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5 Things Recent High School Grads Need To Know About Credit Cards – Forbes Advisor



Congratulations! You made it through high school and you’re at a major transition time in your life. Whether you are moving on to higher education 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 is 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 already having an authorized user card 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 begin building a solid credit history. If you’ve already done that, then it’s the perfect time for you to take the next step and keep increasing your credit score.

Why Credit Is Important

As you graduate from high school and move on with your life, whether you go on to college or technical school, take a gap year, or get your first full-time job, your credit score will become more and more important. Many types of businesses, including banks and landlords, use your credit score to determine how they want to do business with you, if at all.

Having good credit will help you get lower interest rates and better loan terms whenever 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 will make the interest rates you are offered higher and may make some companies not want to offer you a loan at all.

In addition to 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 make sure that 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 you can.

Limitations From The Credit CARD Act Of 2009

Back in 2009, some changes were made to the way that banks can market to and approve people who are 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 that they have an independent means of paying their bills.

In effect, this means that 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 a lot of sense, because you shouldn’t be piling up credit card debt if you have no way to pay it back. Unfortunately, it makes it somewhat tougher for high school graduates to build up good credit without assistance.

If You Don’t Have Independent Income, Ask For Help From Others

Since you 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 a little bit of help to get started with credit either before you graduate high school or right afterward. There are a couple of options available if you have a friend or family member who is willing to help you out. Before you decide on one of these paths, make sure that everyone involved understands what is being agreed to.

In adding an authorized user card to their account or co-signing for your account application, the other person involved is accepting responsibility for any charges that 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 it shouldn’t be taken lightly.

Get An Authorized User Card

One benefit that almost all credit cards offer is the ability to add an authorized user to an account. The authorized user is given a credit card with their own name on it and they can use it as if it is their credit card account.

The only difference is that instead of a bill coming to the authorized user, it goes to the main account holder. You will need to work something out with whoever agrees to help you with this so that you make sure you are paying your share of the bill each month.

The great part about being an authorized user on someone’s account is that you don’t have to worry about getting approved on your own. That person has already been approved so all they have to do is provide your information to have you added. With most banks, your authorized user card will be reported to the credit bureaus, so having it and making regular charges and payments will help to improve your credit score.

However, negative payment history or high credit utilization on the account will affect your credit negatively, even as an authorized user. In addition to the main account holder needing to trust you, you need to 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 you have a solid relationship with them, now is a great time to ask if they will add you. You’ll be able to start building your credit as soon as you get it.

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 can use their credit history to help you get approved.

A co-signer on your card application is telling the bank that 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 actually pay all of your bills so that person doesn’t regret agreeing to help you.

Many large banks do not 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 a good 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 makes it possible to start building your credit even with no prior history, as long as you have proof of independent income.

It is much easier to get approved for a secured credit card than for a traditional, unsecured credit card because you are actually providing the money that you will be borrowing upfront. Secured credit cards require that you put down a deposit when applying and your credit limit will typically be equal to 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 a great option for people just starting out. Once you’ve shown that you can pay your bill on time every month, some secured cards will often give you the option to increase your credit limit or transition over to a non-secured card.

By making purchases every month and paying off your bill on time, your secured credit card will give you a base credit history to start from and will help improve your credit score over time. With a mix of application requirements and fees, it’s important to pick the right secured credit card to start off with. Here are a few that we think are worth considering.

The information for the Discover it® Secured, Secured Mastercard® from Capital One®, Citi® Secured Mastercard® and BankAmericard® Secured Credit Card have been collected independently by Forbes. The details for the cards on this page have not been reviewed or provided by the card issuer.

Read More: Best Secured Credit Cards

Student Credit Cards

Student credit cards are exactly what they sound like: Credit cards designed for students. They are often a little easier to get approved for, have low fees and have rewards programs that make sense for people who are still in school.

You will still need to meet at least one of the three following criteria to get approved for one of these cards, but if you do, you can use it to take the next step in building a strong credit history while you are still young. If none of these apply to you, your best best is to take a look at a secured card or an authorized user card, as we discussed above.

  • Have a documented steady income
  • Have someone to co-sign your card application, if permitted
  • Be over the age of 21

All of the cards we have listed have no annual fee, so as long as you pay your bill off in full and on time each month, it won’t cost you anything to have and use one of these cards. The fact that you can earn points or cash back without paying any fees makes these cards a great way to get started with earning rewards for your spending.

The information for the Discover It® Student Cash Back, Discover It® Chrome for Students, Journey® Student Credit Card from Capital One®, Bank of America® Travel Rewards Credit Card for Students and Bank of America® Cash Rewards Credit Card for Students have been collected independently by Forbes. The details for the cards on this page have not been reviewed or provided by the card issuer.

Read More: Best Credit Cards for Students

Bottom Line

A high credit score can make your life easier and less expensive in many ways, so it’s definitely something that you want to learn to manage. When you are applying for a job, a loan, or even an apartment somewhere down the road, you want to be confident that you’ve built your credit score up so that it helps you instead of harming you.

Moving on to the next phase of your life can be scary. So many unknowns, so much you need to learn about and so many decisions to make. Luckily for you, when it comes to your credit, we are here to help.

Whether you are heading to work or starting another round of schooling, now is the time to start paying attention to your credit and working on building up your credit history, especially if you haven’t previously. 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, on to whatever lies ahead for you.

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Bad Credit

If You Want Consumers to Lose, Network Regulation is a Must – Digital Transactions



After the current U.S. Congress was sworn in, a predictable chorus of merchants, lobbyists, and lawmakers demanded new interchange price caps and other government mandates to decrease credit card interchange fees for merchants. The tired attacks on credit cards are an easy narrative that focuses almost exclusively on the cost side of the ledger, while completely ignoring the cards’ important role in the economy and the regressive effects of interchange regulation. 

To lawmakers blindly acting on behalf of retailers, regulation is a brilliant idea—regardless of how it affects their constituents. For decades, they have promised these interventions would eventually benefit consumers. But the lessons from the Durbin Amendment in the United States and price cap regulation in Australia is clear. Although some policymakers bemoan the current economic model, arbitrarily “cutting” rates for the sake of cuts completely ignores the economic reality that as billions of dollars move to merchants, billions are lost by consumers. 

For the uninitiated, let’s break down what credit interchange funds: 1) the cost of fraud; 2) more than $40 billion in consumers rewards; 3) the cost of nonpayment by consumers, which is typically 4% of revolving credit; 4) more than $300 billion in credit floats to U.S. consumers; and 5) drastically higher “ticket lift” for merchants. 

Johnson: “To lawmakers blindly acting on behalf of retailers, regulation is a brilliant idea—regardless of how it affects their constituents.”

These are just some of the benefits. If costs were all that mattered, American Express wouldn’t exist. Until recently, it was by far the most expensive U.S. network. Yet, merchants still took AmEx because they knew the average AmEx “swipe” was around $140, far more than Visa and Mastercard. 

Put simply, for a few basis points, interchange functions as a small insurance policy to safeguard retailers from the threat of fraud and nonpayment by consumers. Consider the amount of ink spilled on interchange when no one mentions that the chargeoff rate for issuing banks on bad credit card debt exceeds credit interchange.

Looking abroad, interchange opponents cite Australia, which halved interchange fees nearly 20 years ago, as a glowing example of how to regulate credit cards. In truth, Australia’s regulations have harmed consumers, reduced their options, and forced Australians to pay more for less appealing credit card products. 

First, the cost of a basic credit card is $60 USD in many Australian banks. How many millions of Americans would lose access to credit if the annual cost went from $0 to $60? Can you imagine the consumer outrage? 

In a two-sided market like credit cards, any regulated shift to one side acts a massive tax on the other. For Australians, the new tax fell on cardholders. There, annual fees for standard cards rose by nearly 25%, according to an analysis by global consulting firm CRA International. Fees for rewards cards skyrocketed by as much as 77%.

Many no-fee credit cards were no longer financially viable. As a result, they were pulled from the market, leaving lower income Australians, as well as young people working to establish credit, with few viable options in the credit card market.

Even the benefits that lead many people to sign up for credit cards in the first place have been substantially diluted in Australia because of the reduction of interchange fees. In fact, the value of rewards points fell by approximately 23% after the country cut interchange fees.

Efforts to add interchange price caps would have a similar effect here in the U.S. A 50% cut would amount to a $40 billion to $50 billion wealth transfer from consumers and issuers to merchants. For the 20 million or so financially marginalized Americans, what will their access to credit be when issuers find a $50 billion hole in their balance sheets? 

The average American generates $167 per year in rewards, according to the Consumer Financial Protection Bureau. Perks like airline miles, hotel points, and cashback rewards would be decimated and would likely be just the province of the rich after regulation. Many middle-class consumers could say goodbye to family vacations booked at almost no cost thanks to credit card rewards.

As the travel industry and retailers fight to bounce back from the impact of the pandemic, slashing consumer rewards and reducing the attractiveness of already-fragile businesses is the last thing lawmakers and regulators in Washington should undertake.

Proposals to follow Australia’s misguided lead in capping interchange may allow retailers to snatch a few extra basis points, but the consequences would be disastrous for consumers. Cards would simply be less valuable and more expensive for Americans, and millions of consumers would lose access to credit. University of Pennsylvania Professor Natasha Sarin estimates debit price caps alone cost consumers $3 billion. How much more would consumers have to pay under Durbin 2.0?

Members of Congress and other leaders should learn from Australia and Durbin 1.0 to avoid making the same mistake twice.

—Drew Johnson is a senior fellow at the National Center for Public Policy Research, Washington, D.C.

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Increase Your Credit Score With Michael Carrington



More than ever before, your debt and credit records can negatively impact you or your family’s life if left unmanaged. Sadly, many Americans feel entirely helpless about their credit score’s present state and the steps they need to take to fix a less-than-perfect score. This is where Michael Carrington, founder of Tier 1 Credit Specialist, comes in. Michael is determined to offer thousands of Americans an educated, informed approach towards credit restoration.

Michael understands the plight that having a bad credit score can bring into your life. His first financial industry job was working as a home mortgage loan analyst for one of the nation’s largest lenders. Early on, he had to work a grueling schedule which included several jobs seven days a week while putting in almost 12-hour days to make $5,000 monthly to get by barely.

“I was tired of living a mediocre life and was determined to increase the value that I can offer others through my knowledge of the finance industry – I started reading all of the necessary books, networking with industry professionals, and investing in mentorship,” shares Michael Carrington. “I got my break when I was able to grow a seven-figure credit repair and funding organization that is flexible enough to address the financial needs of thousands of Americans.”

With his vast experience in the business world, establishing himself as a well-respected business leader, Michael Carrington felt he had the power to help millions of Americas in restoring their credit. Michael learned the FICO system, stayed up to date on the Fair Credit Reporting Act (FCRA), found ways to improve his credit score, and started showing others.

The Tier 1 Credit Specialist uses a tested and proven approach to educate their clients on everything credit scores. Michael is leveraging his experience as a home mortgage professional, marketing executive, and global business coach to inform his clients. He and his team take their time to carefully go through their client’s credit records as they try to find the root of their problem and find suitable financial solutions.

The company is changing lives all over America as it helps families and individuals to repair their credit scores, gain access to lower interest rates on loans and get better jobs. What Tier 1 Credit Specialists is offering many Americans is a chance at financial freedom.

Michael Carrington has repaired over $8 million in debt write-ups and has helped fund American’s with over $4 million through thousands of fixed reports. “I credit our success to being people-focused,” he often says. “The amount of success that we create is going to be in direct proportion to the amount of value that we provide people – not just our customers – people.”

Because of its ‘people-focused goals, the Tier 1 Credit Specialist is determined to help millions of Americans achieve financial literacy. It is currently receiving raving reviews from clients who are completely happy with the credit repair solutions that the company has provided them.

Today, Michael Carrington is continuing with a new initiative to serve more Americans who suffer from bad credit due to little or no access to affordable resources for repair.

The Tier 1 Credit Socialist brand is changing the outlook of many families across America. To do this, the company has created an affiliate system that will provide more people with ways of earning during these tough economic times.

As a well-respected international business leader and entrepreneur with numerous achievements to his name Michael Carrington aims to help millions of Americans achieve the financial freedom, he is experiencing today. Tier 1 Credit Socialist is one of the most effective credit repair brands on the market right now, and they have no plans for slowing down in 2021!

Learn more about Michael Carrington by visiting his Instagram account or checking out the Tier 1 Credit Specialist website.

Published April 17th, 2021

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Bad Credit

Does Having a Bank Account With an Issuer Make Credit Card Approval Easier?



Better the risk you know than the one you don’t.

When it comes to personal finance, nothing is guaranteed. That goes double for credit. That’s why, no matter how perfect your credit or how many times you’ve applied for a new credit card, there’s always that moment of doubt while you wait for a decision.

Issuing banks look at a wide range of factors when making a decision — and your credit score is only one of them. They look at your entire credit history, and consider things like your income and even your history with the bank itself.

For example, if you defaulted on a credit card with a given bank 15 years ago, that mistake is likely long gone from your credit reports. To you and the three major credit bureaus, it is ancient history. But banks are like elephants — they never forget. And that mistake could be enough to stop your approval.

But does it go the other way, too? Does having a bank account that’s in good standing with an issuer make you more likely to get approved? While there’s no clear-cut answer, there are a few cases when it could help.

A good relationship may weigh in your favor

Credit card issuers rarely come right out and say much about their approval processes, so we often have to rely on anecdotal evidence to get an idea of what works. That said, you can find a number of stories of folks who have been approved for a credit card they were previously denied for after they opened a savings or checking account with the issuer.

These types of stories are more common at the extreme ends of the card range. If you have a borderline bad credit score, for instance, having a long, positive banking history with the issuer — like no overdrafts or other problems — may weigh in your favor when applying for a credit card. That’s because the bank is able to see that you have regular income and don’t overspend.

Similarly, a healthy savings or investment account with a bank could be a helpful factor when applying for a high-end rewards credit card. This allows the bank to see that you can afford its product and that you have the type of funds required to put some serious spend on it.

Having a good banking relationship with an issuer can be particularly helpful when the economy is questionable and banks are tightening their proverbial pursestrings. When trying to minimize risk, going with applicants you’ve known for years simply makes more sense than starting fresh with a stranger.

Some banks provide targeted offers

Another way having a previous banking relationship with an issuer can help is when you can receive targeted credit card offers. These are sort of like invitations to apply for a card that the bank thinks will be a good fit for you. While approval for targeted offers is still not guaranteed, some types of targeted offers can be almost as good.

For example, the only confirmed way to get around Chase’s 5/24 rule (which is that any card application will be automatically denied if you’ve opened five or more cards in the last 24 months) is to receive a special “just for you” offer through your online Chase account. When these offers show up — they’re marked with a special black star — they will generally lead to an approval, no matter what your current 5/24 status.

Credit unions require membership

For the most part, you aren’t usually required to have a bank account with a particular issuer to get a credit card with that bank. However, there is one big exception: credit unions. Due to the different structure of a credit union vs. a bank, credit unions only offer their products to current members of the credit union.

To become a member, you need to actually have a stake in that credit union. In most cases, this is done by opening a savings account and maintaining a small balance — $5 is a common minimum.

You can only apply for a credit union credit card once you’ve joined, so a bank account is an actual requirement in this case. That said, your chances of being approved once you’re a member aren’t necessarily impacted by how much money you have in the account.

In general, while having a bank account with an issuer may be helpful in some cases, it’s not a cure-all for bad credit. Your credit history will always have more impact than your banking history when it comes to getting approved for a credit card.

For more information on bad credit, check out our guide to learn how to rebuild your credit.

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