If you want to start building credit, then you need one of the best starter credit cards. We’re here to help.
If you just graduated from high school and only have a part-time job at the local pet store, American Express probably isn’t going to offer you a Platinum card with a $100,000 credit limit. But, if you want to eventually qualify for that top of the heap American Express card, this article will help you get going with one of the best starter cards.
The best first credit card for you will depend on things such as your employment situation and your basic willingness to shell out an annual fee, and whether you can live with being charged a fairly high rate of interest (starter credit cards don’t typically offer the lowest rates). The good news is that getting any credit card will give you the opportunity to establish good credit, which will enable you to qualify for other credit cards that offer lower fees and interest rates, and higher rewards.
The Best Starter Credit Cards – the List
Even for a credit card newbie, there are numerous choices of cards that are specifically designed for students or anyone with no established credit history. Some of them even offer the most treasured credit card benefit – rewards.
Look for a card that has a low annual fee – or better yet, no annual fee. There’s no sense in paying more than you have to for the privilege of using credit. Also shop around for the lowest interest rate, but the plain truth of the matter is that, starting out, you may just have to live with an interest rate above 20%. Of course, if you pay your credit card balance in full every month, then you won’t have to pay any interest at all.
Another thing to look for in your credit card search is whether there’s a chance, once you’ve established good credit, to advance to a better credit card from the same issuer. Once you’ve built a solid relationship with a credit card issuer, it’s usually easier to get a better card, with a higher credit limit, from that same issuer than if you applied to an issuer that you don’t have any specific credit history with. So, look for banks or other credit card issuers, such as American Express, that offer a path to obtaining better and better cards.
Without further ado, here’s our list of the best starter credit cards:
- Capital One QuicksilverOne Card – Best Flat Rate Cash Back Rewards Card
- Discover it® Student Cash Back Card – Best Student Card
- Petal® 2 Visa® Credit Card – Best No Fees Card
- American Express Blue Cash Everyday Card – Best Interest Rate Card
- Discover it® Secured Credit Card – Best Secured Card
- Brex Mastercard – Best Small Business Card
Following is a description of each card, including its relative advantages and disadvantages and why it made our list of best cards. We also note a couple of “honorable mention” cards that are good alternatives to our top picks.
(Note: Interest rates quoted may have changed. When the Federal Reserve raises its base interest rate, the rates on most other credit products also increase.)
Capital One QuicksilverOne Card – Best Flat Rate Cash Back Rewards Card
Cash back rewards are an important money-saving credit card perk. But most starter cards either offer no rewards or are kind of stingy with them. The Capital One QuicksilverOne card is an exception – it offers 1.5% cash back on everything you buy with it. That’s in contrast to many cards, where cash back rewards are limited to a rotating list of categories. So if you happen to buy that big flatscreen TV during a month when “electronics” isn’t one of the categories, no cash back.
Even better, you can get 5% cash back on hotels and rental cars as long as you book them through Capital One Travel.
This card’s other advantages include having a relatively low annual fee – $39. Plus, all you have to do is make your payments on time for six months, and Capital One will consider raising your credit limit.
Capital One has garnered many positive reviews as a bank, so you may want to open a checking or savings account there, too. One of the free services it gives all its clients is CreditWise, a service that monitors your credit score and alerts you to any significant increases or decreases. CreditWise also provides personalized advice on things you can do to improve your credit score.
The lone drawback with this card is the high interest rate – 26.99%.
Honorable Mention Alternative – Capital One Platinum Credit Card
An alternative to the QuicksilverOne card is another offering from Capital One. It’s Platinum card is a little easier to get with no credit history and a lower credit score. It offers the advantage of no annual fee…but, sorry, no rewards.
Discover it® Student Cash Back Card – Best Student Card
This Discover card is a great first credit card for students, for several reasons. First, it’s one of the few starter cards that offers a more reasonable interest rate – from 13.74% to 22.74%. It also offers up to 5% cash back rewards on purchase categories that rotate every quarter (up to a specified maximum quarterly amount). All other purchases earn 1% rewards.
Discover runs special intro offers with this student card, such as giving you matching cash back after your first year, doubling whatever cash back you’ve already received.
Another key advantage with the Discover Student Cash Back Card is no annual fee.
Honorable Mention – Discover it® Student Chrome Card
Discover’s Student Chrome Card is a good choice if you plan to mostly use the card just to buy gas and for dining out. That’s because it offers 2% rewards on all gas station and restaurant purchases.
Petal® 2 Visa® Credit Card – Best No Fees Card
The Petal 2 Visa card is our pick for the best “no fees” card – no annual fee, no late payment fees, no fees of any kind.
This card offers 1% cash back rewards on eligible purchases, and up to 10% back on things you buy at specified stores. But before you start thinking that’s awesome, note that one of the disadvantages of this card is the fact that its cash back rewards program is considered very complex and difficult to keep up with. So, you might think you have a small fortune in cash back coming, only to find out that you didn’t actually make any “eligible purchases”.
The Petal 2 Card offers variable interest rates of 13.74%-27.74%. And it’s good card to apply for if you have exactly no credit history, because the issuer considers other factors besides just your credit score.
American Express Blue Cash Everyday Card – Best Interest Rate Card
This starter card from American Express offers 3% cash back on groceries and 2% back on gas station purchases. Another perk? – If you spend $2,000 with the card within your first six months, you get a $200 credit to your account balance.
There’s no annual fee for the AmEx Blue Cash Everyday card. (That’s quite a contrast with some of the more high-end American Express cards, where the annual fee runs hundreds of dollars.)
But here’s the best thing about this card: you get an introductory interest rate of 0% for your first 15 months (after that, the rate you’ll get varies from 14.74% to 24.74%). Combined with no annual fee, no interest for 15 months makes the Blue card a very good deal. (Plus, if you grab the Blue card, you’ll be on your way to earning the coveted American Express Platinum Card, with a rumored credit line of a gazillion dollars.)
The one disadvantage here is the disadvantage common to all AmEx cards – you need a sterling credit score to qualify, typically 690 or better.
Discover it® Secured Credit Card – Best Secured Card
If you happen to have some established credit history – and it’s not particularly good – then getting a secured card may be your best bet to start rebuilding good credit. With a secured card, your credit limit is equal to the amount of the security deposit you put down with the card issuer.
Most secured cards come with both the highest interest rates and the highest fees, and with no credit card rewards. In contrast, the Discover secured card charges no annual fee, carries an interest rate of 23.74%, and offers 1% to 2% cash back on purchases. You can get a starting credit limit of up to $500 with a matching deposit.
After building a solid payment history with the secured card, you can look to qualify for an unsecured card.
Brex Mastercard – Best Small Business Card
Are you an entrepreneur, starting your own business? If so, then getting a Brex card may be a big help to you. That’s because, unlike most small business cards, this one doesn’t require you to be personally liable for the credit card debt. Your business qualifies for the Brex card based primarily on its cash balance and spending history. (It also takes into consideration any investors you may have gathered to help back your business venture.)
The bottom line is that you can qualify for the Brex card even with poor credit, as long as you have a big bank balance.
A big plus is that the Brex card typically offers a substantially higher credit limit – up to 10 or 20 times more – than what’s available with most small business credit cards. There’s no annual fee, and you can earn substantial rewards with the card. The issuer also throws in a sign-up bonus of offers worth up to $150,000 from business product and services providers such as Google Ads and Salesforce.
How Do I Qualify for a Credit Card?
Credit card issuers require basic information about your finances and income, as well as basic personal information, such as your address and phone number.
Three of the main things issuers customarily require are the following:
- A U.S. residential address (you can’t usually get a card just using a P.O. box address)
- A checking and/or savings account at a bank, credit union, or other financial institution (it’s a plus for qualifying for a card and for boosting your credit score if you have both a checking and a savings account)
- Some proof of income or other ability to make payments
If you don’t have any income, you can still qualify for a credit card if you have a co-signer willing to be responsible for your debt (such as a parent). An alternative is becoming an authorized user on someone else’s credit card.
How to Use Your Card to Build Good Credit
Once you get a credit card, it’s important to practice good credit habits. Doing so will help you increase your credit score and qualify for higher credit limits and for cards that offer lower fees and interest rates, and greater cash back rewards. Establishing good credit with your credit card will also help you qualify for other forms of credit, such as auto loans and mortgage loans.
Here are the main factors that impact your credit score and that you need to mindful of in using your new credit card:
- Your payment history with the card – Be sure to always make your payments on time, every month. Your payment history makes up the largest part of your credit score – 35%.
- How much of your available credit you use – This factor, known as your credit utilization rate, also accounts for a big chunk of your credit score – 30%. If your credit limit is constantly almost maxed out, that counts against you. Keeping your usage below one-third of your available credit will boost your credit score.
- How long you’ve had a credit card account – A lot of people aren’t aware that this also affects their credit score, accounting for approximately 15% of it. Because of this, it’s a good idea to keep your first credit card account open even when you can qualify for a better card. That way you maintain a longer credit history.
You should check your credit history with the three major credit bureaus – Experian, Equifax, and TransUnion – regularly, not only to see what your score is, but to make sure that no fraud, such as identity theft, is being perpetrated against you. Some card issuers, such as Capital One with its CreditWise service, offer free credit monitoring.
Best Starter Credit Cards – Summary
Getting a credit card gives you significant financial advantages, in the form of convenience, fraud protection, and cash back rewards on your spending. It also increases your purchasing power.
Because there’s a wide variety of issuers and cards to choose from, it pays to take the time to compare cards in terms of fees, interest rates, card rewards, and other factors. Hopefully, our list of the best starter cards will help you out.
What’s the average credit limit for a “starter” credit card?
Opening credit limits with most starter cards typically fall in the range of $300-$500. However, if you establish a good credit history – making all your payments on time and not constantly maxing out your card – many credit card issuers will consider increasing your credit limit within just a few months.
What’s the highest credit limit you can get with a credit card?
Seriously? – You’re just starting out with getting credit, and you already want to know the highest possible credit limit? ? Okay, well – for future reference – the highest credit card limits generally available are around $100,000. Most high-limit cards give you a credit line in the range of $10,000 to $20,000. To qualify for the very highest limit cards, you need lots of assets, not a lot of outstanding debt, and pretty much an impeccable credit history. The irony is that if you’re in good enough financial shape to qualify for such high limits, you probably don’t even need a credit card, because you can pay cash for anything short of a $50 million mansion in Beverly Hills.