5 Options for Your First Credit Card
As you enter into the credit building market for the first time, you may find the number of available credit card offers to be overwhelming. Some cards are secured while others are unsecured so to help you build credit responsibly, try to use less than 30% of the card’s credit limit, and try to pay the balance in full and ON TIME each month. Here are 5 options to help you on your credit building journey.
1. Cards that permit co-signers
When you can't meet all requirements for a Visa or Mastercard alone due to your slender record of loan repayment, a co-endorser with a decent FICO assessment (of 690 or higher) may offer you access to one. Under this agreement, you would be the account holder and only your name will show up on the monthly bill, however the obligation will show up on both yours and your co-endorser who is vouching for you. A co-signer is basically putting their great record of loan repayment history in danger to enable you to build yours.
Another option is having someone with excellent credit add you as an Authorized User on their account. You still get a card with your name on it, but the the person who added you to their card as an authorized user has more control over the account since they are responsible for managing it and making direct payments.
2. Secured Credit Cards
When you can't fit the bill for a conventional Visa or Mastercard, aecured credit cards might be an alternative. They require a money down as a security — commonly a couple of hundred dollars — as a guarantee. The amount you put down determines your credit limit and it lessens the risk to lenders extending you credit if your default payments.
3. College/Student Credit Cards
A student credit card is a great first step in establishing a good credit history. Commonly, these cards are focused toward 18-to 21-year-olds. Building good credit may not seem like a priority while in school but you will need good credit on future purchases like a car and/or a home.
With regards to picking a college/student credit card, search for one without a yearly(annual) charge. A Student Cash Back Card is a great first card for a student learning to manage their credit. You can get cash back on purchases like gas, groceries and restuarants. Check out Discover's Student Cash Back credit card.
4. Retail Credit Cards
If you're a loyal customer to any particular store you may want to consider a Store Credit Card. Unlike a conventional credit card these retail cards can only be used at that specific store. It may be easier to get approved for a retail credit card than a non-retail credit card but before you are faced with this choice consider that Retail Credit Cards have high interest rates and could cause irrational spending.
5. Unsecured Credit Cards
Unlike, a secured card requiring a deposit an unsecured does not require this. Unsecured Credit Cards are intended for individuals with good to excellent credit, and many unsecured credit cards offer excellent rewards programs including cash back, miles, and points. Most unsecured credit cards have many benefits like no annual fees, access to higher credit limit after 5 on time payments, 1% cash back and cardholders have additional benefits like discounts with travel and insurance companies.