Getting a credit card for the first time is a massive financial milestone, but the power and responsibility that come with it may be a bit daunting for some. Comparing options is a great starting point in a person’s credit card journey.
Overview of the Best Credit Cards for Beginners
When picking a credit card for the first time, understanding the nuts and bolts of the main alternatives on the market could help make a better decision that allows cardholders to build good credit — and save some money while they’re at it. Here’s a rundown of the best credit cards for beginners with no credit in 2022.
|Annual Fee and APR
|Discover it Secured Credit Card
|Capital One Quicksilver Secured Credit Card
|Discover it Student Cash Back
|Capital One SavorOne Student Cash Rewards Credit Card
|Chase Freedom Student Credit Card
|Deserve PRO Mastercard
|Petal 2 Cash Back, No Fees Visa Credit Card
|Best for U.S. expenses:
What To Look For in a Beginner Credit Card
Newcomers to credit may not qualify for the credit cards with the most perks, richer rewards and generous sign-up bonuses. These alternatives are typically reserved for applicants with credit scores over 700 and certain income conditions. While achieving these criteria may take time, aspiring cardholders can find more immediate ways to build their credit, like getting a beginner credit card.
Important Credit Card Information To Keep in Mind
Credit card issuers are legally required to disclose interest rates and fees on all their products. Examining them closely will give potential account members a sense of what they’re getting into. Regardless of whether they’re new to credit, customers should remain inquisitive about annual fees, annual percentage rates, foreign transaction fees and late fees before applying for a new credit card.
How APR Works
The APR of a credit card is the interest customers need to pay on balances they carry on a month-to-month basis. It’s important for consumers who are new to credit to understand the different APRs for the specific credit card they’re interested in. For example, some companies may charge different APRs depending on the transaction and even have penalty APRs on late payments.
As long as cardholders pay their balance in full every cycle, interest is avoidable on all credit cards. That’s because interest won’t normally start accruing on new purchases until after the first due date. It’s only when customers carry a portion of that balance over to the next month that interest starts accumulating.
What To Know About Late Payments
All account members need to steer clear of late payments if they want to keep a healthy credit rating. While being late for one or two days may not immediately harm a cardholder’s credit, it could result in undesirable late fees and interest.
Credit card issuers report to all major credit bureaus. Paying 30 or more days late will be recorded on a card user’s credit score and damage their reputation with other issuers. Keeping an eye on payment due dates is imperative to prevent any repercussions.
Credit Cards Geared Toward Beginners
Many issuers offer products for people with poor or no credit history. Starting small is a good strategy to test the waters before diving into credit cards with more wiggle room, which often come with hefty fees and intricate terms and conditions. Some good options for credit beginners are:
- Secured credit cards
- Student credit cards
- Beginner credit cards
- Preapproved credit cards
Typically, applicants won’t know their credit card limit until they’ve been approved. Secured credit cards are the only cards that may give users a sneak peek of how much they’ll be able to spend once they become account members.
Top 3 Secured Credit Cards
As mentioned above, people with limited or no credit may have a hard time getting their first credit card because issuers won’t have grounds to assess their creditworthiness. Secured cards are designed to help those who are new to credit build trust among creditors. They may even help those with bad credit recover from their current situation.
To open a secured credit card account, customers need to put down a security deposit. The card’s credit limit will typically be equal to or slightly higher than the minimum deposit. For example, putting down $300 will give the account holder an initial $300 credit line. While the average secured card cost ranges from $200 to $500, some issuers let applicants deposit more to increase their initial credit line.
Here are some of the best secured credit card options across issuers.
1. Discover it Secured Credit Card
Best for: Intro rewards
For a beginners’ credit card, the Discover it Secured card comes with many perks. Additionally, it allows users to graduate once they’ve built a strong relationship with the issuer. This means getting their deposit back is possible.
The Discover it Secured card has no annual fee, but it comes with a high APR. On the bright side, this is one of the few secured credit cards on the market that offers rewards with every purchase. In addition, Discover will match all the cash back earned during the first year on a dollar-for-dollar basis with no caps.
This beginner credit card offers 2% at restaurants and gas stations on up to $1,000 each quarter and 1% on all other purchases.
2. Capital One Quicksilver Secured Credit Card
Best for: Flat-rate rewards
Capital One offers a similar alternative to Discover with slightly lower but still competitive rewards. The Capital One Quicksilver Secured card gives members an unlimited 1.5% on all purchases. The APR with this card is relatively high, which is not uncommon for secured credit cards. However, it comes with a $0 annual fee and the possibility of getting the security deposit back as a statement credit.
The minimum deposit for the Capital One Quicksilver secured card is $200, but the issuer allows users to put down up to $1,000 to increase their credit line. Capital One may also offer a credit line increase for responsible cardholders as soon as six months after opening the account. Much like its Discover counterpart, the Quicksilver card lets customers graduate and opt for an unsecured card over time.
3. Citi Secured Mastercard
Best for: Choosing a due date
This secured card is designed specifically for beginners, so unlike other options on this list, it’s not appropriate for people trying to rebuild credit. It’s a fairly straightforward option with no rewards or significant perks other than reporting to all three major credit bureaus — which surprisingly not all credit cards do.
The Citi Secured Mastercard is not a bad choice, however. It has a $0 annual fee and may return cardholders their deposit after 18 months. Applicants have up to 14 days to pay their deposit after being approved, and the amount can range between $200 and $2,500.
Top 3 Student Cards
Although marketed to college students, student credit cards aren’t too different from regular credit cards. Applicants will still need to have a steady, independent income and meet other requirements. Those under 21 will need a co-signer to qualify per federal law, but some issuers may not allow this.
Some of these cards may reward good grades or have bonus perks for student-related expenses. Otherwise, student credit cards are pretty standard. Here are the best options available in 2022.
1. Discover it Student Cash Back
Best for: Rewards on rotating categories
Unlike many other options out there, this student credit card offers generous rewards to beginner credit holders. It comes with no annual fee and gives new customers an unlimited cash-back match on all rewards earned during the first year. Geared toward the younger population, this card also offers personalization features to match the cardholder’s style.
The Discover it Student Cash Back card offers 5% on rotating categories upon quarterly activation, including grocery stores, fitness clubs, gas stations and restaurants. Additionally, it gives 1% on all other purchases.
The card comes with a 0% introductory APR during the first six months, followed by a variable APR, and offers balance transfer options. The issuer reports payments to TransUnion, Equifax and Experian.
2. Capital One SavorOne Student Cash Rewards Credit Card
Best for: Dining and entertainment
Capital One has a variety of student credit cards with different benefits. However, the SavorOne is among the most attractive choices. It gives cardholders 3% cash back on dining, entertainment, select streaming services and grocery stores, excluding Target and Walmart. In addition, it offers a 1% flat rate for all other purchases. This card also gives users 10% cash back on Uber and Uber Eats purchases. Plus, cardholders can enjoy complimentary Uber One membership statement credits through November 14, 2024.
The Capital One SavorOne Student Cash Rewards credit card has no annual fee or foreign transaction fees. It’s a solid alternative for those who want straightforward rewards without worrying about rotating categories and quarterly activations. Plus, rewards never expire as long as the account remains open.
As with other Capital One options, users can get a credit line increase when paying on time for as little as six months. This credit card has a high APR, so paying the monthly balance in full is important.
3. Chase Freedom Student Credit Card
Best for: Low interest rates
This Chase card requires customers to be students to qualify. It may be the only credit-building card for beginners currently offered by this issuer, but it comes with excellent perks in its category. The Chase Freedom Student credit card comes with a $0 annual fee, but the benefits don’t stop there. It offers Good Standing incentives for responsible use — $20 each year — along with credit limit increases and even credit card upgrades.
This card gives 1% cash back on all purchases, which is a low rate compared with other offers on this list. However, it gives cardholders 5% on qualifying Lyft services and a three-month subscription to DoorDash’s DashPass.
The APR on this Chase credit card is significantly lower at a than other beginner cards on the market. On the downside, the Freedom Student card has foreign transaction fees, so it may not be suitable for those studying abroad.
Top 3 No-Deposit Beginner Cards
Some issuers also offer credit cards for beginners without asking for a security deposit. Qualification requirements for these alternatives may vary, but they’re an excellent choice to start building credit while getting some advantages that not all secured credit cards provide — like cash-back rewards. Here are some of the best options available this year.
1. Deserve PRO Mastercard
Best for: Foreign applicants
This is an excellent credit card alternative, not only for credit beginners but also for U.S. newcomers. Deserve allows foreign citizens on a visa and new green card holders to begin their credit journey in the country.
The Deserve PRO Mastercard is a cash-back credit card, meaning it offers rewards with qualifying purchases. It gives 3% on travel and entertainment, 2% at restaurants and 1% on everything else. After hitting the $25 mark, rewards are redeemed automatically as a statement credit.
This Deserve credit card also gives referral statement credits to customers who recommend the product and those who join. It comes with no annual fee and a competitive variable APR for cards in this category at 17.24% to 27.24%.
2. Petal 2 Cash Back, No Fees Visa Credit Card
Best for: Higher credit limit
This beginner credit card has a no-fee policy and asks for no security deposits. Additionally, the issuer uses a special algorithm to determine creditworthiness instead of solely turning to the applicant’s credit score. It considers other important factors, including their income, savings and spending habits.
The Petal 2 offers an attractive reward scheme, with a flat rate on all purchases that increases over time. Users begin by earning 1%, but with responsible use, the percentage increases every six months until it reaches 1.5%. Additionally, cardholders may earn between 2% to 10% with select merchants.
3. American Express Blue Cash Everyday Card
Best for: Everyday expenses at U.S. gas stations, supermarkets and online retail stores
American Express may have a reputation for being incredibly exclusive and requiring excellent credit for all of its credit cards. However, the Blue Cash Everyday Card is a great rewards credit card for those with good to excellent credit. It comes with no annual fee and offers 3% cash back at U.S. supermarkets, on U.S. online retail purchases and at U.S. gas stations on up to $6,000 per year in each of these categories. After the category caps are hit 1% back will be earned and all other eligible purchases also earn 1% back.
This credit card has a 0% introductory APR on purchases and balance transfers for 15 months (followed by a APR) and comes with a $0 annual fee. Plus, it allows American Express® Card Members to earn $200 in statement credit after spending $2,000 in the first six months.
The Express Blue Cash Everyday card gives Card Members all the perks of being an American Express® Card Member minus the expensive annual fees.
Credit Card Preapproval
Qualifying for a non-secured credit card may be challenging in some cases. One primary issue that comes with applying for a credit card is that, even when the applicant is denied, it may cause a dip in their credit score. This is because most issuers tend to make a hard inquiry on the person’s credit to gauge the risks of offering them credit.
To prevent this, most banks have preapproval options. Users can fill out a form on the issuer’s site to see which credit cards, if any, they qualify for. Although this method doesn’t guarantee actual approval, it could give applicants a better idea of what their options are or whether they need to improve their situation before applying.
Authorized Cards (If Everything Else Fails)
Beginner credit holders have one last resort when they cannot get their own card to start building a solid credit reputation: They can ask a family member with good credit to allow them as an authorized user on their credit card. This is an excellent way to learn about credit and acquire good habits before getting their own credit line.
Why Building Credit Is Important
Having good credit has numerous benefits. It shows how responsible a person is when it comes to borrowing and paying back money. This is critical information that pops out when trying to buy a home, start a business, set up utilities or get a car loan, and it can also boost a debtor’s chances of landing a job in some cases.
Although there are numerous methods to build credit, using a credit card responsibly is perhaps one of the most reliable ones. Since issuers regularly report payments to all credit bureaus, it’s a fast way to progress in the account member’s credit journey.
How To Build and Maintain Good Credit
Having a credit card is tricky, especially for those with no experience. However, it’s the easiest route to build and maintain good credit when done right. Although it may seem a little scary at first glance, keeping a good score is easy with responsible credit use. Some tricks to achieve this:
Not only will following this advice spare cardholders many headaches down the line, but it will also help them maintain their financial health and solidify their relationship with credit-awarding institutions.
What Credit Card Is Best for a Starter?
Applying for a credit card for the first time doesn’t need to be a complicated endeavor. With appropriate guidance and a little patience, everybody can be creditworthy in due time. The above tips should help aspiring credit card members build a solid foundation to begin building their credit.
To pick the best option from the ones described here, such as the Discover it Secured Card, American Express Blue, and even ones geared towards students such as the Capital One SavorOne Student Cash Rewards card, users need to carefully assess their financial history and capabilities to select an option that won’t end up doing more harm than good to their credit in the long run.
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