works.</p>
<p>Last year, a lot of new freshman who posted on CC received credit card applications in the mail, but were then turned down because they had no credit history (I think Citibank was a prime offender). We are members of USAA, which serves families of past and present military personnel. USAA offers a student card that is automatically approved for members' children, regardless of whether they have a job or a credit history. It offers a $500 limit for freshmen, going up automatically in increments each year as creditworthiness and responsibility are established. An auxiliary card on a parents' account does not establish a students' creditworthiness. To accomplish that, the student must be the primary account holder.</p>
<p>You may want to try 1st FinancialBank USA. We got a flier in mail. They can start you out with credit limit of $150. A word of caustion though. The reviews on this card are mixed. They are very unforgiving. They make their money on over the credit limit, late payments and very high interest rate (you do have grace period and no yearly cost).</p>
<p>These days, one needs to shop for a card very carefully. Between short grace periods, punitive late fees, high interest rates for even one late payment, etc., many cards have real traps.</p>
<p>I don't know that a freshman needs to worry about building a credit history. Heck, I'm not so sure a senior needs to worry about it too much, given all the new grad programs etc., not to mention the ever present option of a parental co-signer. Besides, building a credit history is only a good thing if it is a GOOD credit history. Do you want to gamble that a kid starting out college has the discipline to get those bills payed on time AND get good grades AND have fun AND...? Just remember, each late payment (only one day, with a short grace period) will be reported by these cards.</p>
<p>Emergencies? Different story. I had my D issued a card on my main account. I trust her enough to tell me right away if she loses the card and not make charges without permission.</p>
<p>I'm inclined to agree with Newmassdad: I don't think your daughter will find it hard to establish credit later on, and I believe student credit cards can hurt more than they help. Many of these cards come with disadvantageous--and confusing--payment terms and interest rates, and can lead to real trouble, from major debt to a lousy credit rating because of a few late payments. There have been many articles warning about the dangers of these cards; here's a link to one that seems pretty sensible: <a href="http://www.youngmoney.com/credit_debt/get_out_of_debt/020809_01%5B/url%5D">http://www.youngmoney.com/credit_debt/get_out_of_debt/020809_01</a>.</p>
<p>Assuming that your daughter has a savings or checking account, many banks (my freshman daughter uses Bank of America) now have ATM cards that also function as Visa or Mastercard debit cards that can be used at stores and for online purchases. Like Newmassdad, I also got my daughter her own credit card on my account, to be used for emergencies and pre-approved expenses like school books and eyeglasses. She knows that I watch her bills on that account and has been extremely responsible with the card. (Even her younger sister, who was at first jealous at the idea that the older one got a credit card of her own, has seen me checking the bills and is getting the idea that a credit card isn't free money.)</p>
<p>I'm not sure whether her debit and/or my credit account will help my daughter start building a credit history, but again, I don't think that will be a problem once she has a genuine source of income.</p>
<p>newmassdad, I agree with you about 18 year olds building a credit history (a joke in my mind). But the way I see it, this may teach kids to be responsible. With a small credit limit, the down side is not high and they would learn their lesson. Besides my son is dying to have his 'own' checking account and credit card - he is in hurry to be an adult.</p>
<p>Investigate the institutions that are located at/near your D's school. Free accounts are plentiful and they cater to students' needs (low credit limits!).</p>
<p>Wells Fargo has a student plan - free checking, savings, debit card, and VISA. Need to be 18. D had absolutely no problem establishing this account in our hometown. Her OOS college town has a branch and an ATM in the school's student center.</p>
<p>6 years ago, S opened a similar comprehensive student account at National City Bank during summer orientation at UMich (not a bank in our state). Not one eyebrow was raised about lack of credit. He's in grad school now in another state and still uses their VISA card.</p>
<p>I had the same problem - literally no credit (not bad credit, just no credit), so I couldn't get a card.</p>
<p>CapitalOne does student credit cards. They have a $500 limit, which is enough for most things but low enough so that the student isn't going to get into trouble with it. capitalone.com, I think... no fee, Visa, no finance charges if paid off in full every month.</p>
<p>I have been tossing S's (many) credit card offers into a file and plan to sit down and compare them all. One that looks interesting is the Vision Visa from 1st Nat'l Bank of Omaha. It has a credit limit of $500 or $1000 and will not be reviewed for a credit line increase for 2 years, no fee, some small amount of cash back and a 10% discount from many bookstores and <a href="http://www.gotused.com%5B/url%5D">www.gotused.com</a>. (until 12/31/05). It does require a co-signer.</p>
<p>I read on this board, with some surprise, that if your S/d has a card in his/her name as an authorized user on your account, this will begin to build a good credit rating for the kid. I then went to a credit rating site (a free one, not paying Equifac, Hyp,...) and found that my S does indeed have an excellent credit score. He has had a Visa w his name on it since early teens and he just got an AX w his name on it when he turned 18.</p>
<p>This seems to me to be an outstanding way to start to build credit history (assuming you have a responsible teen who will not charge you into oblivion; our S reimburses us for any "discretionary" purchases he makes). We did not get him the cards for this reason, as we had no idea it would work that way.</p>
<p>Given this, we are in no rush for him to need his own account when leaving in the fall. If it becomes too much hassle to sort his purchases from ours in terms of who will pay, then we will go that route and presumably benefit from the fact that he has credit "established."</p>
<p>I cannot emphasize enough that you need to read and understand all the terms of any card you want. Yes, there are some great deals out there, but they are not usually the ones heavily recruiting by direct mail. All too often, the so called "free" cards get you in other ways:</p>
<ul>
<li> cash advance? Pay 3% and interest starts immediately.</li>
<li> purchase in Canada, Europe or elsewhere outside the US? Pay an extra 2-3% on top of the Visa/MC 1% exchange fee.</li>
<li> just received your bill? Look carefully. The due date may only be a week or ten days away. Remember, they can run billing cycles any way they want.</li>
<li> a day late with the payment? Mail was slow. Too bad. Triple base hit for the card issuer. First your interest rate jumps. Then, they charge you a $35 late payment fee. And...who knows what else is in the contract.</li>
</ul>
<p>I also gave S access to a credit card account with a small limit ($3K), instructing him to use it for gas or food if he runs out of cash. He has been admirably prudent about its use, therefore I have no qualms allowing him to keep it. Also recently got his own bank accounts and ATM card - still has not balanced his checkbook (or written any checks).</p>
<p>When my kids began doing things without me - like shopping at the mall - I felt it was safer for them to carry a credit card than cash. So S carries a card that is joint with us, but "his" in that it has a very low credit limit (about $800) and he is the only one to charge things on it. Although he has never lost it, if he were to, it would in no way impact on my ability to use "my" cards. And it makes settling up at the end of the month easy. As he gets older, he has used it for gas, doctor appointments, etc. and I know if he should have an emergency - like his (hmm, I mean my) car gets towed, he will always have enough money to do what needs doing.</p>
<p>Thanks for all the great info. While I understand the potential risks of students having cards, I am very comfortable with my daughter having one at this point. Being at school in a city, and travelling home by bus it is something that I feel is important so she need not carry a lot of cash, and need not deal with fees associated with the debit card (not to mention the debit cards are not accepted as universally as credit cards).</p>
<p>My frutstration was with the card company advertising the card as a 'credit builder' yet denying her because she had none. despite exeeding the minimum required balance in her bank accounts and minimum income from her on-campus job. </p>
<p>We will look further on-line for other card companies. We really want no fees, and have always made it clear to our kids that when they do get credit cards, that they should pay balances in full each month as we do. The key is to not spend money that you dont have.</p>
<p>The same thing happened to my son 5 years ago. He was doing some college trips without us and it was a pain to arrange payment of the hotel rooms without his having a credit card and it just made travel a lot easier. We found that some places will not take a joint ATM/debit card even with the MC or Visa seal on it as they can tell it is a debit card. Don't ask me why. Car rental places are particularly bad about this but it does crop up elsewhere as well. We finally just added a card for him on one of joint credit card accounts. Within a year after he was in college, he was deluged with card offers, most of which were ursurus in interest rates, but we manage to get him his own card. This time around with S2, we did not even bother to try to get him his own card, as we knew the drill. Again, he did some college trips and things on his own where a card in his name was useful. I am sure he will be inundated with card offers as well, once he is in school. S1 got a nice deal on his American Express card and a school visa card once he was in college, and I'll be eyeing the same type of offers for S2.</p>