By Snezana Stojilkovic; Chicago, Illinois
International students who plan to stay long period of time in the US need a credit card. Without a social security number, or an ID it can be complicated. But, don’t worry: there are solution for that problem.
Coming to the USA for the first time might be difficult and challenging. It’s definitely worth of knowing some basic rules prior arriving: where and how to look for an apartment, how much money you might need for a month, where to look for help in case you need some. For international students who plan to stay long period of time in this country, having a credit card can be useful. Without a social security number, or an ID it can be complicated. But, don’t worry: there are solution for that problem. Michael Jung, financial sales consultant from the PNC bank answered my questions trying to help you with all doubts you might have about getting and maintaining credit cards.
Q: We have a lot of international students that come to the USA who are not familiar with procedures of getting a new credit card. Can you explain us how someone without the SSN or the state ID can obtain one?
A: Someone that is not a native to the USA needs a residence here. We need that address in the USA for contacts and mail, and a residence back in their home country. With that two piece of information we can make a profile, and then student can apply for a card. It is little trickier for new people without the SSN to establish credit. When you apply for a credit card it’s better to be a resident alien, since it’s a little harder for a non-resident alien, but we have options for both.
If they already have a checking/saving accounts, which is very easy for international students to get, that will help you, and getting a credit card with that bank will be a lot easier. If they don’t have a credit history at all they can get a secured card. The student can put deposit on that card, minimum $250, which allows you to spend up to $250. If you pass that you will earn the interest on the balance. That money is actually protection for us. It is like a starter card, about 6 months or a year after using that card, you get your deposit back and then you can apply for a credit card.
Q: What factors determine credit limit?
A: Secured card limit is chosen based on how much money you put on as a deposit, similar like a deposit for an apartment. In term of factoring your credit limit for normal credit cards it goes based on your credit history. If you have a good credit score or a good relationship with borrowing money it will be higher.
If you are a young person an kind of starting out, the limit is usually around $500 and less, rarely more than $1000.
In general, it’s based on income, and how much debt you owe. Let’s say you pay $1000 rent every month, you make $4000 a month – they take that into consideration and calculate how much the credit will be.
Q: Many students do not work in the USA, since they have F1 visa. Do they have to prove their parent’s income?
A: In terms of documentation, we don’t have to have any documentation for your income. The applicant provide that to us.
Q: So, you don’t really check it?
A: I mean, we check in terms of your credit history. If you don’t have any credit history, but you are saying that you are making a lot of money a year, we are going to look and see where that money comes from, and we are going to contact you and ask for more details.
Once you apply for a credit card at PNC bank, you don’t really have to wait more than an hour to see the results. If, by any chance, you haven’t been approved, you might start thinking about rebuilding your relationship with your bank. Start with the checking/saving account, or the secured card that we talked about. It usually takes 3 to 6 months to establish significant change to your card. After that time, feel free to apply again.
Q: What is the most important thing students have to pay attention to when they are deciding which credit card is perfect for them, since there are so many of them.
A: So many, thousands of cards. They should look for any fees that are associated with the credit cards. Second thing, features of the card: depending on type of rewards you are getting with the card, depending on how much the fee would be or how do you spend your card. A lot of business people that travel a lot, have cards with rewards for travel spending: on rental cards or restaurants. There might be a fee, but it’s provided by company. Those cards work very well for business people.
Student cards that we have are basic cards, practically with borrowing and paying back, so the credit limits will be lower, also the interest will be little lower. That helps students in creating a habit: borrowing-paying back.
One more thing that is important: the type of cards that are accepted. For example, Discover is very popular here, but not in Europe or anywhere else. Michael says that the best way for building a good credit score is:
“Pay back what you borrowed, and don’t spend more than you can afford to spend. “
Although you don’t have to pay everything right away, 30 days go very quickly. Be aware that late payment can hurt your credit score and affect you in the future if you decide to apply for other credit cards, request a credit limit increase or maybe a auto or a student loan.
Q: Can international students apply for auto loan?
A: For international students it is very difficult, near impossible.
Q: Many students have work authorization in the USA, and they have jobs here. Can they apply for a car loan?
A: They can, in depends on their term. Usually, students are here for four years, and they have to have residency for that time. It is still difficult, but definitely worth of conversation.
Q: How about student loans?
A: For student loans they can apply online. We have different departments, we don’t do it in physical office. There are other lenders, millions of them, too. Definitely shop around, look for low interest rate. The only benefit is that you don’t have to pay it back immediately, you will do it after you graduate, but the interest goes the whole time.
Q: What happens if someone lose credit card?
A: Credit cards have much more security and consumer feature that debit cards. When you have a debit card you are spending your own money. If you lost your card that money is gone until we finish our investigation, which can take up to 45 days.
With the credit cards the money that you are spending is not actually you’re until you pay it back. In terms of fraud it’s very easy to fix it. As long as the transaction is posted you can disputed it. For example, you go out drinking, and you lose your card in a bar. When you wake up the next morning you can see that you spend your money only in the first place, but not in the rest of them. You can call Visa, you can call us, and we can see where the card lost possession, all transactions, and you don’t have to pay that money back.
The banks job is to protect their clients, their own money as well. That’s why they will conduct serious investigation when fraud happens. The first step is to find out where was the payment terminal, so they can call the ownership, and get the records, pictures and videos from the security cameras. Whenever unusual activity show up on your card, you can expect a call, text or an email from your bank: they just want to make sure that you are the person who still use that card. It wouldn’t be a bad idea to let them know if you are planning to travel outside the state, so you can continue using your card normally, without risking your card being shot down.
Q: What does having a chip in the card mean for the security?
A: The USA is the last country to update their cards. When you swipe the card in the store, the machine is taking the numbers right of the card, all the information from your card. That’s how they charge, using the signal. The chip creates unique signal only while the card is in the machine. When you click in you process transaction, for example 20, 30 dollars. As soon as you take it out and transaction is complete that’s when the signal is gone. So, the only time your card can be hacked is when it is physically in the machine. It’s much more safely, since when you swipe it normally the number goes to the machine and it will stay there. Someone would hack the machine and get all the information, but with the chip it won’t happen.
Q: How many credit cards students should have?
A: One. At least for a year. There is no reason for someone who is less than 30 years old to have more than one or two credit cards. It will be easier to manage one than multiple cards. That’s why I usually recommend people not to get credit card in stores, for example in Target, or Banana Republic, since their interest rates are going to be higher, and benefits for that cards apply only in that store. Our rates are anywhere between 10 and goes up to 25% – if you have really bad credit score. But, most of this cards start from 22% flat out. So the benefit is not good enough to getting those credit cards. And, besides, how often are you going to use them?
Q: If someone decide to close one of many cards they have, which one do you recommend is the best one for closing?
A: Close the one with the lowest limit. Let’s say you have a card with $250 limit and you spend $50, the ratio is good. But if you have $1000 limit, and you spend 100 the ratio is better. It is good when you close them with zero balance, especially if it’s zero balance on all of them.
The last advice is: be very careful when using the credit cards. One day, if you apply for a good job in the USA, potential employer will have the right to ask to check your credit history. It is valid just as your criminal history.
Be smart and shop wise.
