Best Credit Cards for New Immigrants
Credit cards can be a great financial tool. Used properly, credit cards can earn you cash back, travel rewards and offer consumer protections. Credit cards are critical for those new to America - a country that runs on credit - because they are a great way to build credit.
We’ll explain why credit is so important, how to get a credit card with no credit history, and explain the difference between secured and unsecured credit cards. And we’ll show you the best credit cards for new immigrants and international students studying in the US.
Why credit is so Important to a non-US citizen
While some countries are cash economies, the US runs on credit. Having good credit can help you rent an apartment, qualify for credit cards, and secure loans for things like an education, a car, and a home.
While nearly all people who live in America need credit, Americans who were born here have an advantage over new immigrants. Many Americans have been building credit since they were in their late teens or early twenties because they took out student loans or opened credit cards. That means by the time they reach their mid-twenties or early thirties, when they might be considering buying a new car or a home, they have years of credit history built up.
New immigrants don’t have that advantage. The average age of newly arrived immigrants increased between 2000-2017 from 26 to 31, the age at which credit becomes important. That age demographic is the reason credit is so important for non-US citizens. Those newly arrived are playing catch up in the credit game when compared to their fellow residents.
But don’t worry! Upwardli is here to help you catch up! Credit cards are an excellent way for new immigrants to build credit.
Getting a credit card with no credit history as an immigrant
Getting a credit card in the US is not difficult for everyone, but it can be more challenging as an immigrant than for citizens. The reason? No credit history! But getting a credit card with no credit history as an immigrant is totally possible, and you don’t need a Social Security number to do it either.
While a bank account is also not required to be approved for a credit card, in some cases, it can help. And there are plenty of other good reasons to have a bank account. Some foreign banks have branches in America, including the State Bank of India. Working with a bank with which you already have an account and are familiar can help smooth part of your financial transition to your new home.
Credit card issuers don’t require a Social Security number, but they require that you prove your identity and make enough money to make your payments each month. These are the things you’ll need to get a credit card with no credit history:
Full legal name
Date of birth
SSN or ITIN
Mailing address
Phone number
Email address
Gross (after-tax) annual income
Secured vs. unsecured credit cards
If you’ve been researching credit cards, you may have seen the term “unsecured credit card.” There are some differences between secured and unsecured cards, and secured cards might be an ideal way for new immigrants to start building credit.
A secured credit card requires the cardholder to give the card issuer a deposit. Generally, the amount of the deposit is your credit limit. Each month you make your payments to pay off any charges you’ve made. The issuer reports that information (not all of them do) to one or more of the three major credit bureaus. This information creates your credit file which is used to calculate your credit score.
The card issuer isn’t taking a risk because they hold your deposit. If you fail to make your payments, the deposit is used to do so. Some secured cards allow users who have used their cards responsibly to transition to an unsecured card eventually.
Secured cards don’t require a deposit. That means the issuer is taking a risk each time they approve an application. For that reason, it can be harder for those with no or limited credit history to be approved. This is why unsecured credit cards can be a great alternative for newcomers or young people with no credit history.
If you have a relationship with someone who has an established credit history in the US, they may be willing to make you an authorized user on their credit card. You have a card with your name on it and can use it to make purchases and make the monthly payments. As long as the issuer reports your activity separate from the account holder’s, the card will help build your credit. If you don’t make the payments, the cardholder is responsible and will surely take your card away and remove you from the account!
Debit cards like the Wise Debit card do not build credit. Any money you spend on a debit card is pulled from your bank account. You’re spending your own money, which means there is no credit activity to be reported to the credit bureaus.
The best credit cards for immigrants
At Upwardli, our goal is to find the best financial products for newcomers to the US. As such, we’ve researched many, many credit cards and found the best credit cards for immigrants.
Petal offers two credit cards. The Petal 1 Visa Credit Card approves users based on things other than their credit score and history. Things like your banking history, income, and spending habits are used to determine approval.
The Petal 1 card offers credit limits between $500 and $5,000. The Petal 2 card offers a higher credit limit, up to $10,000, and you can receive cashback on eligible purchases.
Petal cards have no international fees, no late fees, and you can set payments to auto-pay, so you never make a late payment, something that will decrease your credit score. If you make your payments on time for six consecutive months, you may be eligible for an increased credit limit (something that improves your credit score). Petal reports your activity to all three major credit bureaus.
The Sable Credit Card is another excellent option for immigrants. It’s a secured credit card. Approval takes just minutes, and you don’t need a Social Security number to be approved. The amount of your deposit will be your credit limit. Unlike many secured credit cards, Sable offers some of the perks traditional credit cards offer including cash back on eligible purchases, travel assistance, and extended warranties. Sable reports your activity to all three major credit bureaus.
Best credit cards for international students
For students coming to the US to study, their credit cards from home will work in the US as long as they are co-branded with Visa, MasterCard, American Express, or Discover. But even if you are 100% certain you will return home after finishing your studies, you never know! You may be offered your dream job in the US and decide to make the move permanent.
Building your credit in America while you’re a student is a smart strategy. It’s a bit easier for international students to get credit cards as there are credit cards specifically for them and some have perks that are beneficial to those attending college.
We wrote The International Student’s Guide to US Financial Life that has a lot of additional information to help make your time as a student easier from a personal finance standpoint.
Upwardli was created for you
At Upwardli, we understand how tough it can be for newcomers to navigate an entirely new financial system and how important it is to start a new life with a solid financial base. We can help you find the financial services and providers you need to succeed in your new life.
