Credit Card Requirements and Options for Special Populations
Written by Yun Yang   

For most people who wants to apply for a credit card, you would probably be asked to give your social security number, your date of birth, current address, driver’s license number, details about your salary, where you are employed, your banking history and credit obligations if any. However, for those who are under 21 years old, or military personnel, or non U.S. citizen, here are some special requirements and options you may want to notice.


People Under 21 Years Old

On May 22, President Barack Obama signed into law the Credit Card Accountability, Responsibility and Disclosure Act of 2009. Under the new law, anyone under age 21, military personnel, or can get a credit card unless he/she can meet at least one of the requirements below:
  • Get a cosigner, who can be a parent, guardian or spouse, for the card.
     
  • The young adult has proof of sufficient income to cover the credit obligations.
Credit limits on new student credit cards range anywhere from $300 to $2000 or higher, and credit limits increase over time for anyone paying their credit card bills on time.

While the new rule tries to prevent credit card companies from targeting college kids to weigh them down with debt before they even graduate, it also causes some problems. For example, it will delay the process of creating a credit history which is one of the determinants of credit score. 

For those who are younger than 21 and cannot meet the above two requirements, here are some good alternatives for student credit cards:

  • Charge Card: Charge cards may seem like almost a thing of the past. American Express, however, still offer several types of charge cards: the American Express Preferred Rewards Green Card and the American Express Preferred Rewards Gold Card. Having a charge card lets cardholders begin to build a credit history, as well as a relationship with American Express, which will make it easy to get approved for a credit card down the road—as long as your child keeps up with the monthly payments.
     
  • Authorized User Credit Card: Parents can make their children under age 21 to be an authorized user on their credit card, something which most all credit card issuers allow. Parents who share their credit card account with their child can easily track purchases, help their young adult child build a credit history, and make sure that he or she stays within a pre-agreed credit limit.

Military Personnel

Difficulty of Credit Card Application for Military Personnel
The majority of credit card issuers (banks and financial institutions) do not accept mailbox specific addresses. Unfortunately, the U.S. military base that you are stationed at usually has such an address for written communication. This rule may disqualify some credit card issuers and make online applications impossible. Another problem is that these credit card issuers are aware of this technicality but still refuse to change their policies. Therefore, you may need to filter out these companies that refuse to work with your circumstances and instead apply for a card specially created for members of the military. Some major banks, such as Bank of America, have a variety of cards created exclusively for military personnel.

Benefits for Military Personnel
The Service members Civil Relief Act of 2003 (SCRA) limits the amount of interest that may be collected on the debts of active-duty members of the military to 6 percent per year. The cap applies to all debts incurred in the period prior to service and includes credit card debts. The act specifies that in order to receive the interest rate reduction, a service member must request it in writing and include a copy of his or her military orders.

Financial Institutions that Serves Exclusively for Military
There are three big financial institutions which are exclusive to military personnel and relatives, and offer some great benefits not available elsewhere.
  • USAA, the largest financial institution serving primarily military families.
     
  • Navy Federal, the largest credit union in the United States.
     
  • Pentagon Federal, the third largest credit union.
Advantage of Military Credit Cards
The most noticeable advantage for team Military is Secured Credit Cards, which are pre-approved credit cards used to help people with poor credit to rebuild their credit scores. Civilian banks gouge secured credit card holders with high fees and minimal rewards, but Navy Federal has the lowest fees and it pays out rewards.

Which card is the right credit card for you in the military?
One good choice can be a no-fee rewards credit card that you pay in full every month. Rewards based credit cards can offer generous perks to enhance your military lifestyle, provided you are prepared to pay the balance in full each month. However, if you do carry a balance, be aware that with these credit cards, you may be subject to a variable interest rate as high as 19%. Also, if you're late with payments or used up too much of your credit limit, you may get a penalty as high as 30%.


Non-U.S. Residents

If you’re a non U.S. resident, obtaining a credit card in the United States is difficult and while it can be done, there are many legal issues to first overcome.

U.S. Banks are hesitant to issue credit cards to non U.S. residents because of the high risk of unpaid debt that can be accumulated and abandoned. It is very difficult to collect debt from someone who disappears into another country. Therefore, since there are a handful of dishonest people in the world, all non U.S. residents must pay the price by being declined a
U.S. credit card.

What Do You Need To Apply For A Credit Card As A Non U.S. Resident?
  • A U.S. Address: In order to obtain a U.S. credit card you usually need a U.S. address. Some non U.S. residents are living in the United States and working or going to school, so having proof of a U.S. residence may not be that difficult. You need a physical address because P.O. Boxes are not usually acceptable forms of mailing addresses for obtaining a credit card.
     
  • Social Security Number: Credit card companies do not typically issue credit cards if you do not have a valid social security number. It is possible to get a social security number as a non-resident, but it does entail some legalities.
How to Get a Credit Card as a Non U.S. Resident?
  • Call different U.S. banks and simply ask if they will issue a credit card to you as a non U.S. resident. It is simple and inexpensive, but time consuming. It requires diligent searching and contacting numerous banks.
     
  • Hire a lawyer to help you with the legalities of obtaining a U.S. residential address and the appropriate social security card (which contains your social security number). There are lawyers who specialize in this and can help you get through the process quicker, but it is also more expensive than doing the work yourself.
     
  • Asking for services that offer to give you all the information you need to obtain a non resident U.S. credit card for a mere $40. While the service may be genuine and could be a small investment worth considering, it could also lead you nowhere and simply leave you out of pocket on the fee.
While it is not easy to obtain a credit card as a non U.S. resident, it can be done. If you have all of your legal paperwork and are willing to put forth some due diligence, you may be able to enjoy the benefits of a U.S. credit card.




Last Updated on Tuesday, 21 December 2010 05:28