Before applying for a credit card
First off, you might already have good credit. If you have a major credit card — and have proven you know how to use it responsibly — you're more likely to get approved for another.
Share the credit. If you cannot obtain a credit card on your own, you can get help from someone who already has one by becoming a Joint Owner or Authorized User on their card. When each of you holds up your end of the agreement, you'll be well on your way to establishing good credit. This overview will assist you in determining if you should be a Joint Owner or Authorized User, depending on your current needs. Either path gives you a card that you can use for your very own, with the same account number as the primary cardmember card, but embossed with your name.
Being a Joint Owner. The most effective way of establishing your own credit (if you can't get approved on your own) is to become a Joint Owner on somebody else's card. You'll share all the benefits — and all the responsibilities — of having a credit card.
A Joint Owner…
- Shares liability on an account with the primary cardmember
- Has access to the full credit limit on the account and is fully responsible for all charges on the account
- Assumes responsibility for ensuring that the monthly bill is paid
- Receives full access to the information about the account, including adding or changing rewards programs
The minimum age requirement for a Joint Owner is 18 (19 in Alabama and Nebraska).
Being an Authorized User. The simplest way to get a credit card you can use is to become an Authorized User on somebody else's card. When the primary cardmember holds up his/her end of the cardmember agreement, this could have a positive impact on your credit report. Although this does not have as strong an impact on building your credit as Joint Ownership, you will be able to have a card to use as your own.
An Authorized User…
- Has access to the full credit limit on the account
- Is not liable for repayment of any of the charges on the account: this is the sole responsibility of the primary cardmember
- Has limited access to account information when calling Cardmember Services; however, would be able to:
- Obtain balance information
- Change payment due date
- Redeem rewards
There is no minimum age requirement to be an Authorized User.
Making Credit History for Yourself. You've weighed the options, now take action. Getting your credit off to a good start can all begin today. Here's to good luck — and even better credit.
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Choosing the right credit card
No two credit card offers are exactly the same, which can make it difficult to choose the best one for your needs. You should carefully read the terms and conditions found in the cardholder agreement. Some common rates, fees and other characteristics to look for include:
Annual percentage rate (APR). APR is the interest rate you will be charged if you carry forward a balance due. Credit cards often have different APRs for purchases, cash advances and balance transfers, so make sure a low APR in one category is not offset by unreasonably high APRs in others.
Introductory rate. Some credit cards offer low introductory APRs, which end after a number of months. Make sure you understand how long the introductory rate lasts and what the rate will rise to afterward.
Penalty Rates. After the first 12 months of your account open date, if you make late payments you may have your rate increased on new transactions. Check to see what the maximum penalty rate can be.
Interest free period. Most credit cards give you an "interest free period" on purchases -- the chance to avoid interest on purchases if you pay your credit card bill in full by the due date. There often is no interest free period for cash advances, balance transfers or balances carried over from previous months — you begin paying interest on those immediately.
Annual fee. Some cards (usually those offering rewards programs) charge an annual fee for use; however many do not, so shop around.
Cash advance fee. This fee is either a per-use flat rate or a percentage of the cash advance amount.
Late payment fee. Charged if payment is not received by the due date.
Balance transfer fee. You may be able to transfer a balance from one card to another to reduce the interest rate, but note that there may be a fee to do so.
Other fees. Ask the lender to spell out all other possible fees, such as those for making payments by phone or foreign transactions.
Minimum payment. The smallest monthly payment you can make to keep your account in good standing. If you consistently pay only the minimum on your credit card balance, it will take you a long time to pay off the balance and you may end up paying a lot of interest.
Membership perks. Check your cardholder agreements for extra card benefits such as: free rental car collision damage insurance, emergency travel assistance, extended warranties, and flight accident insurance.
Handy features. Many cards offer features like email or phone alerts to remind you when payments are due, if you are nearing your credit limits, view statements and make payments online. These options can help you manage your accounts and avoid fees. You can also compare features of many different credit cards at www.bankrate.com. It's a good idea to check with your bank or credit union to see if they offer student cards with favorable terms and features.
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