Studying abroad can be an adventure, but to get the most out of it you’ll need a plan to keep your finances running smoothly.
A credit card can be an ideal payment tool while traveling – not only because students can use it to build credit while earning rewards, but also because credit cards can provide peace of mind. travel benefits, robust protections against fraud and more.
If you are a student, here are the credit card options you may be eligible for and how to determine which ones are best for you.
Know what you are entitled to
You can apply for a credit card from the age of 18, but under the Credit Cards Act 2009, consumers under the age of 21 are required to have either a co-signer or independent income to qualify for a card. Note, however, that many major credit card issuers do not allow co-signers, and many young students will not be able to meet independent income requirements.
“You can apply for a credit card once you are 18, but consumers under 21 must have a co-signer or independent income to qualify for a card.“
Students 21 and older also need a source of income to be approved, but they are allowed to list any income to which they have reasonable access, such as income earned by a partner or spouse.
No matter how old you are, however, it can still be difficult to get approved for a credit card if you don’t have a credit history.
Credit card options for students
But difficult does not mean impossible. If you are a student looking for a credit card, you have several options:
Apply to become an authorized user on someone else’s card. Becoming an authorized user means that a primary cardholder authorizes you to use their account. You will get your own credit card, which is linked to the main account and has the same account number, and you will have full access to the card’s line of credit. If the primary cardholder already has good credit and the credit card issuer reports the activity of authorized users to major credit bureaus, this could help your credit score. Keep in mind that the primary cardholder is the person responsible for the debt, which means that if you use the card irresponsibly it can damage the credit of the person who agreed to help you.
“As an authorized user, you will get your own credit card, which is linked to the master account, and you will have full access to the card’s line of credit.“
Get a co-signer. If you are under 21 and do not have access to independent income – and if the issuer allows it – you can ask if a spouse or close family member would be willing to co-sign for you to obtain a credit card. . In these cases, the issuer uses that family member’s income and credit history to determine if you qualify for the card. Unlike in authorized user situations, however, you and the co-signer are both responsible for the debt.
Apply for a secure credit card. If you don’t have a credit history, a secured credit card may be an accessible option. These cards require a guarantee in the form of an initial security deposit. For example, you give the issuer $ 200, which gives you a credit limit of $ 200. This reassures the lender that they can still collect your credit card balance if you are unable to pay. Once you establish a credit history with a secured credit card, you can apply for an unsecured card (and you can get your security deposit back). If you can’t pay the security deposit yourself, you can see if a family member would be willing to pay the money.
“If you can’t pay the security deposit for a secured credit card, you can see if a family member would be willing to pay the money.“
Apply for a student credit card. Federal age and income rules still apply to these credit cards, despite the word “student” in the name. But if you can meet these requirements, a student credit card might be right for you. These cards tend to have reasonable credit score requirements for applicants with more recent credit history. Some, like the Discover it® Cash Back for Students, even offer cash back and statement credit for good grades. (Check out the notes that there is also no FICO history requirement for this card.) The trade-off when it comes to student cards, in general, is that your annual percentage rate will likely be high and your credit limit is likely to be low. This is how issuers manage the risk of lending to someone with little credit history.
What you want in a credit card while studying abroad
A Visa or Mastercard, if possible. Discover and American Express are less likely to be accepted when traveling internationally, so a Visa or Mastercard can provide more flexibility.
No foreign transaction fees. Many credit cards charge an overseas transaction fee, typically up to 3% of each purchase, and during a study trip abroad, these fees will add up. Choose a credit card that does not charge foreign transaction fees.
Bonus points for travel expenses. If you qualify for a travel rewards credit card, you can earn bonus points for purchases such as airline tickets, meals, hotels, and overseas transportation. While you may not be eligible for a Travel Rewards credit card, you may be eligible for a card that entitles you to general or lump sum rewards.
Travel protections. Many credit cards provide benefits and perks for travelers apart from reward points. Baggage insurance, rental car coverage, travel delay insurance, and accident insurance are just a few of the popular travel protection features of some credit cards, and they can save your life when you you venture abroad.