Building credit can feel like a catch-22. You need approval for a credit card to build credit, but it’s tough to get approved without credit history. Luckily, there are credit cards specifically designed for building credit. These cards cater to new users with limited credit history, including students.
The best first credit cards for building credit have no annual fees and may offer cash-back rewards. It’s crucial to find the card that suits your needs. To help you out, we’ve extensively analyzed various credit cards in this category from different issuers. Our aim is to curate a list of the very best options available. Here are our top picks.
Discover it® Student Cash Back
The annual fee for this card is $0, making it cost-effective for students. You can earn 5% cash back at various places each quarter, up to a quarterly maximum, once activated. For all other purchases, you get a standard 1% cash back rate. A welcome bonus awaits you: Discover will match all cash back earned during the first cardmember year. No foreign transaction fees are charged for using this card abroad, saving you money. The Discover it® Student Cash Back provides added benefits like free Social Security number alerts.
These alerts help protect your identity and ensure safety in an increasingly digital world. Another useful feature is the “Freeze it,” which allows you to freeze your account if the card is misplaced. However, one drawback is that the Discover card may not be as widely accepted worldwide. Cards part of Visa or Mastercard networks might offer better international acceptance.
Capital One Quicksilver Secured Cash Rewards Credit Card
The annual fee for this card is $0. It offers 1.5% cash back on purchases and 5% cash back on hotel and rental car bookings through Capital One Travel. However, there is no welcome bonus or foreign transaction fee.
One of the benefits of this card is Capital One Entertainment, which grants exclusive access to dining, sports, and entertainment events. It’s important to note that this card is secured and requires a refundable security deposit.
Discover it® Student Chrome
The annual fee for this card is $0. It provides 2% cash back at gas stations and restaurants, up to $1,000 in combined purchases each quarter. Additionally, you get 1% cash back on all other purchases. As a welcome bonus, Discover matches all the cash back earned at the end of the first cardmember year. This card has no foreign transaction fees.
Apart from rewards, it offers Social Security number alerts to protect your identity. You can freeze your account using the “Freeze it” feature if your card is misplaced. However, it’s worth noting that the Discover card may not be as widely accepted worldwide as Visa or Mastercard.
Petal® 2 “Cash Back, No Fees” Visa® Credit Card
Annual fee for the Capital One Quicksilver Secured Cash Rewards Credit Card is $0. You can earn 1.5% cash back on regular purchases and 5% cash back on hotels and rental cars when booking through Capital One Travel. This credit card does not offer a welcome bonus or charge foreign transaction fees.
One unique feature of the card is that it rewards you for making on-time payments with additional cash back. It’s important to note that the Capital One Quicksilver Secured Cash Rewards Credit Card is issued by WebBank. Another benefit of the card is that you can freeze your account if your card gets misplaced, adding an extra layer of security. Overall, this card offers several perks, making it a favorable choice for cashback enthusiasts.
Deserve Digital First Card™
The annual fee for this card is $0. You can earn up to 1.5% back per $1 spent. There is no welcome bonus offered. Additionally, there are no foreign transaction fees.
This card stands out from others because it provides instant approval and can be used with Apple Pay. However, it currently does not offer a physical card or compatibility with other mobile payment systems.
Petal® 1 “No Annual Fee” Visa® Credit Card
Annual fee for this card is $0. It offers 2% to 10% cash back at select merchants. There’s no welcome bonus or foreign transaction fees. The card is quite basic and issued by WebBank. It comes with some targeted cash back offers that can be useful. However, expect a modest credit limit, sometimes as low as $300. The card also provides a path to credit limit increases over time.
Tomo Credit Card
The annual fee for this card is $2.99 per month, and it doesn’t offer any rewards or welcome bonus. There are no foreign transaction fees. On the positive side, it provides several credits from companies like DoorDash, Lyft, and HelloFresh. Additionally, a ShopRunner membership is included, which offers further benefits. However, it’s important to note that this card isn’t a traditional credit card, as it doesn’t allow carrying a balance for financing purchases.
OpenSky® Secured Visa® Credit Card
Annual fee is $35. No rewards available. A welcome bonus of $50 Amazon.com gift card is given for funding $500 or more. For funding $300 or more, a $30 Amazon.com gift card is offered. Restrictions apply; refer amazon.com/gc-legal. Foreign transaction fees: 3% of each Transaction in U.S. dollars. The card is a basic secured one for individuals with poor credit, providing access to roadside dispatch and identity theft protection.
Avant Credit Card
The annual fee for this credit card is $59. There are no rewards associated with this card. Likewise, there is no welcome bonus provided. Additionally, there are no foreign transaction fees. However, it’s essential to note that this card caters to individuals with past credit missteps. One of its advantages is the option for proactive credit line increases. Nevertheless, the availability of this benefit depends on your credit profile. Furthermore, there is a possibility of having an annual fee based on your creditworthiness.
Should you get one of these first credit cards to build credit?
As you start your credit journey, monitor your actual FICO Scores regularly. These scores are used by 90% of top U.S. lenders. Checking your FICO Scores frequently can improve your credit. The FICO Scores are dynamic and change with your credit behavior.
Credit cards, when used responsibly, help build credit securely. They offer a convenient method of payment and are ideal for those with limited credit history. Rewards and benefits are nice features, but focus on building credit first.
A Jan. 2023 TransUnion study shows new-to-credit consumers perform as well as established borrowers with similar risk scores. These credit cards exist to help you build credit. Use them sparingly and pay your monthly balances in full to avoid interest.
To build a strong credit history, pay your bills on time and avoid accumulating debt. Over time, you’ll enjoy a high credit score and greater financial opportunities.
Guide to first credit cards to build credit
The initial credit cards designed to build credit are beneficial for your credit history and score.Knowing the right time to acquire a credit card and how to apply is crucial.
When should you get a credit card?
To open a new credit card account, you must be 18 years old or above. However, it’s best to get your first credit card when you can handle it responsibly. Parents may teach their children to use a credit card responsibly before they turn 18 by adding them as authorized cardholders.
Once children reach 18 and become adults, they can choose to open their credit card. This provides a secure and convenient payment method and helps them learn personal finance skills. However, young adults aged 18 to 20 must demonstrate payment ability before opening an account.
How to apply for a credit card
Applying for a credit card is often a straightforward process. Once you’ve chosen the desired card, most people complete the application online. Alternatively, some prefer doing it at a bank branch, while others use mail submissions.
The application form typically begins by asking for basic personal details like legal name, birth date, address, and Social Security number. If you’re an existing customer with the credit card issuer, you might be able to log in and autofill some information. Additionally, the form includes inquiries about your employment status, income, and whether you own or rent your home, along with your monthly housing payment.
When you apply online, you’ll receive an instant decision from the card issuer. This can be an approval, a rejection, or news that a decision is pending, with a follow-up letter expected in 7 to 10 days. If your application is denied, the law requires the issuer to provide a reason for the decision.
How to get a credit card with little or no credit
When applying for a credit card, choosing the right one is crucial for approval. Fortunately, some cards cater to individuals with limited or no credit history. While they may have fewer rewards and benefits compared to cards for established credit profiles, they increase your chances of approval.
To ensure a smooth application process, be diligent in providing accurate information. Mistakes in vital details like birth date or Social Security number can lead to denial. Include all eligible sources of income, including your spouse’s or domestic partner’s income if you can reasonably access it for loan repayment. Other income sources like child support, alimony, Social Security, and investments can also be included.
If your application gets denied, don’t lose hope. Reach out to the card issuer to explore possibilities for reconsideration. Sometimes, rectifying a mistake can lead to approval. Alternatively, you might be offered a secured card, which requires a refundable security deposit before opening an account. Secured cards function like regular credit cards but cater to individuals with less-established credit histories.
Tips for building credit for beginners
After successfully opening a credit card account, prioritize timely payments and avoiding debt. Begin with small charges and pay them off promptly. Setting up autopay with your card issuer is an easy way to ensure on-time payments.
For new credit card users, monitoring accounts is crucial. Use the mobile app provided by your card issuer to review monthly statements. Watch out for unauthorized or erroneous charges. Importantly, maintain control over your spending; only make purchases that fit your budget and could be covered with cash.