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Find the best student credit cards of 2021
Getting a credit card while attending college full time is a great way to start building credit. Even if students do not have gainful employment, they can use other forms of income in their credit card application, such as family bank deposits or financial aid leftovers.
Students must be at least 18 years old to be eligible for a credit card.
Why is income required on a credit card application?
Credit card issuers typically require income information on a new application. Issuers often look at disposable income – what is left over after someone pays expenses like rent or utility bills. Disposable income helps issuers determine what the applicant’s credit card limit will be and whether the cardholder will be able to make payments on time.
It is common for full-time students to have no income or minimal income from part-time employment. So what should a student put on a credit card application for income?
What counts as income?
Students can list actual earnings from a job if they have one. In addition to income from work, regular allowances or bank deposits received from parents or family may be included in income. As long as the monthly bank statements prove income, they are valid as income on a credit card application. Remaining financial aid (after paying tuition and college fees) may also count towards the income of a credit card application.
Make sure you add up all the potential income received and enter it into the credit card application. Students may be required to provide documents to prove their income, such as pay stubs, bank statements, or financial aid records.
How Much Income Do Students Need to Qualify for a Credit Card?
Technically, there is no minimum income required to obtain a credit card. A student’s disposable income could be as low as $ 100 and they would still have the option of being approved for a credit card.
Higher incomes generally give applicants a better chance of getting a card approved and a higher credit limit. Don’t lie about the income on a credit card application. Putting false information on a credit card application is fraud and can result in jail time or heavy fines.
What to do if you don’t get approved for a credit card
Some students without a credit history may have difficulty obtaining a credit card. Credit card issuers review an applicant’s credit history, but younger students usually have no history to analyze. They need a first credit card to build a line of credit for future loans and major purchases. Fortunately, there are alternatives for students to build a credit history if a credit card issuer denies an application.
- Apply for a student credit card. Student credit cards are designed to help students get their first credit card. Issuers may have lower expectations for key application information such as revenue. Some do not have an annual fee and offer the option of increasing the line of credit over time as long as payments are made on time.
- Apply for a secure credit card. Secured credit cards are approved for a predetermined amount of cash prepaid by the cardholder. The initial payment becomes the credit limit of the card. Cardholders can begin to build a positive credit history by using the card to make purchases and pay off their monthly balances. Keep in mind that purchases can still be charged with interest if the balance is not paid monthly. The cash amount will be returned to the cardholder once their account is closed.
- Become an authorized user. Parents or other family members can add someone as an authorized user to credit card accounts. This is a great way for students to build on someone’s good credit history to start building their own. Be sure to ask the issuer first if they are reporting authorized user activity to the credit bureaus.
- Have a co-signer sign the application. Having a parent or other responsible family member co-sign a credit card application can be one way to make approval more likely. As long as the co-signer has decent credit and pays their bills on time, it increases the chances of student approval. Many banks do not allow co-signers on credit card applications.
Students can list actual income from employment, regular bank deposits from family members, or remaining financial aid as income on a credit card application. Make sure you are honest about the income on an application. Creating or faking the truth about any information is fraud and can result in jail time or heavy fines. If a student receives a credit card denial, they can try again using a co-signer on their application. Alternatively, students can apply for secure credit cards, student credit cards, or become an authorized user on a family member’s account in order to start building their own credit history.
Find the best student credit cards of 2021