Student Credit Cards

[visitor]

What are some of the better student credit cards with good rewards and rates? Looking to just build credit for when getting out of school. Thanks.

[InDebtInDC]

I would like to know your source for stating that CC is a good way to build credit, or if that's what you implied.

[sweeps]

Check out the MTVu card. It's a slam dunk if you're a responsible college student.

[visitor]

I would like to know your source for stating that CC is a good way to build credit, or if that's what you implied.

By buying something and paying it right off. Having no late fees, etc. Right now, I have nothing to base my credit off of. Having a CC and paying it off on time etc should help.

[visitor]

Unless I have that totally wrong and it will not help me in that sense.

[disneysteve]

I would like to know your source for stating that CC is a good way to build credit, or if that's what you implied.

I think using a credit card responsibly does contribute to a favorable credit score. Keep your utlization below 30% of your credit limit and pay your bills on time. Of course, you should also pay the bill in full every month. Though that doesn't impact your score, if you can't pay in full, you shouldn't be using a credit card.

[MHlove]

One of the best student credit cards is Bank of America® Student Platinum Plus® Visa® Credit Card and Discover® Student Card - Clear.

bestcreditcardratings.com/student-credit-cards

[InDebtInDC]

I think using a credit card responsibly does contribute to a favorable credit score. Keep your utlization below 30% of your credit limit and pay your bills on time. Of course, you should also pay the bill in full every month. Though that doesn't impact your score, if you can't pay in full, you shouldn't be using a credit card.

And what is your source for this information, especially the 30%? Or is it generalization gleaned from experience?

[disneysteve]

And what is your source for this information, especially the 30%? Or is it generalization gleaned from experience?

Multiple sources - MONEY, Kiplinger's, Smart Money, etc. Pretty much anything I've ever read about credit scores has said that utilization ratio matters. They always advise using no more than 50% of your credit line and ideally no more than 30%.

Here is one article from Kiplinger's that recommends not exceeding 25%:
Boost Your Score - Kiplinger.com

Here's another from MONEY that says to keep it to a third or less:
Know Your History - October 1, 2005

[Exile]

You didn't state your age or employment status, visitor. But assuming that you are still very young, I would urge you not to fall into the credit card trap. In my career in credit and collections, I saw too many college students crash and burn due to lack of awareness and naïveté about the pitfalls of cards.

I find it commendable that you want to start building your credit rating, but believe me credit cards can be deadly for your financial future unless you are experienced in budgeting your finances, are working full time or have other means to support yourself, and can pay the balance in full each month and still keep up with your other obligations.

An alternate means by which you can start a credit history is with an installment purchase (furniture, electronics, etc.) Make sure that it's something that you can truly afford and offers adventageous credit terms, such as interest free if paid within 90 days, etc.

Good luck.

[disneysteve]

I would urge you not to fall into the credit card trap.

I saw too many college students crash and burn due to lack of awareness and naïveté about the pitfalls of cards.

credit cards can be deadly for your financial future unless you are experienced in budgeting your finances, are working full time or have other means to support yourself, and can pay the balance in full each month and still keep up with your other obligations.

An alternate means by which you can start a credit history is with an installment purchase (furniture, electronics, etc.) Make sure that it's something that you can truly afford and offers adventageous credit terms, such as interest free if paid within 90 days, etc.

Exile, while I understand your concern, I'm not sure your advice is appropriate, at least in this case. The simple fact that the OP has taken the time to find and post to this forum asking for advice speaks volumes about his level of understanding and awareness. I certainly get the impression that OP knows the deal and gets that the bill has to be paid in full each month or there are consequences to pay.

If someone is going to be irresponsible with credit, an installment loan is just as bad, if not worse, than a credit card. An installment loan is a secured loan. If you don't pay, it can mess up your credit and they can come and take back the merchandise. A credit card is unsecured. If you don't pay, it messes up your credit but that's all. Not that either is a great thing to do, but if I had to pick one, it would probably be the credit card.

[buzz]

I would like to know your source for stating that CC is a good way to build credit, or if that's what you implied.

From How can I increase my FICO score? at myfico.com:

"In general, having credit cards and installment loans (and making timely payments) will raise your FICO score."

That's pretty straightforward.

[sweeps]

Poor OP hasn't gotten much help on his original question.

[Exile]

Exile, while I understand your concern, I'm not sure your advice is appropriate, at least in this case. The simple fact that the OP has taken the time to find and post to this forum asking for advice speaks volumes about his level of understanding and awareness. I certainly get the impression that OP knows the deal and gets that the bill has to be paid in full each month or there are consequences to pay.

If someone is going to be irresponsible with credit, an installment loan is just as bad, if not worse, than a credit card. An installment loan is a secured loan. If you don't pay, it can mess up your credit and they can come and take back the merchandise. A credit card is unsecured. If you don't pay, it messes up your credit but that's all. Not that either is a great thing to do, but if I had to pick one, it would probably be the credit card.

Disnysteve, you're right that OP appears to be levelheaded. Nevertheless, cards may not be the right way to start out that trip on the credit highway. They're just too volatile.

It's true that if a borrower defaults on a credit card, the charges are usually unsecured, and his/her credit will be messed up. But that's NOT all. The card lender may sue the cardholder, get a judgment, and attach his or her wages and bank account to satisfy the debt + costs. Further, many employers will fire an employee whose wages are garnished. Lengyh of time for a judgment to stay on one's credit history: Usually 7 years.

In the event of default on a secured loan, yes the seller / lender may repossess the merchandise. But except for vehicle purchase, the seller/lender usually cannot sue the borrower for the deficiency balance which is the difference between the balance owing and the original price. Length of time for a repo to be listed on one's credit report: Usually 5 years.

So this is why I advise people, especially newbies in the world of borrowing, to stay away from credit cards to the extent possible. Plastic can come in handy, but unfortunately too many people, like the old deceptive Bank of Ameirca commercial says, still think of it as money.

[Seeker]

Disnysteve, you're right that OP appears to be levelheaded. Nevertheless, cards may not be the right way to start out that trip on the credit highway. They're just too volatile.

It's true that if a borrower defaults on a credit card, the charges are usually unsecured, and his/her credit will be messed up. But that's NOT all. The card lender may sue the cardholder, get a judgment, and attach his or her wages and bank account to satisfy the debt + costs. Further, many employers will fire an employee whose wages are garnished. Lengyh of time for a judgment to stay on one's credit history: Usually 7 years.

In the event of default on a secured loan, yes the seller / lender may repossess the merchandise. But except for vehicle purchase, the seller/lender usually cannot sue the borrower for the deficiency balance which is the difference between the balance owing and the original price. Length of time for a repo to be listed on one's credit report: Usually 5 years.

So this is why I advise people, especially newbies in the world of borrowing, to stay away from credit cards to the extent possible. Plastic can come in handy, but unfortunately too many people, like the old deceptive Bank of Ameirca commercial says, still think of it as money.

Dimetapp - FamilyEducation.com

I'm curious Exile --- Just exactly how would you propose a college aged, and hopefully working, student build a credit history without CC or some form of borrowing and paying?

To pay cash always is one option I suppose, my folks never had CCs and still don't, but I don't know how they qualified for such things as the motgage they had to pay decades ago, nor the auto that Dad drove, etc.

I mean ultimately, responsibility is the key and most people do start one or two credit card applications while in college. What other alternative is there?