How Does a College Student Obtain a Credit Card?

College students sometimes have the worst borrowing habits, but universities often receive compensation by letting credit card companies come to campus to entice students to sign up for a card. The federal CARD Act of 2010 put up barriers between students and credit card companies to stem the flow of young people acquiring cards. Students can still obtain a card, but probably not without a cosigner.

CARD Act Changes

The CARD requires credit card companies to obtain verification of income to pay an unsecured line for anyone under 21. A student can also have a parent cosign an account. Since students usually have a low income or none at all, the credit card companies are expected to cater to the parents, probably citing credit cards as a necessity in case of an emergency.

Considerations

Banks make the ultimate decision on whether to offer a credit card to a person under 21. The CARD Act does not specify how much a student must make before he qualifies for a credit card, according to CNN. Technically, any amount of annual income could qualify a student for some type of credit, even just a few thousand dollars.

Other Options

Instead of cosigning on an account, a parent or legal guardian can add a college student as a authorized user. Authorized users build credit history and receive a card, but have no responsibility to pay the bill. The student may also probably qualify for a secured card. Since a secured account requires a deposit usually close to or equal to the credit limit, it may satisfy the income requirement of the CARD Act.

Warning

Students should avoid credit card offers through the mail, according to Scott Gramm of HelpSaveMyDollars.com. The CARD Act banned pre-approved offers, so the banks found a loophole through "professional cards." Professional cards allow the same tactics as the pre-CARD Act era, but are technically supposed to go only to small business owners. However, professional card offers often only require the borrower to claim he owns a business without any verification of this fact.