Credit Card for Student with no credit history

<p>My S got the BofA student package of on-line checking account, debit card and credit card when he turned 18. He had no credit history. The credit limit was low, something like $700. He just got a new replacement card and the limit is now $1700. He will be 20 in the Fall. I assume the credit increase is because he pays the balance off each month. He never writes a check (I don't think he knows how), pays bills on-line and uses his debit card for cash and deposits.</p>

<p>Wow, I'm glad I read this. We've added our kids onto one of our credit cards in hopes of establishing some credit for them. I didn't know this had changed.</p>

<p>My son has a citi bank card with "thank you" points for college students, but that wasn't really a draw, he's very frugal and wouldn't rack up that many very quickly. He linked it to his checking account and gave me the password just in case he wasn't around or able to pay it one day. He tries to either pay it in full or in 2 or 3 payments. They told him at the bank (and I read this online) that paying it off in full is better for your pocketbook, but doesn't show that you can make monthly payments on time. So he keeps it low, under 100.00 and usually pays it off over 1-3 months when he has a balance.
I think (for me too) that internet paying is much easier than remembering to write the check, mail it, buy stamps, etc. You can even have an email reminder a week before your due date. If you pay it late, you can't really blame anyone but yourself.</p>

<p>"They told him at the bank (and I read this online) that paying it off in full is better for your pocketbook, but doesn't show that you can make monthly payments on time."</p>

<p>That doesn't really make sense. If you are paying it off in full every month (on time), you ARE showing that you can make monthly payments on time.</p>

<p>This explains it pretty well:</p>

<p>Ask</a> YOUNG MONEY: Should I pay off my credit card balance each month?</p>

<p>FICO will allow authorized users afterall</p>

<p>FICO</a> Will Keep Authorized User Accounts</p>

<p>FICO</a> to Restore Authorized User Accounts — Mortgage Industry Blog</p>

<p>Nrdsb4, I agree, you shouldn't have large balances and you should try to pay off your charges when you can. When my nephew was in business school, he echoed what I read below:
"Contrary to what many credit advisors say, paying off credit cards each month is not always the best action to take. When making credit card payments, don't pay the balance in full each month -- let a little roll over. Carry a balance on your credit card every other month --as little as a dollar. Paying balances in full does not increase your credit score; paying balances in full may in fact lower your credit score. Accounts with zero balances do not compute significantly in your total score. For instance, a credit card with a perfect payment history and no balance will not raise your credit score as much as a credit card with a low balance. Any balance keeps the card active so it computes in your credit score."
I don't think you should let a credit card company make a lot of money on you, (I myself made some mistakes in the past with that) but what I was told years ago when I was applying for a loan, was that cards like American Express were never considered the same in computing credit scores because you were forced to make a full payment every month (not the case now) You were using it not to carry cash and it made sense it wouldn't be considered the same as a regular credit card. If you use your Visa the same way, it shows you make timely payments, but that you could have paid if off anyway, you just delayed the payment. My nephew told me that paying a mortgage or car loan, a longer timed payment, takes budgeting and it's harder for some to make the same payments long term which they see at banks often.</p>

<p>I told my son to try to never have a large balance, but if he occasionally takes a few months to pay off a balance,instead of making his usual "in full" payments, it wouldn't hurt his score.
5</a> ways to boost your score - Sep. 21, 2005</p>

<p>Depending on which source you are reading, you will find arugments among financial experts about whether or not paying off balances in full helps or hurts your credit. You can find multiple sources to argue both sides of that one. I found them myself when I googled this very question.</p>

<p>I am not going to debate that, I just disagreed with the statement that paying off balances every month doesn't show that you can make monthly payments on time. Whether you pay $300 of your $500 balance on time, or whether you pay $500 of your $500 balance on time, you are still making a monthly payment on time. This assumes that you are using your credit card every month, not just once or twice a year and thinking that paying off two monthly balances a year is going to show better than someone who pays most of their balances down every month on time.</p>

<p>The credit card companies love it when you don't pay off your balance because they get to charge you interest. They would certainly prefer the client who pays part of the balance on time every month to someone who pays it all off each month. In fact, some credit cards are starting to charge a yearly penalty for those who do pay off their balances in full every month, and others are considering levying such charges. Doesn't matter to me. We have an extremely high fico score with very little debt. We have paid our credit card balances in full every month since we have been married (20 years now). Our fico score has never dropped; it has only risen since we've been married, so we are living proof that paying all your bills in full on time need not hurt your credit rating.</p>

<p>We got son a low limit and low rate credit card from USAA so if you are associated with the military -- they are a good source.</p>

<p>USAA is wonderful. We've done business with them for 35 years. We opened a joint checking account with S when he left for college in 2005 and also a joint credit card. USAA rebates up to $15 in ATM fees monthly, which is a great savings over the year. S opened a student Discover card in his own name about a year ago to build credit on his own. I'm trying to convince him to keep USAA when he graduates in December. Their customer service is tops. When a different S had a Wells Fargo account years ago, I called CS with a question, then saw a $2 charge on the statement. Seems that if you can find your answer online, WF charges you $2 to speak to a CS rep.</p>

<p>My son has what thumper1 mentioned: an unsecured card from the same bank he has checking with. He went to the "bank room" at orientation, where 7-8 area banks had representatives, and they were all competing for the student business.</p>

<p>Fastweb had a link to this BOA site about their student package:</p>

<p>Student</a> Package</p>