Best Credit Cards for Building Credit
Finding the right credit card can be a difficult task for most. However, for anyone that has a limited credit history, the task can be even more daunting. Most credit card issuers either won’t give you a credit card at all or they have only select cards available for credit-builders.
Why is a Credit History So Important?
Whether you are heading off to college for the first time, or have simply ignored your credit for years, establishing credit is vital. Building a solid credit history will help you get the best terms when you purchase a home or finance a new car. Without a solid credit past, lenders will be hesitant to give you the money you need, And if they do, it will likely come at a much higher interest rate.
While regional credit unions or banks like USAA have some great cards available, we want to provide you with national options available to everyone. Let’s look at five cards that are perfect for helping you build a credit profile.
Capital One® Platinum Credit Card
The Capital One® Platinum credit card is ideal for anyone looking to establish credit. While it’s not going to give you a signup bonus or a bunch of rewards for purchases, it will provide the opportunity to make payments on time so you can show good borrowing habits. This will allow you to move into more rewarding cards in the future.
When you first apply for the Capital One® Platinum card you will most likely receive a fairly low spending limit. However, after you make your first five payments on time, that credit limit could be increased. You will also have access to Creditwise® from Capital One®. This will give you unlimited access to your VantageScore so you can have a visual on how you are progressing at building your credit.
Because this is a Platinum Mastercard, you will also receive several shopping and travel benefits including: extended warranty, purchase protection, travel accident insurance, rental car insurance and more. This card will come with no annual fee.
The biggest downside to the Capital One® Platinum credit card is that it has a high variable APR of 29.74% on both purchases and balance transfers. Because of the high APR it’s critical that you pay your bill in full each month to avoid finance charges.
Capital One® Secured Mastercard®
Another secured card that is great for building your credit is the Capital One® Secured Mastercard®. While this card will not give you rewards on the purchases you make, it will offer a low deposit for some cardholders. You will start out with a $200 credit limit and, depending on your credit score, the deposit will be either $49, $99 or $200. Then, after you make five on-time payments, you will receive a credit limit increase without being required to add any additional deposit.
The Capital One® Secured Mastercard® will report your activity to all three major credit bureaus. This will help you build an equal credit history across the board. This card will have no annual fee and the variable APR on purchases is 29.74%
First Progress Platinum Prestige MasterCard® Secured Card
One of the biggest negatives to using a secured credit card to build a credit history is that most come with a high APR. Most secured cards will have APRs above 20%. This makes it critical to pay your balance in full each month so that you can avoid finance charges. However, with the First Progress Platinum Prestige MasterCard® Secured Card, the standard variable APR is just 14.24%, which puts it well below the competition.
Just like other secured cards, you will be required to put down a deposit of at least $200, which will act as your credit limit. But unlike some of the other secured cards that include no annual fee, this card has a fee of $49 each year.
Capital One® QuicksilverOne® Cash Rewards Credit Card
The Capital One® QuicksilverOne® Cash Rewards credit card is a great way to earn rewards while establishing credit. You will earn 1.5% cash back on all purchases that you make. There is no limit on how much you can earn. Plus, your rewards will never expire as long as your account stays open and active.
As a reward for good borrowing habits, you will receive a higher credit limit after making five straight on-time payments. You will also have access to CreditWise® from Capital One®, giving you a continuous look inside your VantageScore to make sure you are getting started on the right track.
In addition to benefits like purchase protection, extended warranty, and 24/7 roadside assistance, you will also receive 50% off a Spotify Premium membership through April 2018. With the Capital One® QuicksilverOne® Cash Rewards credit card there is a $39 annual fee and a standard variable APR of 29.74%.
The Bottom Line
If you have little or no credit history, opening a credit card is a relatively easy way to plant that first seed. Unfortunately, it can be difficult finding a card issuer willing to take on the risk of the unknown. By choosing any of the five cards above, you can start building your credit, which should hopefully open the door for bigger and better cards in the future.
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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.