Building Credit With An ‘alternative’ Credit Card
Even though you can eventually get a security deposit back, it can be difficult to come up with that amount upfront and then have those funds tied up for a period of time. In recent years, though, several startup credit card issuers have begun exploring different approaches.
These so-called “alternative” credit cards don’t require a security deposit, nor do they rely on the traditional FICO-based method of credit evaluation. Instead of pulling your credit history, they can use their own proprietary underwriting models to determine your creditworthiness, taking into account things like your school or employer, your income, or your bank account information. And some of them specifically target international applicants.
For example, the Deserve® EDU Mastercard for Students is NerdWallet’s Best Credit Card for International Students for 2020. It doesn’t require international students to have either a Social Security number or a U.S. credit history. The issuer can evaluate applicants through its own underwriting process and algorithm, which looks at factors such as your school and major, your likelihood of graduating and becoming employed, and the balance in your bank account. The annual fee is $0, and the card even earns rewards.
Act As An Authorized User For An Existing Credit Card
If you are unable to get a credit card in the US, you can see if a trusted family member or friend will add you to her/his existing credit card as an authorized user.
A cardholder can add an eligible user with a social security number or ITIN to their credit account as an authorized user, without relying on the authorized user’s credit score.
As an authorized user, you will receive a credit card with your name on it and any expenses made will be charged to the account owner. Some credit card issuers may report the payment history of the credit card to credit bureaus for both the cardholder and the authorized user. This allows an authorized user to earn payment history for the card’s use and build their credit score with every on-time payment.
While you should be sure to arrange with the cardholder any details about how you will use the card and how you will pay for any charges you make on the card, becoming an authorized user is a simpler way to have access to credit without a Social Security Number, ITIN, or credit score.
Citi Rewards+ Student Card
The Citi Rewards+ Student card was a popular choice for students with a strong existing credit score, as it allowed customers to earn rewards with no annual fee, and while continuing to build a credit history. Unfortunately this card is no longer available for new Citi customers.
Citi also used to have another option called the Citi ThankYou Preferred Card for College Students. This card has also been discontinued for new users – but the good news is that there are still plenty of strong choices out there for international students looking for a student credit card.
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Are International Students Eligible For Credit Cards
As long as the credit card issuer accepts Individual Taxpayer Identification Numbers as a substitute for Social Security numbers, international students are eligible to apply for credit cards. However, if you have a very limited credit history or no credit history at all, it may be difficult to get approved.
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Faqs About Best Credit Cards For College Students
1. What makes college student credit cards so different from regular credit cards?
College student cards can be easier to qualify for than regular cards because they are specifically designed for people just starting with credit. If you have a little credit history, if youre a so-called thin file consumer, youll have trouble getting approved for many credit cards.
2. What is the Best First Time Credit Cards for College Students?
The approval process for a student card might de-emphasize credit history in favour of other criteria that suggest youre a good credit risk, including your income and the fact that youre in college studying toward a career.
3. What is the Best Credit Cards for College Students?
Often, college student cards offer features of special interest to people new to credit. These include incentives for responsible behaviour, such as a bonus for good grades or a reward for always paying on time. They may also come with a free credit score and tools to help you learn to manage credit responsibly.
4. What is the Best Starter Credit Cards for College Students?
Note, however, that while student cards might be more forgiving of an applicant with no credit history, theyre not for people with bad credit.
If your credit score has taken a serious hit from mistakes youve made or from simple bad fortune, look to a card designed for rebuilding credit, such as a secured card, rather than a card for establishing credit, like a student card.
What To Do With Your Credit Cards After Graduation
Once you boost your credit score into the well-to-excellent range, youre more likely to be approved for regular, non-student credit cards with richer rewards and enhanced features.
After you graduate and begin working , consider your options with your student credit card:
Upgrade it. Ask your issuer whether you can switch your account to a different card through a so-called product change. Doing so allows you to move to a card that better suits your needs while keeping the account open. Thats beneficial to your credit score because it helps preserve the length of your credit history.
Replace it. If youre paying an annual fee on a student card you dont plan to continue using, and the issuer wont upgrade you, youre probably better off applying for a better card and closing the student card account.
Keep it but in a drawer. If you cant upgrade the card but you arent paying an annual fee, its smart to keep the account open even after you apply for other cards. Your credit score will benefit.
Use a simple autopay and everyday strategy to keep your account active with one purchase or several throughout the year.
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Pursuing Us Credit Cards
The process of getting a first US credit card is the same for all individuals who live in Canada and are also interested in being residents of the United States for the purposes of credit card bonuses, regardless of whether or not youre an international student.
Our in-depth guide summarizes the procedure, including how to set up a mail forwarder, get an individual taxpayer identification number , and maximize points-earning opportunities with both Amex US and other issuers.
If you need a visitor visa to cross the American border, make sure to apply for one early on with a US embassy or consulate in advance of your travel.
After all, walking into a US branch may yield a faster approval with Chase, and its required for Bank of America. Furthermore, if you plan on taking an international trip, US routes may have better business class and First Class availability with Asian, European, and Middle Eastern airlines.
I got my first Amex US card using Nova Credit in October 2019, when my Canadian credit history was about 14 months old. The card I chose was the Hilton Honors Card with a $0 annual fee, and I have it open to this day to build my average age of accounts. Because of limited earning opportunities in Canada as an international student, I went full force into the US credit card market, which is more accommodating to non-residents.
Our Featured Pick For Students Who Dont Have Credit From Abroad To Use: Deserve Edu Mastercard For Students
The DeserveÂ® Edu Mastercard for Students was created specifically for a first credit card for international students, although US citizens and permanent residents who are students can also qualify for the card. It may be an especially good option for students who donât have authorization to work in the US and canât get a Social Security number , and who donât qualify for an Individual Taxpayer Identification Number , although you will need a US bank account.
You donât need an SSN or ITIN, or US credit history to qualify.
No annual fee or foreign transaction fee.
Earn 1% cash back on all purchases.
Offers cardholder perks, including a reimbursement for your first year of Amazon Prime Student .
Deserve reports your payments to only TransUnion and Experian, which are just two of the three major credit bureaus in the U.S.
Doesnât allow for balance transfers or cash advances.
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Capital One Savorone Rewards For Students: Best For Dining And Entertainment
- 3 percent cash back on dining, entertainment and streaming services
- 1 percent cash back on general purchases
- No annual fee and no foreign transaction fees
- Available for fair credit
- 22.99 percent variable APR
Why we chose it: You can apply for the Capital One SavorOne Rewards for Students with an ITIN and it offers a stunning 3 percent back on categories students can take advantage of.
The details: Launched in August 2021, the Capital One SavorOne Rewards for Students credit card earns unlimited 3 percent cash back on three categories: dining, entertainment and streaming services in addition to unlimited 1 percent cash back on everything else. Plus, cardholders earn 8 percent back on Vivid Seats ticket purchases through Jan. 31, 2023. Cash back rewards accumulated with Capital One cards dont expire over the life of the account, so students can build up cash rewards. There are also no foreign transaction fees or annual fees.
Best For Us Students Studying Abroad: Bank Of America Travel Rewards Credit Card For Students
Heres why: The Bank of America® Travel Rewards credit card for students offers a sign-up bonus of 25,000 online bonus points after spending $1,000 on purchases within the first 90 days after account opening.
Thats a great rewards bonus for a student card! And for U.S. students studying abroad, those points earned with the Bank of America® Travel Rewards credit card for students could be used to help offset airfare, hotels or rental cars. And since this card charges no foreign transaction fees, you can use the card overseas just as you would in the States without having to worry about an additional fee for each purchase you make.
With the Bank of America® Travel Rewards credit card for students, youll earn 1.5 points for every $1 spent on all purchases.
Finally, the Bank of America® Travel Rewards credit card for students offers an introductory 0% APR on purchases made within the first 12 billing cycles after account opening, which could help cover an emergency. After that, your purchase APR will be a variable 14.99% to 22.99% on purchases.
One thing to keep in mind: If you do cover a big expense with your credit card, youll want to pay it off as quickly as possible. Ideally, youll want to have no balance on your card when the introductory APR period ends, so that you can avoid having to pay interest on that big purchase.
Read our full review of the Bank of America® Travel Rewards credit card for students to learn more.
How Student Credit Cards Work
In general, student credit cards work the same way as all credit cards. Your card has a credit limit, or the maximum amount of money you can charge to the card. You are required to pay off the amount you spend with the card, usually with a minimum monthly payment. If you do not pay off the entire amount each month, you will pay interest on top of the amount you owe. These interest rates can be very high, which is why it is important to only spend what you can actually afford to pay off.
Some companies offer special credit cards for college students, which have lower credit limits and do not require previous credit history to get approved. They also have specific requirements:
Proof of part-time or full-time enrollment as a student
Proof of income
If you do not have a job, some companies may allow your parent to be a co-signer on the card, to show that you will be able to pay off the card with help. This means the card is in your name and you build credit, but your parents are also legally responsible for payments on the card. Not all companies allow this option, and may require the co-signer to be established in the US, so you will have to check for specific requirements.
The Benefits Of Having A Credit Card
There are many benefits of having a credit card to use while youre an international student. Here are a few of thosebenefits:
- You can build good credit: Your credit history will affect your ability to obtain loans forlarge purchases in the future. If you can build good credit now, youll be golden down the road if for example,you buy a car.
- Learn how to use money: While its great to have independence, having a credit card comes witha lot of responsibility. Its a good way to become disciplined with your money.
- Great backup plan: In case of an emergency that requires a purchase youre otherwise not ableto buy, credit cards are great to have on hand.
- Avoid overdrafts: With a debit card, you can easily overdraft your account when paying monthlybills and fees. You can plan to pay these bills with a credit card to avoid an overdraft fee from your bank.
- Perks/rewards: A lot of credit card issuers will provide perks and rewards for using theirservice.
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How To Compare Different Credit Cards
Student credit cards rarely offer the same rewards and perks as regular credit cards. Thats OK the main purpose of student cards is to build credit to qualify for better cards down the line.
A good student credit card will save you money and report to all three rewards are just a bonus.
Here are some factors to consider as you shop around:
The student credit card you choose should report to all three credit bureaus: TransUnion, Experian and Equifax. These companies gather the information used to calculate credit scores.
Thats why you want your excellent payment history recorded by all of them. All of our recommended student cards report to all three bureaus, except for the Deserve® EDU Mastercard for Students, which says it reports to Experian and TransUnion.
2. Annual Fee
Its ideal to avoid an annual fee when youre on a student budget. Besides keeping costs low, a no-annual-fee card makes it easier to keep an account open once you build enough credit to move on to better credit cards.
Without an annual fee, you can keep your original credit card open to keep the length of your credit history and benefit your .
3. Introductory and Ongoing Interest Rates
Cards designed for people new to credit tend to have higher interest rates, so its best to pay your bill in full each month, which allows you to avoid paying interest entirely.
If you choose a student credit card with rewards, use it only for those purchases you already make within your budget.
Wells Fargo Secured Credit Card
The Wells Fargo Secured Credit Card requires a minimum of $300 security deposit. The security deposit number is the same as your credit availability the more you deposit the more credit you have. They only offer this card to those that already have a savings or checking account with their bank and charge an annual fee of $25.
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A Great Credit Card For International Students Is Out There Even For Those Who Dont Have An Extensive Credit History Or Perhaps Even A Social Security Number
The best cards will also limit fees and may even offer rewards. Here are our top choices for the best credit card for international students and what we like about each one.
Heres why: The Deserve® EDU Mastercard doesnt require a security deposit. And for international students, the credit card issuer doesnt even require a Social Security number to apply.
The Deserve® EDU Mastercard is designed to reward students who have positive financial health and habits.
With the Deserve® EDU Mastercard, youll earn 1% cash back on all purchases, issued as a statement credit. Youll also get one year of Amazon Prime Student when you spend $500 in the first three billing cycles using the card. The Deserve® EDU Mastercard has a $0 annual fee, too, which many students may find to be a nice perk.
If you want to learn more about the Deserve® EDU Mastercard, read our review to check out the full scoop.
Deserve Edu Credit Card For Students
Earn 1% unlimited cashback on all purchases with no annual fee. Students using this card can also qualify with no credit history. A Social Security number isnt required for international students.
For college students and especially for international students the $0-annual-fee Deserve® EDU Mastercard for Students is an excellent starter credit card.
Because of Deserves alternative underwriting standards, its possible to qualify for the card with no credit history. And international students can qualify without a Social Security number, which often isnt possible with traditional credit cards.
Theres also no security deposit required. The card further stands out with incentives like cashback and perks, rare benefits among cards for people without a credit history.
Deserve® EDU Mastercard for Students: Basics and benefits
The Deserve® EDU Mastercard for Students differs from other credit cards in that it relies on applicants financial documents and a proprietary algorithm to measure credit potential.
The startup company also looks at U.S. bank account balances to determine your ability to pay. Your contact information physical address, email address and phone number is also a factor.
Deserve is one of the 10 Best Credit Cards for College Students and it so looks at how information has changed over the years to determine whether it can reach you easily.
Card Type: College student.
Rewards: Unlimited 1% cashback on all purchases.
Foreign transaction fees: None.
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