#first time credit card
Which Credit Card is Best for First Time Users?
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Top Answer: Submitted by Aryana Nakhai
It’s the biggest problem new credit card users face. How can I get credit if I don’t have a credit score yet? Credit cards for first time users provide an opportunity to build a credit score, but there are plenty of scams and tricks to avoid. The process is all about finding a lender to give you a chance, using that credit card wisely to build your credit score and then looking for a better offer down the road.
CARD ACT’s Effect
With the CARD Act in place, it is harder for younger consumers to get a credit card. You will have to have the financial means to pay your bills or find a cosigner for your account until you are at least 21 years old. We don’t know what impact this will have long term on consumers getting credit cards. However, Sallie Mae reported in 2009 that only two percent of undergraduates had no credit history. The trick is getting a credit card that will help you to build credit without costing you a small fortune.
No Credit Credit Cards
Some lenders will take a chance on you. If you are a first time credit card applicant, or you’ve been rejected in the past, lenders may not offer the best rates – chances are good you’ll pay a higher APR and more fees. Without a credit history, you’ll need to turn to these lenders until you can build up your credit score.
Building Through Secured Cards
Some lenders offer secured credit cards – you secure the card with a deposit that establishes the line of credit. The lender has no risk since you can only spend up to the pre-deposited amount. Specifically look for those companies that will report to the credit bureaus. That way, you are working to build your credit score.
The Capital One Secured MasterCard is a good fit for many borrowers. This card will automatically report to all three credit bureaus and as you prove yourself, the company may increase your credit limit. You can secure the credit card with a refundable deposit of $49, $99, or $200, depending on creditworthiness. The APR on purchases is 22.9% variable. There are no processing fees to get started, either.
Other Offers for No Credit Applicants
Orchard Bank Classic MasterCard reports to all three credit bureaus. This traditional credit card charges and annual fee and has an APR of 14.99 percent up to 19.99 percent – significantly lower than most other companies. Plus, the company reminds you through text messages when you need to pay your bill – it’s meant to make building credit easy.
Another route to consider is a prepaid card. You can use it like a credit card, wherever the logo is accepted. However, you don’t need a credit score to obtain it. Some offer free direct deposit, signup bonuses and have a high savings interest rate, such as the Mango MasterCard Prepaid Card. The problem with this card, though, is that it doesn’t report to the credit bureaus.
First time users of credit cards need to make the right decisions when they do get these cards – keep your balance low, pay on time and don’t open too many cards – to ensure they build a strong credit score. Once you do that, apply for credit cards with lower APR’s.
*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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