Student Credit Cards Questions

[Storm Bay]

Dd received an offer in the mail for a college student credit card where she can get a very low credit line (a good thing) and doesn't have to have much money or a job to get it. It would all be hers, and dh & I don't have to sign anything. Have any of your college dc done this? OTOH I hate the idea, but OTOH she could start building a credit rating. She is very frugal and not one to overspend her own money.

 

If you have or even if you haven't, does anyone have any experience with a 1st Financial Bank credit card? If so, how do they compare with other credit card companies, etc?

[Wildcat]

Well, we would consider it, but we (as a family) often do things others wouldn't. :tongue_smilie:

 

It would depend on the student ~ you said she isn't a 'spender', but does she understand about paying on time, paying the min vs more/all?

 

I would imagine that the cc has a very high interest rate (and maybe a yearly fee, which would be a deal-killer for us), so if she does this, she needs to be prepared to pay it off each month, and after a year or two, check around for a lower interest card. I would also make sure that she isn't given a limit over, say, $500. That is what my first card had, and it allowed me to establish enough credit to apply for a card with better terms. I did have to ask them to "lower" my limit at one point, but that $500 is a great amount for a first card. It's also not so high that it would create a huge problem if she needed parental help. :coolgleamA:

 

I know nothing about the company you listed. Can you google reviews on it?

[Brigid in NC]

I would also make sure that she isn't given a limit over, say, $500. :coolgleamA:

 

I completely agree that a low limit makes sense for a first-time credit card holder. But let me share something I just learned.

 

Last week we helped our ds apply for a credit card with our/his bank (so that he could easily pay his credit card bill by transferring money from his checking account), and our local banker alerted us to an interesting point. Part of the reason we wanted to help ds get a credit card was so that he could begin building his own credit history--and the banker (who we know and trust) said to be careful not to set the limit too low. If the credit card is going to be used to pay for college books and rent, you want to set the limit high enough so that the student is not coming close to the credit limit each month. She said that even if the amount is paid off in full each month, "maxing out" will negatively affect the cardholder's credit score. :w00t: I was not aware of this at all. I figured that if the balance was fully paid off each month, that all was good. So, just a tidbit for consideration.

[readwithem]

Just for the record, we have never responded to an unsolicited cc offer for any family member, college student or otherwise. We have intentionally sought out cards that provide enough added value (cash back, no annual fee, free shipping,etc.) to make them a worthy addition to our collective wallets.

 

That said, my college daughter has two credit cards, one in her name and one as an add-on to our family's travel card which has no foreign exchange fees.

[Wildcat]

I completely agree that a low limit makes sense for a first-time credit card holder. But let me share something I just learned.

 

Last week we helped our ds apply for a credit card with our/his bank (so that he could easily pay his credit card bill by transferring money from his checking account), and our local banker alerted us to an interesting point. Part of the reason we wanted to help ds get a credit card was so that he could begin building his own credit history--and the banker (who we know and trust) said to be careful not to set the limit too low. If the credit card is going to be used to pay for college books and rent, you want to set the limit high enough so that the student is not coming close to the credit limit each month. She said that even if the amount is paid off in full each month, "maxing out" will negatively affect the cardholder's credit score. :w00t: I was not aware of this at all. I figured that if the balance was fully paid off each month, that all was good. So, just a tidbit for consideration.

 

Oh, yes, this! I completely forgot to mention that nugget. The last I heard (three years ago), if you go over 50% of your limit, it will negatively affect your credit. It also doesn't matter if you have four cards with $10,000 limits each and only carry an $8,000 balance on one.... that one card with the high balance will give you a lower overall credit score than having $2,000 on each card. Stupid, eh?

 

Just for the record, we have never responded to an unsolicited cc offer for any family member, college student or otherwise. We have intentionally sought out cards that provide enough added value (cash back, no annual fee, free shipping,etc.) to make them a worthy addition to our collective wallets.

 

That said, my college daughter has two credit cards, one in her name and one as an add-on to our family's travel card which has no foreign exchange fees.

 

This. Shopping around is best.

 

Sometimes, though, those unsolicited cards are best for a student to get without needing a co-applicant/co-signer. If that's the route one chooses, however, it's best to get rid of it ASAP, as there are better values out there!

 

Another great point!

[Storm Bay]

Thanks. I did check reviews, but some of the sites were just for complaints. It doesn't look good, although the company has an A+ rating with BBB and has over 90 resolved cases handled through them. I'm a but suspicious naturally. She does know about paying on time and I did tell her that to improve her credit rating it's good to spend no more than 30 percent of her limit per month and then pay it off.

 

The two comments I did find several times since posting this that are the deal breakers for me (an annual fee would be as well) is that this company will suddenly change when your account is due and they charge for paying by phone. Those who like the card were those who paid their bills on time, but I think that it's harder to keep track if the due dates can change if a statement gets lost in the mail. If someone here had had good experiences with this, it would be helpful to know.

 

I got my first credit card with my dad as a co-signer; I was about 30, still single and finally caved in so that I could rent a car if I needed to, etc. However, he worked it out with his bank manager so it improved my credit rating. Dh and I have credit cards, but not through our local banks. If she got a card, then she could set things so that she can't receive any pre-approved credit card offers (not what she has now.)

 

As for books, she has a $300 per semester credit at the college bookstore as long as she's in the honours college in good standing, and she has a chequing account with textbook money my mil sent her, so we'll see if they'll take cheques. That's the one place on campus she can't use her campus ID card that's used for meals, buying certain things, etc.

[Arcadia]

I have a secured credit card in my name to build credit since I am a SAHM. There is an annual fee though which we are willing to pay as if anything happens to hubby, I have some credit history to fall back on. I did received plenty of pre-approved credit cards offers and my guess is it is because I have my hubby's supp cards.

AMEX is the card that most shops reject. So far we had credit cards with Wells Fargo, Citibank, BOA and Target and all were generally okay. We did not run into any issues.

 

If the credit card is going to be used to pay for college books and rent, you want to set the limit high enough so that the student is not coming close to the credit limit each month. She said that even if the amount is paid off in full each month, "maxing out" will negatively affect the cardholder's credit score.

 

I was told by my banker to keep the usage to 33% or less for each card. Also try not to close the oldest credit card you hold as that is good for credit history.

 

ETA:

Sign up for paperless statement. We have mail break-ins here and bank statements are targeted for mail theft.

We never paid by phone. We just pay at the bank's ATM or bank.

[regentrude]

The two comments I did find several times since posting this that are the deal breakers for me (an annual fee would be as well) is that this company will suddenly change when your account is due and they charge for paying by phone.

Why would you pay by phone?

 

Those who like the card were those who paid their bills on time, but I think that it's harder to keep track if the due dates can change if a statement gets lost in the mail. If someone here had had good experiences with this, it would be helpful to know.

 

Nowadays it is no longer necessary to rely on mailed paper statements. If she gets a credit card, she should set up online banking so that she can check her credit card balance and statement online and pay her bill online as well. She should make it a habit to check every few days as this is the best way to spot wrong charges, ID theft - or, as you mention, changing conditions.

[Nicole M]

We set up my son's credit card account with our local credit union, and his accounts are all connected, so he can make transfers between checking, savings, and his credit card loan very easily. One-stop shopping, as it were.

 

A few years ago there were some high profile cases of suicides related to despair over enormous credit card debt. Predatory credit card companies had begun to target college students, and the families were, naturally devastated, and not even aware of the tens of thousands of dollars of debt accrued. Of course it was and is a complex issue, but since hearing those news stories a while back, we made it our rule never to respond to unsolicited credit card offers.

 

And you know, it seemed like my son was getting a LOT of credit card offers, mailed here to the house. I was throwing them into the recycling the moment they came in the door. But two weeks ago I thought, I wonder just how many he gets, on average? So I collected them, and in ten days of mail service, he's received seven, from four different credit card companies.

 

I guess I would just be very apprehensive about not going with a trusted bank.

[katilac]

I love what SWB says about this in one of her talks (paraphrasing): A credit card should not be a parting gift to the student :laugh:

 

 

In other words, ideally you would start them with the card under your guidance while still at home. If that ship has sailed, I would encourage dd to get it, with the understanding that we would still be providing that heavy guidance, looking over the bills, discussing how/when to use it, etc. Not b/c you don't trust her, but simply b/c there is a lot involved.

 

I would not have her keep the card for emergencies only (that won't help her credit rating much), but to use it in a sensible manner. My kids are accustomed to us using cards for everything, and paying in full each month. We work hard to teach them that money is money, whether it be cash, check, debit, or credit card, and you only spend what you have.

 

Now, for building credit, I *think* it is better to have at least a few occasions of paying on time over a period of months, rather than in full each time. Haven't checked that in a while, though. If that's accurate, I would help her plan how to do this deliberately, to keep from falling into a pattern of not paying in full.

[Storm Bay]

Why would you pay by phone?

 

 

 

Nowadays it is no longer necessary to rely on mailed paper statements. If she gets a credit card, she should set up online banking so that she can check her credit card balance and statement online and pay her bill online as well. She should make it a habit to check every few days as this is the best way to spot wrong charges, ID theft - or, as you mention, changing conditions.

 

I personally pay by phone sometimes as it's free and we don't do our banking online. Dh and I have had our account for longer than we've had a computer and neither of us has wanted to change how it's set up. OTOH, dd just opened an online account, so she may end up working paperless once she gets on her email more regularly. She's never felt the need to do email, but has to for college.

 

Dd is very careful with her money, so as she's ready we'll work on getting her a credit card with a reputable company such as our bank. She's only going to be about 30-40 minutes away, so will be home some to many weekends depending on her job situation (she's just interviewed for a weekend job in our town.P

[AngieW in Texas]

We had our oldest get a college credit card through our bank which is also the bank on her campus. We actually pay the bills on that card because she is supposed to use it for school expenses like textbooks and a parking pass. She is also supposed to use it for any medical expenses and for gas and groceries. Any extras are supposed to be paid with her debit card. The paper copy of the bill comes to the house so I can pay the bill each month.

 

We tried to get the same deal for our middle dd, but she has to wait until Christmas break because the bank won't do it until she is 18yo.

 

Since she is going to the same school where her sister is, her sister is going to buy her textbooks for her on her credit card. That way if any need to be returned, they can be. Because when you return a text, you need to give them the same card you bought it with so they can credit it back to the account.

 

Since it is a college credit card through a participating campus, there are no fees.

[readwithem]

We set up my son's credit card account with our local credit union, and his accounts are all connected, so he can make transfers between checking, savings, and his credit card loan very easily. One-stop shopping, as it were.

 

A few years ago there were some high profile cases of suicides related to despair over enormous credit card debt. Predatory credit card companies had begun to target college students, and the families were, naturally devastated, and not even aware of the tens of thousands of dollars of debt accrued. Of course it was and is a complex issue, but since hearing those news stories a while back, we made it our rule never to respond to unsolicited credit card offers.

 

And you know, it seemed like my son was getting a LOT of credit card offers, mailed here to the house. I was throwing them into the recycling the moment they came in the door. But two weeks ago I thought, I wonder just how many he gets, on average? So I collected them, and in ten days of mail service, he's received seven, from four different credit card companies.

 

I guess I would just be very apprehensive about not going with a trusted bank.

 

Isn't it amazing how many unsolicited offers you get?

 

The only thing I would suggest is shredding them before recycling, as someone could go through your recycling and submit the forms and ruin your credit.