Build Credit in Minnesota, United States: Secured & Student C

Build Credit in Minnesota, United States: Secured & Student Cards — What to Expect

Building credit is a vital step for financial health, particularly for residents in Minnesota looking to establish or improve their credit profiles. Secured and student credit cards are two accessible options that can help individuals build their credit history effectively. This article will cover card categories, typical credit scores, APRs and fees, application steps, and answer frequently asked questions.

Card Categories

1. Secured Credit CardsSecured credit cards are designed for individuals with limited or poor credit history. These cards require a cash deposit that acts as collateral, usually equal to the credit limit. For example, if you deposit $500, your credit limit will likely be $500. Secured cards report to the major credit bureaus, enabling responsible users to build or improve their credit scores over time.

2. Student Credit CardsStudent credit cards are tailored for college students who may not have an established credit history. These cards often come with lower credit limits and may have fewer rewards or benefits compared to traditional credit cards. However, they provide an excellent opportunity for students to start building credit while managing their finances.

3. Cashback Credit CardsCashback credit cards reward users with a percentage of their purchases back in cash. While these cards may be less accessible to individuals with no credit history, some secured and student options may offer cashback benefits. For those eligible, they can be a great way to earn rewards on everyday spending.

4. Travel Rewards Credit CardsTravel rewards credit cards allow users to earn points or miles for travel-related expenses. Similar to cashback cards, these may be harder to obtain without an established credit history. However, some secured and student cards may offer travel-related perks, making them a viable option for those who travel frequently.

Typical Credit Scores

In Minnesota, as in the rest of the U.S., credit scores typically range from 300 to 850. Here’s a breakdown of what these scores mean:

- 300-579: Poor credit. Individuals in this range may struggle to qualify for most credit cards.
- 580-669: Fair credit. Secured and some student credit cards are usually available to individuals in this range.
- 670-739: Good credit. Many credit card options become available, including cashback and travel rewards cards.
- 740 and above: Excellent credit. Individuals with scores in this range can qualify for the best credit cards available.

Secured and student cards are ideal for those in the fair credit range or those just starting their credit journey.

APRs & Fees

Annual Percentage Rates (APRs)The APR on secured and student credit cards can vary significantly based on the card issuer and the applicant's creditworthiness. Here’s a general range:

- Secured Credit Cards: APRs typically range from 15% to 25%. Because these cards are designed for individuals with limited credit histories, they may come with higher interest rates.
- Student Credit Cards: APRs usually range from 14% to 24%. Again, rates vary based on the issuer and the applicant's credit situation.

Fees- Annual Fees: Some secured and student credit cards charge annual fees, which can range from $0 to $50.- Foreign Transaction Fees: If you plan to use your card internationally, check for foreign transaction fees, which can be around 1% to 3% of each transaction.- Late Payment Fees: Late fees can be substantial, typically ranging from $25 to $40, depending on the card issuer.

Application Steps & Documents

Applying for a secured or student credit card is generally straightforward. Here are the typical steps involved:

1. Research- Compare different cards to find one that meets your needs (APR, fees, rewards).

2. Check Eligibility- Review the eligibility requirements for each card, including age and income requirements.

3. Gather Required DocumentsYou may need to provide the following documents during the application process:- Government-issued ID (e.g., driver’s license, passport)- Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN)- Proof of income (e.g., pay stubs, bank statements)- Contact information (address, phone number)

4. Complete the Application- Most applications can be completed online, though paper applications may also be available.

5. Wait for Approval- The approval process can take a few minutes to a few days, depending on the issuer.

6. Deposit (for Secured Cards)- If approved for a secured card, you will need to make a cash deposit to activate your account.

FAQs

1. Can I build credit with a secured credit card?Yes, secured credit cards report to major credit bureaus, helping you build or improve your credit score when used responsibly.

2. Are student credit cards only for college students?While primarily designed for students, some issuers may allow recent graduates to apply as long as they meet the eligibility criteria.

3. How long does it take to build credit with these cards?Building credit can take several months of responsible use, including timely payments and maintaining low balances.

4. Can secured credit cards convert to unsecured cards?Many secured credit cards offer the option to convert to an unsecured card after demonstrating responsible usage over time.

5. What happens if I miss a payment?Missing a payment can result in late fees and negatively impact your credit score. It's essential to make payments on time.

6. Is there a minimum credit score required for student cards?Student credit cards often have more lenient requirements, but a fair credit score (580+) can improve your chances of approval.

7. Can I use a secured card for online purchases?Yes, secured credit cards can be used for online purchases, just like traditional credit cards.

Building credit in Minnesota through secured and student credit cards is an achievable goal for many residents. By understanding card categories, credit scores, APRs, and application processes, individuals can take proactive steps towards a healthier financial future.

About the Author

Marks Toms – Editor-in-Chief
Marks oversees editorial policy, compliance, and fact-checking at bankaccountsopen. Read more articles