Starter Credit Cards to Build Credit
Starter Credit Cards to Build Credit
- By: Frank Makrides
- Updated on December 6, 2020
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Establishing or have good credit standing is essential today for either securing a loan or obtaining employment. One of the best and fastest ways to build your credit are through starter credit cards.
What Are Starter Credit Cards?
Starter credit cards are cards that specifically appeal to people who have either bad or no credit. Usually, these cards have low-interest rates and no annual fees. There are also fewer criteria to qualify. You’ll probably need to be able to prove that you are over 18 and that you have an income that is sufficient to pay a monthly credit card bill. If you have no credit history you may have to get a co-signer who has good credit to help you out. Another good option for a starter credit card is to get a secured card. These types of cards require you to put down a down payment, but you typically do not need a co-signer to start building your credit history.
Why Should You Get a Credit Card?
In today’s world, having a credit history is necessary. Your credit score affects everything from renting a car, or an apartment to being able to get a loan to buy a home. Landlords, car dealerships, and even prospective employers look at your credit score to determine how reliable you are. If you have a high credit score, it is more likely that you will make your payments on time. Good credit history will also help you get more favorable terms when getting a loan for a car or a home. There are many factors that go into developing good credit. Getting a starter credit card is a simple way to start building a good credit history that will help you further down the line.
#1 Rated Premium Credit Card For Credit Building
#1 Rated Premium Credit Card For Credit Building
Jasper, the premium Mastercard, issued by WebBank, member FDIC, is more than just a credit card-it’s a credit-building partner, The Jasper Mastercard is especially helpful for customers who are new to credit in the U.S., such as young adults who have recently started their professional lives and expatriates who have recently relocated to the U.S. for work.
Starter Credit Cards Vs Secure Credit Cards
Starter credit cards are true lines of credit. This is different from secure credit cards that are pre-funded cards that you can only transact in amounts that reflect your funded balance.
In most cases, you will build your creditworthiness faster with a true line of credit than with a secured credit card.
If for some reason you don’t qualify for a starter credit card, a secured credit card can be a great option for many people.
My recommended secured credit card to use is from Chime. Check out Chime below to open an account if for some reason you can’t open a starter credit card.
#1 Rated For Secured Credit Card
#1 Rated For Secured Credit Card
If you’re looking for banking with no fees and automated savings then you have to try Chime. They offer no hidden fees like monthly fees, overdraft fees or minimum account balance fees. They also offer a service to get you paid up to 2 days early through direct deposit. With Round-Up, you automatically transfer spare change to the dollar into your savings account. Try Chime today.
Make Your Payments on Time
After you obtain a credit card, you can start working on building a good credit history for yourself. The most important thing you can do is to make your credit card payments on time. Your credit score is a number that represents how reliable you are and how likely you are to make payments on time. Because your credit card is the main tool you are using to help build your credit, making those payments on time will go a long way towards building a positive credit history.
Avoid High Credit Card Balances or Maxing Out Your Limit
It can be tempting, once you have a credit card, to use it whenever you’re a little short at the end of the month, or when you want to do something that you can’t quite cover with the budget you have. While credit cards are meant to be used, it’s a good idea to make sure that you don’t keep a high balance or max out your credit card. A high balance can adversely affect your credit score.
Don't Get Into Credit Card Debt
It’s important to stick to a budget when you have a credit card. While a low balance can make you feel like you have some extra money and spending power, you’re really accumulating debt that you will still have to pay off later. The higher the balance on your card is, the higher the interest and the amount of the overall payment. This can throw a wrench into your budget and add extra financial strain. If you fall behind in your payment, you can also expect late fees.
Avoid Paying The Minimum Payment
All credit cards have a minimum monthly payment. This is not a payment that is like an electricity bill, or rent. The minimum payment is the smallest amount that your credit card company will take to keep your account open and in good standing. Paying only the minimum will mean that you will still have a balance on your card even after you’ve paid the minimum payment. Interest will be charged on any balance that is left at the end of a billing period. Interest rates on credit cards tend to be high. By only paying the minimum on a credit card, you will pay a lot more then you owe in interest fees, You will also risk damage to your credit score if you get behind. To avoid these problems, it’s best to pay all of your balance every month.
Keep Your Credit Card Open
While you don’t want to overspend with your credit card, using and paying it off is what helps you build, and maintain a good credit score. Often, people keep credit cards that they use only for emergencies and therefore rarely, or never use. With those types of cards, it’s still a good idea to use them once in a while to keep the credit card account open. If you never use your card, your credit card company may close your account due to inactivity. If that happens, your credit score will actually go down because a line of credit that was extended to you was closed down.
Use Credit Card Alerts
It may seem like there are too many factors about credit cards to keep track of. However, there are a number of ways for you to keep track of what’s going on with your credit card that make things a lot easier for you. Virtually all credit card companies offer alerts that will tell you things like when a transaction is made, or when your bill is due. These features will help you keep track of your transactions and balances so that you can easily keep track of your credit card status. As an added bonus, alerts can tip you off to any fraudulent activity that may damage your credit score. Alerts are typically sent through your email or via text. You can usually choose your preferences when you open the account. Some credit card companies also have apps you can download for added convenience.
Keep Track of Your Credit Score & Credit Report
The main point of having a credit card is to establish and maintain good credit. You’re going to want to keep track of your credit score to make sure that your credit card is working for you to establish and raise or maintain a good credit score. Unfortunately, usually, when you or someone else like a potential employer or a bank loan official checks your credit history, your credit score can go down. You need to be careful that keeping track of your score doesn’t have a negative effect on your credit score. Services, such as Credit Karma, allow you to check on your credit score without any damage. Starter credit cards are a great first step to take to establish a good credit history. Just keep making sure that you pay your bills and keep track of your score and you will be on your way to building a great financial future.
Click on the link to the free “Credit Reports and Credit Scores” guide from the Federal Reserve.
With Credit Karma, you can check your current credit score and they will provide you some tips, tricks and ideas for free to help you immediately improve it if needed. Make sure you have active lines of credit open like credit cards and the like. Also, verify that you have nothing in collections and no late payments showing up on your credit report. If you happen to find any errors in your report you can either dispute them or request they be removed in writing. If you want to learn more about how to get your credit report for free, check out my YouTube video below.
#1 Rated For Free Credit Reports & Credit Scores
#1 Rated For Free Credit Reports & Credit Scores
Monitoring your credit score on an ongoing basis is part of your ongoing journey to financial wellness. The best company out there for this is Credit Karma. You can access your credit score and credit report anytime you need it. I continue to use Credit Karma to this very day. The best part of all is that it’s free. If you haven’t signed up already go do it today.
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Frank Makrides
Is a former financial technology industry executive, licensed realtor, real estate investor, an award-winning speaker, has been published, holds multiple patents and is passionate about all things personal finance and entrepreneurship. He is also a proud husband and father of 2 amazing children.
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