Build Credit in New Jersey, United States: Secured & Student

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

Building credit is essential for financial stability and can open doors to future financial opportunities. In New Jersey, two popular types of credit cards for establishing or improving credit are secured cards and student credit cards. This article will delve into these categories, typical credit scores needed, APRs and fees, application steps, and frequently asked questions.

Credit Card Categories

Secured Credit CardsSecured credit cards are designed for individuals with limited or poor credit history. They require a cash deposit that acts as collateral and typically equals the credit limit. This deposit reduces the risk for the lender and allows cardholders to build credit responsibly.

Student Credit CardsStudent credit cards are tailored for college students who are beginning to build their credit history. These cards often have lower credit limits and may offer rewards or incentives for responsible use. They are an excellent option for students looking to establish credit while managing their educational expenses.

Cashback Credit CardsCashback credit cards offer rewards in the form of a percentage of the amount spent on purchases. Cashback rates can vary, and some cards offer higher rates for specific categories like groceries or gas. While not specifically designed for building credit, responsible use of a cashback card can contribute positively to credit scores.

Travel Credit CardsTravel credit cards reward users with points or miles for travel-related purchases. They may offer benefits such as travel insurance, no foreign transaction fees, and rewards for hotel stays or airline tickets. Like cashback cards, these are not specifically for building credit but can help improve credit scores when used wisely.

Typical Credit Scores

To qualify for secured or student credit cards, applicants typically need a credit score within the following ranges:

- Secured Credit Cards: Often accessible to individuals with credit scores as low as 300 (the lowest possible score) to around 650. Many issuers do not have strict credit score requirements, as the deposit mitigates risk.

- Student Credit Cards: Usually require a credit score of around 600 or higher. However, many issuers are willing to consider applicants with little to no credit history, making these cards more accessible for students.

APRs & Fees

Average APRsAnnual Percentage Rates (APRs) can vary significantly based on the card type, issuer, and the applicant's creditworthiness. Here are the typical ranges:

- Secured Credit Cards: APRs can range from 15% to 25%. Since these cards are often used by individuals with lower credit scores, they may carry higher interest rates.

- Student Credit Cards: APRs typically range from 14% to 24%. As with secured cards, interest rates may be higher for those with limited credit history.

FeesMost credit cards come with various fees, which can include:

- Annual Fees: Secured cards may charge annual fees ranging from $0 to $50, while student cards can range from $0 to $100.

- Late Payment Fees: These fees can range from $25 to $40, depending on the issuer.

- Foreign Transaction Fees: Not all cards have this fee, but it can range from 1% to 3% of the transaction amount.

Application Steps & Documents

Applying for a secured or student credit card typically involves the following steps:

1. Research Card Options: Compare various secured and student credit cards available in New Jersey. Pay attention to APRs, fees, and rewards offered.

2. Check Your Credit Score: Before applying, check your credit score to understand where you stand. This can help you identify the cards you are likely to qualify for.

3. Gather Required Documents:
- Identification: A government-issued photo ID (e.g., driver's license or passport).
- Social Security Number (SSN): Required for identity verification.
- Proof of Income: This could include pay stubs, tax returns, or bank statements.
- Proof of Residency: A utility bill or lease agreement can serve this purpose.

4. Complete the Application: Fill out the application form, either online or in person, providing all necessary information.

5. Submit a Deposit (for Secured Cards): If applying for a secured card, be prepared to make a cash deposit that will serve as your credit limit.

6. Wait for Approval: Approval times can vary from a few minutes to several days, depending on the issuer.

7. Receive Your Card: If approved, you will receive your card in the mail, typically within 7 to 10 business days.

FAQs

1. What is the difference between secured and unsecured credit cards?Secured credit cards require a cash deposit that serves as collateral, while unsecured credit cards do not require a deposit and are issued based on creditworthiness.

2. Can I build credit with a secured credit card?Yes, responsible use of a secured credit card can help build or improve your credit score, as the issuer reports your payment history to credit bureaus.

3. How long does it take to see an improvement in my credit score?Improvement can take time, but responsible use of credit cards and making on-time payments can lead to noticeable changes in your credit score within three to six months.

4. Are there any rewards with secured credit cards?Some secured credit cards offer limited rewards, but they are generally not as robust as those offered with unsecured cards.

5. What should I do if I get denied for a credit card?If denied, review the reasons provided by the issuer, check your credit report for inaccuracies, and consider applying for a different card or working on improving your credit score.

6. Is it better to use a secured or student credit card?It depends on your situation. If you are a student with no credit history, a student card may be more suitable. If you have poor credit, a secured card may be the better option.

7. Can I upgrade my secured credit card to an unsecured one?Many issuers allow cardholders to transition from a secured to an unsecured credit card after demonstrating responsible use and improved creditworthiness. Check with your issuer for specific policies.

Conclusion

Building credit in New Jersey is achievable through secured and student credit cards. By understanding the different card categories, typical credit scores, APRs and fees, and application steps, you can make informed decisions that will positively impact your financial future. Always remember to use credit responsibly to reap the benefits of improved credit scores over time.

About the Author

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