Evaluating the sheer variety of credit cards to determine which type is right for your first credit card can be daunting. While the basics of applying for a credit card are extensively discussed on consumer finance web sites—what is the APR on purchases, and what is the annual fee compared to cash back rewards or perks the card may come with--deciding which is the best card for building your credit may not be so clear.
To help people new to credit cards, issuers have created starter cards, which includes student credit cards. The primary difference between a starter card and a regular credit card may be the cardmember’s goal of building credit. Starter cards, including student credit cards, may initially come with fewer rewards or perks than credit cards designed for more experienced consumers.
What is the difference between secured credit cards and other types of cards?
Secured credit cards, which require the prospective cardmember to deposit a sum of money as collateral, may be considered a kind of starter card. The typical amount of a secured credit card deposit ranges from a few hundred to a few thousand dollars.
By demonstrating an ability to make payments on time, the individual can typically graduate to an unsecured card with a significantly higher limit and more benefits. The time that process can take is usually about a year, although the exact range depends on the issuer and other factors. Please note that Chase does not offer secured credit cards.
There are other cards available to students, entry-level professionals and other first-time cardmembers that do not require making a deposit as collateral to receive a card. Let’s explore some of them below:
Unsecured credit cards explained
There are many starter credit cards which allow cardmembers to build up their credit without having to put money down as collateral. These include store credit cards, low-limit credit cards, and student credit cards. It might be important for students to understand the difference between student and other types of starter credit cards.
Student Credit Cards
A student credit card is a type of starter card designed for young people new to credit cards. While having taken on a student loan or demonstrating a history of using and paying down a store credit card can be helpful to your application, some cards can approve students without any credit history.
Besides standard identifying information such as an address, a phone number and Social Security number or driver’s license ID number, student credit card applications may ask for proof of being a university or college student. Such proof could include a scanned copy of your student ID, a college transcript or a certificate of enrollment.
The minimum age to apply for a student credit card is 18. Pursuant to/in accordance with the Credit Card Accountability Responsibility and Disclosure (CARD) Act of 2009, students under age 21 will need either proof of independent income or a co-signer to apply. Congress designed this law after the 2008 financial crisis to help students avoid accumulating excessive credit card debt while in school.
While many student credit cards come with the downside of a lower limit, using your card responsibly is a pathway to more and better credit card offers. One of the best ways to demonstrate responsible use of a card is to make consistent monthly payments that are not only on time but are above the minimum required payment. Over many a period of months, best practices can lead to a steady improvement in your credit score.
Unsecured credit cards with a co-signer
Having a parent, a working spouse, or other trusted figure act as the co-signer can help you qualify for your first unsecured credit card. However, please note that Chase does not offer credit cards with a co-signer.
Once you have your first card, some of the best ways to build up your credit history include paying your balances on time and making payments over the monthly minimum required. It also helps to keep your level of credit usage under 30% of your card limit. So as an example, if your card has a $1,000 limit, try to avoid carrying more than a $300 balance at the end of each month.
Consider Chase Freedom Rise℠ and start using Credit Journey®
Chase Freedom Rise is a card that may be available to people new to credit. Visit your local Chase branch to apply. You can also use Chase Credit Journey® as a resource for free credit score monitoring and receive a free, personalized score improvement plan provided by Experian™.