Credit Cards for Immigrants

Moving to the US from another country is a huge change on many fronts. Even if a person does not have to learn a new language there are still new things to get used to every day. One of the biggest upheavals for many people though is to suddenly find that the credit rating and personal financial reputation they built up in their own country often means very little once they arrive in the US and they have to begin building a US credit profile from scratch.

After having set up a new bank account most immigrants quickly discover that one of the fastest and easiest ways to build credit in the US is by the careful use of a US issued credit card. Still using the credit card they have from their home country can be a short term solution to cover expenses but out of their home country every transaction made will usually be subject to foreign transaction fees, which as they run at 2-3% in most cases can get very expensive very quickly. Using them will also not help a new immigrant build up that all important US credit rating. However, getting a US credit card can be hard as there are very few US institutions willing to look at a foreign credit history as proof of creditworthiness (unless you are rather wealthy but that is a whole different story). With all this in mind what is an immigrant to do? Here are some options:

Credit Cards for Immigrants – Secured Credit Cards

Perhaps the easiest way that a new immigrant to the US can obtain a credit card and begin building a US credit history is by obtaining a secured credit card. Secured credit cards require a certain amount of money be deposited in a savings account with the card issuer and then a credit card is issued that has a limit that is at least equal to the security amount. The card is then used in the same manner as any other credit card but all activity is reported to the credit bureaus so the card-holder does begin to build a positive credit history.

The number of major US banks that issue a secured credit card product has declined significantly. From amongst them there is really only Capital One that still offers one but the one that they offer is one of the better secured credit cards out there in general. Orchard Bank – which is now owned by HSBC – also offer a good secured credit card as well.

Because they are not so familiar with the ins and outs of the US financial system some immigrants make the mistake of thinking that a prepaid credit card will also help them build credit. That is not the case. While prepaid cards are certainly convenient they are really the same thing as a debit card and they do not help build up credit at all.

Credit Cards for Immigrants – Sub Prime Credit Cards

An alternative to a secured credit card for immigrants to consider is what is known as a subprime credit card. These cards are issued to people with bad or no credit but charge fees that can be quite high and interest rates that are the same. These cards are disappearing though as the Credit CARD Act of 2009 mandates that credit card issuers, as of October 2011, can no longer charge more than 25% of an available credit limit in upfront fees and many of these cards charge fees higher than that.

Specialist Credit Cards for Immigrants

There are a few credit card lenders that are a little more sympathetic to the plight of a new immigrant to the US when it comes to credit cards and offer a specialist credit card that is designed for a new immigrant to the country.

One such card is the Capital One Cash Rewards for Newcomers. This card is a “real” credit card not a secured or sub prime credit card and the application and acceptance process is especially geared towards those whose credit history is not US based. The card has a 24.5% variable APR, a little higher than some other credit cards, but there is no annual fee and no application fee. Initial credit limits may be low, a reflection of the lack of US credit history, but it is usually increased gradually as a good payment history is established.

The Capital One Cash Rewards for Newcomers credit card is also a rewards credit card. Rewards are earned in the form of cash back and 1% is awarded on most purchases but that rate increases to 2% on any travel related expenses. Rewards can be taken in the form of cash, statement credit or as gift certificates for use at certain selected merchants.

For those who happen to be from the UK or Ireland Virgin, who have only fairly recently begun offering credit cards in the US, offer a special version of their Bank of America Virgin Atlantic American Express card to ex pats. Like the Capital One card it takes foreign credit history into account. Although an American Express card it is a credit card rather than a charge card and the 14.24% APR is very reasonable.

This card is a miles credit card, with air miles being awarded for most purchases at a rate of 1.5 miles per dollar spent but that does increase to 3 miles per dollar if the card is used to pay for a Virgin Atlantic flight.