advice for a college student seeking a credit card?

[seaj11]

Last fall, I applied for Amazon's Student Visa card and was declined. I've never had a credit card, but I'd checked my score within the previous year (it was good), and a little web research suggested that I'd be approved, especially for a card geared towards college students like myself. So I checked my credit report and discovered that while I had a good score (I don't remember the exact number), I had an outstanding balance with my local hospital that I'd never received a bill for. That's now been taken care of, as of last October. My question is, is there a length of time one should let elapse after a debt is paid off before applying for another card? That is, when could I, as a college student whose credit history is next to nothing, apply for another card? I understand that applying for one can possibly lower your score, so I'd rather not apply if there's no chance of getting one. Thanks in advance for any advice or experience you'd like to share.

[RedZinnia]

My advice would be not to get one at all. If you get a debit with a Visa or Mastercard logo and you'll be able to do anything you need to without going into debt.

[Rebecca]

Unless you are super-anal about your finances, don't get one.

If you insist, I would make sure that it only had a limit of $500 (at most) and do not let them raise the limit.

Credit cards are just so bad.

[lilac]

What I did once I turned 18 was I got a very low limit credit card (it was either $300 or $500) from my bank with a really high APR. The low limit and high APR kept my spending in check when I was really young so it would deter me from spending a lot of money, mostly because I couldn't.

I think you'd probably have a higher chance of getting approved of one from your bank too, because they'll see that even if you did have that issue with the hospital, they'll also get to see the good credit history you've built up while you've had your money with them.

Good luck, and be careful if you do get one!

[gt0163c]

While I don't know the answer to the original question, I would recommend getting a credit card as a college student, as long as the student understands about credit, is disciplined enough to control spending in such a way that they're able to pay it off every month. My reasons behind this come from the experiences of a couple of friends who did not get credit cards in college. Both of them had issues getting credit cards upon graduation and getting "real jobs" due to having insufficient credit history. I know one guy had to start out with a prepaid credit card (like a debit card, only not exactly linked to a bank account...it was kinda weird and seemed a little sketchy). The other had to get a card in his name from his parents' account. Fortunately, both of them were able to establish enough credit history to allow them to take out reasonable loans for vehicles and houses when the time came.

[seaj11]

Yes, gt0163c, that's exactly my concern. I know credit cards are "bad," but I feel I'm responsible enough to handle one, and in many ways it seems like a necessity, or at least a way to prove you can handle money (if, of course, you do) when it comes to buying a house or car or getting a new job. And for anything I buy online, I do have a Mastercard debit card for PayPal.

Thanks lilac, I'll see what my bank has to offer.

[khorrell]

Seaj11, were you in a situation where the hospital will remove the derogatory information from your credit report? Depending on who made the error, they can remove the information completely. I ran into a similar situation a few years ago and after two years of correspondence, the collection was removed from my credit report. (I was not liable, so it wasn't an ethical issue. They were wrong, and I wanted them to fix it.)

If you know that you can be responsible, I do recommend that you obtain a credit card. I completely agree that you should keep the credit limit extremely low, perhaps use the cost of an emergency plane ticket home as your basis for what a good credit limit would be. If you are by any chance eligible to join either USAA or Navy Federal Credit Union, they are good, honest companies that have outstanding credit card products. Regardless of what bank you use, try to steer away from companies that have tough policies on late payments and other large fees. Of course, you should never go over your limit, or pay late, but it is just so much less stressful working with a company who seems to be working more with you than more against you.

Good luck, you sound like a responsible person who can handle a credit card.

[gt0163c]

Originally Posted by seaj11

I know credit cards are "bad,"

A lot of people say this, but I think it's really an improper generalization.

Yes, you can get into big financial trouble if you're not good at budgeting. But, if you are aware of the terms, handle your money responsibly and pay off the card each month, I think credit cards are great. I use mine for probably 95% of my purchases. I'd love to be able to pay my mortgage with my credit card. That's about the only bill I don't put on my card. I get airline frequent flyer miles and, as a result, probably average a free plane ticket every other year. I have protection against fraud when I purchase things on the internet and it's much more convenient than cash.

Yeah, there's issues, but I don't think that credit cards are bad just by definition.

[seaj11]

khorrell:They assured me it had been cleared from the credit report. It was only $14, so I went on and paid it, even though I suspected there might be a clerical error involved. Because of the small amount, I would have paid it as soon as I got the bill...but I never did, despite their insistence they'd sent it to me at two different addresses. Thanks for your advice about USAA and Navy Federal Credit Union...I'll keep those in mind.

gt0163c: Yes, that's why I put "bad" in quotation marks. It's true that some companies will try their best to screw you over with their cards, and I've read a lot of horror stories on Consumerist. But I agree with you, we can't say all credit cards are bad by definition.

[Xin Lu]

I got one with my bank at the end of senior year of college when I was working at an internship. It had a limit of $600 and it was enough for most things like food and gas. I paid it off every month, though. If you can pay it off every month I suggest getting one because you need to establish your credit history. Sometimes employers do credit checks on you, too.