Before deciding to study in the US, you (and your parents) have probably done a lot of research on costs: tuition, housing, food, and travel between home and school. But spending money in the US while in school may mean more than just getting through the semester—it may be your chance to start building your financial future.
Many students plan to stay in the US after they graduate. If you are considering staying, it will be important to have a good credit history and credit score to make big financial decisions in the future (such as purchasing a car, renting or buying a home, or applying for student loans for graduate school). One of the best ways to build good credit is by using a credit card responsibly.
Let us take a look at what to consider when thinking about getting a credit card, how to find the best credit cards for international students, and how you can use credit cards to start building good financial habits.
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 (additional money) 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 (usually a part-time job is OK)
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.
Challenges to getting a credit card for international students
There are many credit cards for college students. But international students may find it difficult to apply and get approved, based on their type of visa or because they do not have a Social Security number (SSN). Shorelight advisors can help you figure out the process, based on your specific circumstances, and make sure you have the right documentation.
How to find the right credit card
As a student, you may receive lots of offers for credit cards. Some will advertise great rewards and points, and others will say they are the best credit card for students because of their low interest rates. It can be hard to figure out which one is best for you, but with a little research you can find the right card to start building your credit.
When comparing credit cards or student credit cards, here are a few things to keep in mind:
Type of credit card—student credit cards are a good option for many students, but others may choose a secured credit card, which requires a deposit up front to ensure you will be able to make payments. Some credit cards are offered through international companies, while others are offered through local banks.
Interest and fees—watch out for hidden fees and interest rates that start low when you sign up, but increase to a level that may be too high for you to keep up with.
Paperwork and documentation—all credit cards will require some documentation, and international students will need to provide the appropriate visa and proof of enrollment at your college or university.
Opening the account—make sure you have done all your research before you open the account, since it will be linked to your credit score once it is open.
Tips for using a credit card
Remember that the primary reason for opening a credit card or student credit card is to begin building your credit. This means using the card responsibly once the account is open.
Make a budget for your expenses. Remember to only spend money on the credit card if you are sure you can pay it off.
Pay your bills on time, especially your monthly credit card bill. Even if you cannot pay off the whole balance, at least pay the monthly minimum so that your credit score is not affected. Paying bills on time and keeping your spending below your credit limit will help you build a good credit score that may help you with your goals later on.
Consider your long-term goals. If you plan to leave the US after you graduate, or do not feel confident that you will be able to keep up with credit card payments, then a student credit card may not be right for you.
Credit cards can be a great way to build up your credit score in the US, which will help if you plan to stay in the US after you graduate. A good credit score can help you rent an apartment, buy a car, purchase a home, and much more. But building up a good credit history and credit score is more than just getting a credit card—it means following a budget, paying your bills on time, and paying at least the minimum monthly payment on your credit cards.
No matter which kind of credit card or student credit card you open, it can be a great opportunity to learn good money habits and start building credit for the future.
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