Congratulations! You made it through high school and you’re at a major transition time in your life. Whether moving on to higher education, taking a gap year or getting right to work at a full-time job, you’ll want to make sure you have your finances in line. A new credit card can be a useful tool as you start the next phase of your life.
Although some students leave high school having already dipped their toes into the world of credit cards, perhaps having been an authorized user on a parent’s account, many more are ready to get their first card as they head off to college or into the workforce.
If you haven’t yet started, now is the time to build a solid credit history. If you’ve already done that, then it’s the perfect time to keep increasing your credit score.
Find the Best Student Credit Cards of 2024
Why Credit Is Important
As you move on with your life after high school, your credit score will become more important. Many types of businesses, including lenders and landlords, use your credit history to determine how they want to do business with you, if at all.
Good credit can help you get lower interest rates and better loan terms if you need to borrow money. This is true for personal loans, business loans, auto loans and even home loans like mortgages and home equity loans. On the flip side, having bad credit often leads to receiving higher interest rates and can make it more difficult to get loan approval. at all.
Besides determining the availability of loans and interest rates, many businesses use your credit score to decide how responsible they think you are. This can affect your ability to get approved for an apartment or home lease, an auto lease, or even a new job.
The best way to ensure you have an excellent chance of approval and will be offered the lowest interest rates is to take care of your credit. Do this by building up your score and keeping it as high as possible.
Limitations of The Credit CARD Act of 2009
In 2009, some changes were made to how banks can market to and approve people under 21 for credit cards. The most important thing to know is that applicants can only be approved for a new credit card if they can show they have an independent means of paying their bills.
This means you can’t get a credit card on your own unless you are over 21 or have a steady job, even if it’s just part-time. This makes sense because you shouldn’t pile up debt if you have no way to pay it back. Unfortunately, it makes it tougher for high school graduates to build good credit without assistance.
If You Don’t Have Independent Income, Ask for Help From Others
Since you generally can’t start building a credit profile on your own before the age of 18, it may be in your best interest to ask for some help to get started with credit, either before you graduate high school or right afterward. Some options are available if you have a friend or family member willing to help. Before you decide on one of these paths, make sure everyone involved understands what is being agreed to.
Get An Authorized User Card
One benefit that almost all credit cards offer is adding an authorized user to an account. The authorized user is given a credit card with their name on it and can use it as if it is their credit card account.
The only difference is that instead of the authorized user getting the bill, it goes to the main account holder. You will need to work something out with whoever agrees to help you with this to ensure you are paying your share of the bill each month.
In adding an authorized user card to their account or co-signing for your account application, the other person involved accepts responsibility for any charges you put on your card. If, for some reason, you can’t or don’t pay your share of the purchases, that person is ultimately responsible for paying the bill. It’s a big responsibility for both of you and, and it shouldn’t be taken lightly.
The great part about being an authorized user on someone’s account is you don’t have to worry about getting approved on your own. The primary cardholder has already been approved, so they only have to provide your information to the card issuer to add you. Authorized user card activity is reported to the credit bureaus with many banks (you can call to make sure that is the case with your bank), so having it and making regular charges and payments will help to improve your credit score.
However, a negative payment history or high credit utilization on the account affects your credit negatively, even as an authorized user. In addition to the main account holder needing to trust you, you must trust them.
Adding an authorized user is often done by parents for their kids when they are still in school. If you don’t already have an authorized user card for one or more of your parents’ accounts and have a solid relationship with them, now may be a great time to ask if they will add you.
Have Someone Co-Sign For Your Card
What if you don’t have a regular paycheck, or your credit score isn’t quite where you need it to be, but you still want to get your own card account? By having a relative or a good friend co-sign your application, you may be able to use their credit history to help you get approved.
A co-signer on your card application tells the bank they are willing to back you up financially if you don’t pay your bills. This greatly decreases the credit risk for the bank, so they are much more likely to approve your application. Just make sure you pay all your bills so your co-signer doesn’t regret agreeing to help you.
Many large banks don’t offer the option to have a co-signer on a credit card, but if you’re a member of a smaller bank or credit union, this could be an option.
Secured Credit Cards
If you don’t have someone willing to co-sign your card application or to give you an authorized user card for their account, a secured credit card could be your best option. Secured credit cards can help you build credit as long as you can afford to provide the minimum security deposit.
It is much easier to get approved for a secured credit card than for a traditional, unsecured credit card because you are providing the money you will be borrowing upfront. Secured credit cards require that you put down a deposit when applying and your credit limit will typically equal the amount of that deposit minus any account fees.
You may not be required to have a checking account, a prior credit card or even a credit score so these are an option for people just starting with credit. Once you’ve shown you can pay your bill on time every month, some secured cards will let you increase your credit limit, get your deposit back or transition to a non-secured card.
Making monthly purchases on your secured card and paying off your bill on time will give you a base credit history and help improve your credit score. With a mix of application requirements and fees, it’s important to pick the right secured card to start with. Here are a few that we think are worth considering.
The information for the BankAmericard® Secured credit card* have been collected independently by Forbes Advisor. The details for the cards on this page have not been reviewed or provided by the card issuer.
| Card | Annual Fees | Notable Features |
|---|---|---|
|
$0
|
|
|
|
$0
|
|
|
|
$0
|
|
|
|
BankAmericard® Secured credit card*
|
$0
|
|
|
$35
|
|
Read more. Best Secured Credit Cards
Student Credit Cards
Student credit cards are exactly what they sound like: Credit cards designed for students. They’re often easier to get approved for and have lower fees and rewards programs that make sense for those still in school.
If you’re under 21, you’ll need someone to co-sign your card application or you’ll need to provide documentation of a steady income. If you meet these requirements or are at least 21, you can use a student card to begin building a strong credit history. Otherwise, your best bet might be to look at a secured card or an authorized user card.
All the cards we list below have no annual fee. As long as you pay your bill in full and on time each month, having one of these won’t cost you anything. The fact that you can earn points or cash back without paying any fees makes these cards a great way to start earning rewards for your spending.
| Card | Rewards Structure | Notable Features |
|---|---|---|
|
|
|
|
|
|
|
|
|
|
|
Read more. Best Credit Cards for Students
Find the Best Student Credit Cards of 2024
Bottom Line
A high credit score can make your life easier and less expensive in many ways, so it’s something you want to learn to manage. When you’re applying for a job, a loan, or an apartment, you want to be confident you’ve built your credit up so it helps you instead of harming you.
Whether you’re heading to work or starting another round of schooling, now is the time to start paying attention to your credit and building a positive credit history. Credit cards are an important part of raising your credit score and the cards we’ve outlined above are some of your best bets for getting started.
Best of luck as you make this transition from high school and on to whatever lies ahead.
