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Credit card for those new to US

By Janna Herron · Bankrate.com
Thursday, May 2, 2013
Posted: 12 pm ET

One regional bank is making it a little easier for newly arrived U.S. residents to get credit cards.

Bank of the West said last week it created a program for expatriates and immigrants with little to no credit history to qualify for unsecured credit cards. Applicants must make at least $36,000 a year and live in one of the 19 states in which the bank operates. Immigrants must have one of 26 eligible work visas and a minimum of one year of residency remaining on the visa. Last, all applicants must have an existing banking or investment relationship with the bank, according to Thierry Gabadou, head of the international clientele group at the bank.

Gabadou said customers would likely receive the bank's platinum MasterCard, which comes with a 16.99-percent APR and no annual fee. The credit cards also would come with limits between $3,000 and $12,000. That is well above the average limit on secured credit cards, which is one of the few options for people with no credit. Another option is to become an authorized user on someone else's credit card account.

Secured credit cards require an upfront security deposit, typically between $300 and $500, as collateral against the credit limit. The limit is equal to the deposit.

But a higher limit boosts a consumer's purchasing power and can help build credit, says John Ulzheimer, president of consumer education at SmartCredit.com. A higher limit makes it easier for consumers to use only 20 percent or less of their available credit, a key factor in calculating a credit score. For a $300 secured credit card, that means charging $60 or less each month. For a $3,000 unsecured credit card, the 20 percent limit is $600.

"Consumers mistakenly believe that credit travels with you. It doesn't," he says. "If you're new to the country or welcomed back to the country, you really need to start building credit."

Good credit is necessary to get a mortgage, car loan or any other loan. Employers and landlords also check credit histories of potential job candidates or renters. Insurers use credit-based insurance scores to determine premiums, while utilities base deposit requirements on credit history.

Of course, an unsecured credit card is only as good as its terms, says Ruth Susswein, a deputy director at Consumer Action. Make sure to consider fees and the annual percentage interest rate before applying. And always pay off your balance entirely each month, Susswein says.

"I would remind people, particularly those not accustomed to using our credit system, that paying on time is essential to building a good credit history," she says, "no matter who you are."

Are you new to the U.S.? What credit options did you have?

Follow me on Twitter: @JannaHerron

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