You envy your best friend who has a credit card featuring a photo of her dog on the front, and your brother has a card with what seems like a never-ending limit, but you're stuck with the same ordinary card you've had for years. Credit card eligibility rules require good credit and a provide a credit line corresponding with your earned income, but young card seekers have a few other ways to attract credit card issuers to fill in those empty extra slots in your wallet.
Credit card companies love young shoppers with excellent credit scores, but the love extends only as far as the payments you make on the cards. After credit reforms passed as amendments to Regulation Z, the Truth in Lending Act, changing business as usual for lenders in 2010, banks found extending credit to college students less attractive. While students with good credit can still get regular credit cards, those with spotty credit or no credit at all are finding that banks more and more feature prepaid cards as the main choice for credit options. Prepaid cards, also called secured cards, require you to either place funds in an account and then use the card to draw from that amount, or pay the bank upfront for your future charges and use the card as you would a credit card with the limit frozen at the amount of the prepayment. Branded credit cards featuring images, including campus mascots, are nothing new, but the combination credit cards offered beginning in 2012 also serve as campus identification and college library cards.
Couples with good credit and a high combined income level have a choice of credit cards from major bank lenders, but the credit cards offered in 2012 gave few special perks such as bonus points or free travel. High-end credit cards feature no fees, low interest rates and allow you to miss a payment or two during the year without the fear of extra interest added to your account. Qualifying for these credit cards means a clear credit record, no late fees or failures to pay, and a professional-level income for both people. Couples with less-than-sterling credit also have an opportunity to apply for credit cards, but interest rates for these cards in 2012 averaged approximately 10 percent higher than your sterling-credit counterparts.
Professional Organization Credit
Searching for credit cards with better interest rates and lower fees means looking at your resume. Membership in fraternities and sororities, professional societies, alumni organizations, honor clubs and professional groups may offer a chance to apply for credit cards at lower rates than cards offered to the general public. These special card offerings occasionally also arrive without the annual charge or card maintenance fees and typically charge lower fees for overdrafts.
Labor unions, company credit unions and professional occupation organizations, including professional teaching societies, also offer young credit applicants a greater chance for credit card acceptance, although the starting credit limit may be small compared with the limits offered by commercial credit lenders.
- Wall Street Journal: Credit-Card Issuers Pitch No-Frills Plastic
- Wall Street Journal: Banks Pitch Prepaid Cards on College Campuses
- Board of Governors of the Federal Reserve System: New Credit Card Rules Effective Feb. 22
- Board of Governors of the Federal Reserve System: Press Release
- FindLaw: Shopping for Credit Cards
- Bankrate.com: 10 Questions Before Getting a Secured Credit Card
- AARP Public Policy Institute: Prepaid Cards -- Promise and Pitfalls for Consumers
- Bankrate.com: Should You Get a Credit Union Credit Card?
- Alliant Credit Union: Qualifying Organizations
- Los Angeles County Bar Association: Additional Resources for Your Professional Needs
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