Starter credit cards are one of the best ways to get ahead and begin building a positive credit history. These types of credit cards can help people who are new to credit, learn how to manage a budget and use financial products responsibly. The key is finding the one that can help you get a start on good credit while providing the most benefits for the lowest cost to you.
Getting a credit card for the first time can be very exciting. It gives you access to a whole new world of opportunity that you may not have had before. In cases of people with no credit history, it can even bring a certain amount of relief.
Unfortunately, various lenders have often said that they would rather lend to someone with a poor credit history than no credit history. Why? Because they understand that things happen in life that are beyond your control. You can have perfect credit, right up until a medical catastrophe, car trouble, job loss, or any number of uncontrollable events. These events can easily put you behind, and in some cases are even a matter of record on your credit history. Lenders who see this know you weren’t just blowing off your obligations, but simply dealing with the ups and downs of life, but you are still capable of managing your responsibilities.
However, if you have no credit at all, you haven’t yet demonstrated any kind of financial planning to the wary eye of a would-be lender.
This is why a first-time credit card---and what you do with it---are so important to your credit history and future.
Here are the best first and starter credit cards
You might consider a first credit card if you are
With limited options, you need to focus on the following features of your first credit card:
Beginners with no credit history are going to have a more difficult time getting credit cards unless they put some effort into finding the ones that work for them. There are plenty of credit cards that are designed just for beginners, simply because the financial world understands that you have to start somewhere.
Although beginner credit cards usually carry higher interest rates or fees, it doesn’t take long to move on to a higher level of financial opportunity if you use your credit wisely. Some are even tailored to specific demographics, so they grow with you:
Keep in mind that, even if you are just starting out, you don’t have to take the first card offered to you. Review each offer you get and see which one meets your needs and lifestyle. Many starter cards offer cash back and rewards for certain types of purchases. They don’t just encourage you to do well as you manage your credit, but also to meet your goals and thrive in other areas of life as well.
A student credit card is designed to meet the needs of college students who are just starting to build their credit history.
A great example of one of the best student cards for starting out is the Discover it for Students card.
Discover has long been a leader in the credit world, providing various types of credit cards. In fact, many people consider it a financial achievement to qualify for a Discover card. But now, this popular lender has taken things to a whole new level and is a great example of an issuer that provides credit options to fit just about any lifestyle.
As you can see by the name of the card, it’s designed to meet the needs of students. Anyone who has ever spent any time in college knows that having cash at the ready isn’t exactly the hallmark of someone devoting their time to studies. It takes time and dedication to get through an educational program, and that doesn’t always leave time or resources for building any kind of nest egg or emergency fund. College students also have financial emergencies or an interest in developing all elements of their adult lives, including their credit scores.
The Discover it for Students Card doesn’t just help you build your credit. It also addresses your needs as a student, offering cash back for using your card at gas stations and restaurants, two places that college students frequent on a regular basis. Worried about your GPA? Well, you can get some extra motivation from the cash you get rewarded for maintaining a 3.0 GPA, something very few cards offer. They also offer various rewards and match your cash back amount at the end of the year. Now, you just need to understand how to use your credit to get access to even more.
Another great card that works perfectly for students that travel abroad is the Journey card from Capital One.
Outstanding features of the card include:
If you have no credit history, you usually start at an average credit score of 600 on the FICO scale.
That makes your choice wider with a large inventory of cards available for people with average or fair credit.
Not every issuer will approve you with no previous credit history, so it makes sense to check if the pre-qualification offer exists. Most first-time credit cards come with a small credit limit in $200-$500 range usually.
One of the cards, specifically targeted at newcomers is the Capital One Platinum card. It is a great starter card -
It provides a low starting limit and high APR, but charges no annual fee, has rewards, and is an unsecured card by the major bank that helps you to have a great start.
Credit One Bank® Platinum Visa® for Building Credit is another great card to start with – 1% cashback on gas and groceries is a decent rewards rate in that card segment. Annual fee depends on your application and varies from $0 to $99.
See if you Pre-Qualify without harming your credit score.
This fully unsecured credit card with no deposit requirement can be helpful in growing or building credit. Your account activity will be reported monthly to all three major credit bureaus.
All the features you want in a credit card are included. Get 1% cash back on eligible purchases, take advantage of free online credit score tracking, and enjoy credit line increase opportunities. Terms apply.
$0-$99 annual fee
With bad credit, you have limited unsecured card options, but a security card route is always open for you.
Some of the great unsecured cards for bad credit are Credit One Bank® Unsecured Platinum Visa®, Indigo® MasterCard® for Less than Perfect Credit or Total Visa® Card
Credit One Bank automatically monitors every account for credit line increase opportunities each month. We'll let you know as soon as you're eligible for a higher credit line. A fee may apply.
See if you Pre-Qualify without harming your credit score. Find the card that's right for you in less than 60 seconds.
Eligible purchases will automatically get you 1% cash back, terms apply.
Indigo card offers a pre-qualification without a hard inquiry to your credit file. Previous bankruptcy is not a deal breaker if you consider this card.
Store credit cards are usually much easier to get approved for an often offer an instant approval. Options include applying for a store card of your favorite department store offer or an online catalog store card like Emporium card.
Those cards are less convenient to use than general credit cards because they are usually accepted only at the particular store. However, instant approval and high limit overweigths the cons.
The main difference between unsecured and secured credit cards is that with the latter, you are required to put a security deposit in the bank. Security deposit is held against your credit line as a collateral and provide the bank with a peace of mind about your creditworthiness. The drawback is that you hold several hundreds of dollars in the bank, often with no interest on it.
Usually, best strategy is to take the secured card with a smallest annual fee and largest rewards rate (if any) and use it for at least 6 months to get a hold on your credit score and graduate to an unsecured credit card.
Two of the best secured cards are Capital One Secured card and AeroMexico Secured card. Capital One card is the cheapest option – with no annual fee and no international transaction fee it will save you money. Aero Mexico card charges a $45 annual fee (waived for the first year), but in return provides you a welcome bonus and earns you 1-2% rewards on your spending.
$25 annual fee
$0 first-year fee
reports to credit agencies
24 days grace period
unsecured card offer after 12 months
Starting a new business is always exciting, but getting a first credit card for a business is no easier than an individual credit card. Almost all credit cards for small business rely on the business owners credit score to approve your business card. If your personal credit is in a good shape you have a full list of business credit cards opportunities with higher rewards and fancy perks. If you have no credit or an average credit – your best bet will be the Capital One Spark Classic for Business card. This card charges no annual fee and provides you with 1% rewards on all your spending. An interesting twist is that business credit cards usually offer much higher credit limits than personal credit cards, so hopefully, you will not be disappointed with a spending limit either.
Credit cards are convenient, but they aren’t just for emergencies. Incorporate them into your monthly budget, and you have a solid tool to help build your credit history and score. In fact, the first step is to create and maintain a solid budget.
Once you can see all your expenses and get an idea of the monthly payment you can afford, it’s time to figure out how much of your credit you want to access. Many first-time card users make the mistake of maxing out their cards, but then they have nothing for emergencies. Further, using too much of your credit can actually have a negative impact. Instead, we recommend that you use only a portion of your available credit. You can regulate this best by using your card to pay for the same expenses every month.
For instance, if you have a $500 credit limit, it looks great if you only use 10-20% of the amount available. So, what do you do that costs $50-100 a month? Gas in the car, dinner out? Use this method and you won’t spend any more than you already do, but your credit report will reflect your responsible choices. If you make your payment every month on time, you will build a positive credit score that can lead to other cards and opportunities.
In fact, it won’t take lenders long to recognize your efforts. Before you know it, you’ll be getting more credit offers than you can imagine, and the credit limits that you are offered will likely increase. You may have started off trying to find the card that works best for new cardholders, but soon enough, you won’t be going to them; they will be coming to you with offers. Use your credit cards wisely, and you may be surprised by the doors that will open for you over time.
Look at the best starter and begginers credit cards for different situations, selected by our editor.
|1||Newcomers||no annual fee, 1% cashback||low credit limit|
|2||Credit One Bank® Platinum Visa® for Building Credit||unsecured for no credit||1% cashback on selected items||annual fee $0-$99|
|3||unsecured for bad/poor credit||bad credit is not a problem, cashback on selected items||annual fee $0-$99|
|4||bad credit, past bankruptcy||approves with bad credit||no rewards|
|5||students||no annual fee, rewards||Discover network acceptance abroad and by small merchants|