With all the complications international students face with converting currency and credit/debit cards when they travel abroad, it often is recommended to create a bank account or apply for a credit card when you arrive to the U.S.
If you find yourself looking to apply for a credit card, it may be a more difficult process than you would expect. To give you a better idea of how to do this, you can read our guide below.
What is a credit card?
A credit card is typically offered by a bank or financial institution and allows you to make purchases using their funds under the agreement that you will pay them back over a recurring period of time (usually monthly). These cards make it simple to make cashless payments for expenses but come at the risk of accruing debt if you cannot pay back the amount you spend in time.
Credit cards function differently to debit cards, as debit cards are linked to your checking account and only allow you to spend the amount that is posted in your account. With credit cards, you will usually have a credit limit but have the option to spend more money than you have.
Is there a reason for an international student to get a credit card?
When you come to the U.S., any financial information you have from your home country will not be accessible, which can make it difficult for you to apply for loans, sign a lease for an apartment, etc.
Credit cards are not necessarily needed if you’re an international student but the primary reason many get one is to establish a financial profile and receive a credit score, which is a rating from 300 to 850 determined by credit bureaus to predict how likely you’d be able to repay debts.
Debit cards are a safer and more accessible option if you’re just looking for something to pay for your expenses while abroad. However, if you do have plans to stay in the U.S. after school, it may be appropriate for you to get a credit card to begin to establish your credit history.
How difficult is it to get a credit card?
The process of getting a credit card can be complicated, as credit card companies need to check your financial profile to determine if you’ll be a reliable candidate. Since international students don’t automatically get a credit score or social security number, it’s difficult for these companies to review your information.
Many assume that you need to apply for a social security number to get a credit card but it’s not necessary to have one, though it’s preferable to have. You can request a social security number if you are employed at least part-time or apply for an Individual Taxpayer ID Number (ITIN) if you have to file a U.S. tax return, which credit card companies also can use.
Even if you don’t have either, approval for a credit card is up to the discretion of the sponsoring company. Some cards, such as the Deserve EDU or Oportun Visa credit cards, do not require social security numbers at all.
Is there anything I can do to approve my odds of getting approved?
Regardless of if you can get a SSN or ITIN, you should begin to try to establish a good financial background to improve your approval odds. You can do this by depositing funds into a checking account, signing a lease or paying rent/utilities in your name. Your school’s international student office should have resources you can utilize so you can always contact them to see how they can help.
Some companies also offer “secured” credit cards, which will ask you to pay a security deposit as a means of recovering debt in the event you cannot repay your bills. It’s a lot easier to get approved for this type of card since the security deposit covers some of the risk.
What are some tips I can follow to responsibly use my credit card?
Credit cards can be useful but it is always imperative that you exercise caution when you get one as it only takes one mistake for you to find yourself in debt.
Here are some tips you should follow as a new credit card user:
- Don’t overspend- A very simple guideline but you should never look at your credit card as free money. Do not make purchases you would not be able to afford if you were paying with a debit card or cash.
- Make sure understand the terms prior to applying- You should understand things such as your card’s annual percentage rate (APR), credit limit, transactions fees, minimum repayment, etc.
- Use your credit limit as a guideline- It’s always best to keep a balance that is low proportionately to your maximum balance. A good guideline to use would be to only spend up to 30% of your credit limit.
- Pay your full balance all the time- Interest is only accrued if you have an outstanding balance past your set billing date so if you pay your credit bills in full whenever you are charged, you should never have to pay any more than you spend.
- Make sure you set reminders or auto-pay- Understand when you need to make payments and either set up auto-pay through your company or carefully set reminders for yourself so you never miss a payment.
- Don’t be afraid to spend- Not using your card will not do you any help in establishing your credit score. The more you spend and pay back on time will allow you to get the highest possible credit score.
