S1 got a credit card while in college, based on well-paying summer gigs. Never had to sign for him. One place he considered renting right after college wanted us to cosign, but S put up an extra $500 on the deposit to avoid that.
S2 got a credit card from USAA the summer after his junior year of college. He was the primary and had ME as an authorized user. He got to benefit from my credit rating, but since his limit at first was $300, my exposure was limited. Had he not paid his balances, it could have dinged my credit a bit. He applied for an increase after two years and removed me (at my request).
A guy I work with who is 28 just applied for his first credit card and got a $300 limit (the Capital One 1.5% cash back card). I told him he could probably call and get it increased (he makes ~$80k). I mean you can’t buy a lot of plane tickets for $300.
He’s been basically subleasing a room for the last few years so his name isn’t on anything. So other than his student loans, which he has paid off over a year ago, he has no proof of consistent payments. He also may want to buy a car soon, and his lack of credit history could hurt him on the interest rate, and thus the amount of money he would end up paying. His debit card has been working fine for him with no problems so he never had a reason to get a credit card, but now it is potentially coming back to bite him.
IMO it’s important for parents who are able to, to work with their kids to get them started ASAP building credit. So, I think you guys are right to try to fight through the process when they are in college (or HS).
Another slightly off topic but related question. I hear that many people open new CC accounts to receive airline bonus miles and other promotional offers, and close these accounts after using the promotions. Doesn’t this affect credit scores, especially if this strategy is used often?
It does, but if you have excellent credit and open 2-3 new credit cards and make regular payments on those it will bounce back. Obviously you don’t want to play this game if you plan to apply for a large loan soon.
Haven’t read the entire thread, so I apologize in advance if this is a repeat.
My d. tried to apply for a specific Cap. One credit card before studying abroad, since it does not charge any foreign transaction fees. (She had another limited credit card of her own to build up decent credit during undergraduate years). It was a nightmare! She tried online, but was asked several questions she was not sure of the answer, so abandoned the application to first get the answers. Tried again, and was disconnected for a reason I don’t remember. Tried a 3rd time, and it would not let her continue. She was denied due to “too many applications” in a short period.
She called the help line, and got absolutely nowhere. I called the helpline, and after she gave permission for me to discuss her application, each person I talked to, recognized it was an issue, and had to check with a supervisor. I was put on hold (with no return), disconnected, transferred to blank numbers, etc. I asked for supervisors outright, but received the same treatment. Each time she had to get on the phone first to assure them I could talk to them. I even asked them to please note the conversation should we be disconnected or placed on infinite hold (again and again).
I know we called at least 12+ times, and never spoke to the same person. I always asked for their name/contact number, but when I tried to ask for them on recall, I was told they were all at different call centers, and they have no one by that name at the call center I happened to reach at that particular time. Records of previous conversations were never found in their files. It was almost comedy, except we were also told her credit score would take a hit due to 'so many applications". It would supposedly clear up, and she could re-apply in 6 months! She left for her study abroad a few weeks later. She never did get one of their credit cards. Never checked to see what happened to her credit score.
Aside: Any other credit cards that charge no foreign transaction fees?
I’d add that I’ve had a Capital One credit card for several years and have had excellent customer service from them on the very rare occasions that I’ve had to contact them. But of course there is a difference between an existing customer and an applicant.
My credit score is well above 800… so I can pretty much write my own ticket with a credit card. Generally these cards with the better benefits are also harder to get – so I can see why a student with no job and little in the way of an established credit history would run into problems.
My DD traveled all over in high school & college and she literally has had a credit card in her own name since age 8.
Back in the days when there were new credit offers coming in the mail all the time, she got one from the bank where she had a kid’s saving account, filled it out and mailed it in… and voilà. I put it away, allowed my daughter to make charges on it once a year for online holiday gift purchases, paid the bill… and basically kept the card live that way until my daughter was in high school and allowed to carry the card with her. In high school, as soon as the statement arrived, we would go over it and determine which expenses qualified for parental reimbursement, and which she was responsible for - settled up and continued to pay current. By the time she started college she had a fairly generous credit limit.
As far as the fees, it was a terrible card and it has always driven me nuts to see how much my daughter amasses in transaction fees as well as debit fees for cash withdrawals using her ATM card all over the place. But I’ve stayed out of that pretty much – I’ve pretty much let my kids make their own choices and own mistakes along the way.
D1 recently got Chase Reserve card and received 100K bonus points. She had an old Chase card with no fee. She didn’t cancel the old card because she knew it would effect her credit score, so she is just putting it in her drawer. She also got AmEx Platinum card for 100K bonus points. She uses her cards based on number of points they give for different transactions. Some give more points for dining and others for airline purchase. She views points as money to her.
D2 got her first credit card from Chase this year after she graduated. She received 3000 credit limit. She has been paying it off every month. I notice she is getting a lot of marketing mails from Capital One.
She is on my Chase and AmEx cards, and I do see them on her credit report. I may take her off Chase because my monthly spend is high. Her current salary doesn’t support the spend, so it is probably not good for her credit score and may limit her credit in the future.
Reporting back. It took a month, but my D finally got her Capital One Journey Student Rewards card. To recap, she was initially denied because “proportion of revolving account balance(s) to income is too high.” The credit report was picking up cards belonging to us parents where D was an authorized user. After an unsuccessful attempt by D to straighten this out by telephone, she wrote a snail mail letter to the P.O. Box address contained in her rejection letter. It took about 10 days but then she got a snail mail response asking her to mail or fax in copies of her social security card, a government issued ID, and proof of residence such as a lease, utility bill or bank statement. That last one seemed like a strange request for a card marketed to students, but we faxed them copies of the social security card, her passport, and a bank statement. Several more days passed before they called D and asked her to re-fax the passport because it was supposedly too dark, which we did. In the meanwhile D got another email rejection letter. At this point we were all ready to give up and try for a different card in a few months. Then lo and behold the card arrived in the mail (at our home address) a few days ago. D logged on to activate it and found out she has a $3,000 credit limit, which is kind of crazy since she reported less than 5K in income.