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*Last updated April 2015
Credit card beginners may have a limited or no credit score. Getting to that point requires using credit. It may seem like a vicious circle, but building your credit in a positive manner is important. Without credit history, or especially with poor credit, it can be difficult to obtain auto loans, a mortgage, leases, or personal loans.
According to a Gallup poll, the average credit card holder has 2.6 credit cards. Most Americans have had their first credit card since they were in their early twenties. It's not only important to start building credit early, but it's important to be well informed before you begin the process. You can find credit cards for bad credit and credit cards for fair credit. Instant approval may be an available option so you won't have to wait long to start your credit journey. If you are ready to start building your credit, choosing the right card matters.
Are You a Student?
Due to the CARD Act, in order to get a credit card, you must be at least 21 years old, have a cosigner or have the financial means to repay your debts. If you are a student, credit cards are available to you that meet these guidelines and provide you with a way of building credit.
For example, the Discover it for Students - Good Grades Rewards credit card that offers 0% intro APR for 6 months, and an on-going interest rate of 13.24% – 22.24% variable. There is also no annual fee and you can earn additional cash back when you shop within Discover's online shopping mall, while earning 1% cash back for everything else you purchase with your card.
There are plenty of credit cards for students who are trying to build a good credit history. Some of these offers include 0% Intro APR, cash back rewards, and travel rewards. The credit score needed for some of these cards may vary, so it's important to know what your credit score is prior to applying for a credit card.
Be careful though, some websites will try to cheat you into paying for access to your credit score when you don't have to. Be sure to find a free credit monitoring service so you can keep an eye on your credit report to protect yourself from fraud, and it's also encouraging to watch your credit score increase while responsibly managing your first credit card.
Not a Student?
If you are not a student, but need a credit card for beginners, consider those credit cards designed for individuals without a high credit score. Some are even designed for those with limited or no credit history.
The Credit One Bank® -Earn More Credit Fast comes with 17.9% – 23.9% variable APR, and can also be used by those who have poor credit or no credit. This credit card offers unlimited 1% cash back for gas rewards, zero fraud liability and automatic account reviews for credit line increases. This card will report to the three major credit cards bureaus, so if you pay your bills on time every time, you should start seeing your credit score rise.
If rewards are something that interest you, you may also want to look at the Capital One® QuicksilverOne® Cash Rewards Credit Card. This card offers a low annual fee of $39, 0% intro APR until November 2016, and offers unlimited 1.5% cash back for purchases. There is no sign up necessary to start earning rewards and rewards can be earned for any purchases at any time. This credit card makes it easy to increase your credit because after 5 consecutive on-time payments, you are eligible for a higher credit line.
The Barclaycard Rewards MasterCard® is another option available to beginners that comes with a decent rewards program. This credit card has no annual fee, 25.24% variable APR, and a rewards program that earns 2X cash back rewards on purchases for gas, groceries and utilities and 1X cash back rewards on all other purchases. This card comes complete with access to your FICO credit score so you can see how your credit is improving as you consistently make payments on time and responsibly manage your finances.
If you don't qualify for these credit cards for beginners, check out the Capital One® Secured MasterCard®. It does require a deposit, but it is fully refundable as long as your account remains in good standing. The company also reports to all three credit bureaus and works with you to increase your credit limit, depending on creditworthiness. This card has no annual fee and an on-going APR of 24.99% variable.
In order to build credit, you need to use credit. These credit cards for beginners are just meant to be a springboard. Once you work to build your credit score, you can then apply for other credit cards with more lucrative offers for low interest rates, rewards, or low balance transfer fees.
*Editorial Note: Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and have not been reviewed, approved or otherwise endorsed by any card issuer.
*The content in this article is accurate at the publishing date, and may be subject to changes per the card issuer.
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