Did you know nearly three in four Americans get a credit card by age 25, with the average balance being $5,221 for most consumers? In the world of personal finance, establishing and building a credit history is paramount. A good credit score opens doors to various financial opportunities and signifies responsible financial behavior. For individuals new to credit, starter credit cards can serve you as an important tool in this journey.
But before we get into the topic, it is recommended to first read about What Credit Cards are Available for an Average Credit Score in detail by Bright Money!
We've compiled a list of the 10 best starter credit cards in 2023 to help you kickstart your credit journey and achieve your financial goals.
What is a Starter Card?
A starter card, often referred to as a "starter credit card," is a type of credit card designed for individuals who are new to credit or have limited credit history. These cards are typically easier to qualify for compared to traditional credit cards, making them a valuable tool for building and establishing credit.
How does a Starter Card work?
Starter cards work by providing individuals with a low credit limit, which reduces the risk for both the cardholder and the issuing bank. These cards may require a security deposit, which acts as collateral and helps secure the credit line. As cardholders make on-time payments and demonstrate responsible credit usage, their credit history begins to improve, making it easier to qualify for more competitive credit cards in the future.
Benefits of Starter Credit Cards
The benefits of using a starter credit card include the opportunity to establish a positive credit history, which is essential for securing loans, renting apartments, and even obtaining favorable insurance rates. These cards often come with simple terms and lower fees, making them accessible to individuals with limited financial experience.
When should you use a Starter Credit Card?
It's advisable to use a starter credit card when you are new to credit or rebuilding your credit after past financial challenges. Responsible usage, such as making timely payments and keeping balances low, can help pave the way for a healthier financial future and access to better credit products.
Top 10 Starter Credit Cards to start Building Credit
1. U.S. Bank Cash+® Visa® Secured Card
Pros:
- Customizable Rewards: The U.S. Bank Cash+ Secured Card allows cardholders to choose two categories every quarter in which they can earn 5% cashback. These categories include options like restaurants, department stores, and more, allowing you to tailor rewards to your spending habits.
- Cashback Potential: The ability to earn cashback on select categories provides a strong financial incentive for responsible card usage.
- Secured Card Benefits: As a secured credit card, it helps individuals with limited credit history or poor credit build or rebuild their credit over time.
Cons:
- Security Deposit Required: Like all secured cards, you'll need to place a security deposit as collateral, which may not be ideal for those with limited funds.
- No Introductory APR: The U.S. Bank Cash+ Secured Card doesn't offer a 0% introductory APR period for balance transfers or purchases, which is a feature available with some other credit cards.
Why it Stands Out?
The U.S. Bank Cash+ Secured Card stands out for its unique cashback customization feature. This flexibility allows cardholders to maximize rewards based on their preferences, making it an excellent choice for secured card options.
2. Secured Mastercard® from Capital One
Pros:
- Low Initial Deposit: Capital One's Secured Mastercard is known for its accessibility, as it allows individuals to secure the card with a relatively low initial deposit compared to some other secured cards.
- Credit Limit Increase: Responsible card usage can lead to an increase in your credit limit without requiring an additional deposit, which is a feature that many cardholders appreciate.
- CreditWise: Cardholders gain access to Capital One's CreditWise tool, which offers credit monitoring and educational resources to help improve credit health.
Cons:
- No Rewards: Unlike some other secured cards, this Capital One card doesn't offer cashback or rewards, which may be a drawback for those looking to earn rewards while building credit.
- Annual Fee: It does have an annual fee, albeit a modest one, which can be a downside for some users.
Why it Stands Out?
The Secured Mastercard from Capital One stands out for its accessibility, low initial deposit requirements, and the opportunity to increase your credit limit over time with responsible use. It's a solid choice for individuals looking to establish or rebuild their credit.
3. Deserve® EDU Mastercard for Students
Pros:
- No Credit History Required: Deserve takes a unique approach by considering factors like your banking behavior and future earning potential, making it accessible to students with limited or no credit history.
- Amazon Prime Student: Cardholders can receive a complimentary year of Amazon Prime Student membership, which includes benefits like free two-day shipping, streaming, and more.
- No Foreign Transaction Fees: This feature is particularly useful for students who plan to travel or study abroad.
Cons:
- Higher APR: The card has a relatively high APR, so it's important to pay off balances in full each month to avoid interest charges.
Why it Stands Out?
The Deserve EDU Mastercard for Students stands out for its innovative approach to underwriting, making it accessible to a broader range of students without a traditional credit history. The added benefit of Amazon Prime Student membership also makes it appealing.
4. Bank of America® Cash Rewards Credit Card for Students
Pros:
- Cashback Rewards: This card offers cashback on categories like dining, online shopping, and gas, making it appealing to students with active spending in these areas.
- Credit Education: Bank of America provides access to credit education resources to help students learn about responsible credit use and management.
- No Annual Fee: With no annual fee, this card is budget-friendly for students.
Cons:
- Good to Excellent Credit: While designed for students, the Bank of America Cash Rewards Credit Card typically requires a higher credit score compared to some other student cards.
Why it Stands Out?
This card stands out for its variety of cashback categories, allowing students to earn rewards on everyday spending. It also provides valuable credit education resources, making it a well-rounded choice for student credit cards.
5. PNC Cash Rewards® Visa® Credit Card
Pros:
- Competitive Cashback: The PNC Cash Rewards Visa Credit Card offers competitive cashback rates, including 4% on gas, 3% on dining, and 2% on groceries, making it great for everyday spending.
- No Annual Fee: Cardholders can enjoy cashback rewards without having to pay an annual fee.
- Low Introductory APR: It provides a 0% introductory APR on expenses for a limited time, which can be useful for students making significant purchases or managing existing debt.
Cons:
- Balance Transfer Fee: If you plan to use the introductory APR for balance transfers, be aware that there is a fee associated with this.
Why it Stands Out?
The PNC Cash Rewards Visa Credit Card stands out for its strong cashback rates on common spending categories and the introductory APR offer. It's an attractive option for students who want to earn rewards while managing their finances and potentially consolidating existing debt.
6. Capital One SavorOne Student Cash Rewards Credit Card
Pros:
- Cashback Rewards: The Capital One SavorOne Student Cash Rewards Credit Card is particularly appealing for students who enjoy dining out, attending entertainment events, and shopping for groceries. It offers cashback rewards in these categories, providing tangible benefits for everyday spending.
- No Annual Fee: This card doesn't come with an annual fee, which is advantageous for students who want to keep their costs low.
- Credit Education: Capital One offers access to credit education resources, helping students learn about responsible credit management, which is crucial for building a strong financial foundation.
Cons:
- Limited Rewards Categories: While it offers rewards in specific categories, it may not cover all spending areas, potentially limiting its appeal to those with diverse spending habits.
Why it Stands Out?
This card stands out for its focus on rewarding dining, entertainment, and grocery store purchases, making it an excellent choice for students who frequently engage in these activities. It's also a solid option for those looking to build credit without incurring an annual fee.
7. AvantCard Credit Card
Pros:
- Accessibility: The AvantCard Credit Card is designed to be accessible to individuals with fair to good credit, providing them with an opportunity to build or rebuild their credit. This inclusivity is a significant advantage for those looking to improve their credit history.
- Credit Limit Increase: Responsible card usage can lead to an increase in your credit limit, which is beneficial for individuals aiming to boost their credit scores.
- Quick Application Process: The application process is straightforward and quick, making it a convenient choice for potential cardholders.
Cons:
- No Rewards: Unlike some other credit cards, it doesn't offer cashback or rewards, which might be a drawback for those seeking rewards for their spending.
- Annual Fee: It has an annual fee, which could deter individuals seeking cards with no annual fees.
Why it Stands Out?
The AvantCard Credit Card stands out for its accessibility, offering an option for building credit for individuals with fair to good credit. It is straightforward and ideal for those focused on improving their credit history.
8. Discover it® Student Cash Back
Pros:
- Student-Friendly Rewards: The Discover it® Student Cash Back card is designed with students in mind. It offers 5% cashback on rotating quarterly categories like gas stations, restaurants, Amazon.com, and more. This student-focused approach helps young cardholders earn rewards for their everyday spending.
- Good Grades Reward: Students who maintain a GPA of 3.0 or higher can enjoy a $20 statement credit each school year for up to five years. It's an encouraging incentive for academic excellence.
- No Annual Fee: The card comes with no annual fee, making it budget-friendly for students who are just starting their credit journey.
- Introductory 0% APR: Discover it® Student Cash Back offers a 0% introductory APR on purchases for the first six months. This feature can be valuable for students who need to make large purchases or want to carry a balance without accruing interest.
Cons:
- Rotating Categories: While the rotating 5% cashback categories can be lucrative, they may require some planning and adjustment to maximize rewards each quarter.
- Limited Credit History: While it's designed for students, applicants with no credit history may still find it a bit challenging to qualify for this card without a co-signer.
Why it Stands Out?
The Discover it® Student Cash Back card is an excellent choice for students looking to build credit responsibly while earning rewards. The combination of cashback opportunities, a good grades reward, and a 0% introductory APR makes it a standout option for young cardholders.
9. Tomo Credit Card
Pros:
- No Credit History Required: The Tomo Credit Card takes an innovative approach by not requiring a traditional credit history or score for approval. Instead, it relies on income and bank account data, offering a more inclusive option for those without established credit.
- No Annual Fee: It doesn't come with an annual fee, making it budget-friendly for newcomers to credit.
- Rewards Program: Despite its accessibility, it offers cashback rewards on all purchases, allowing cardholders to earn while they spend, which is an uncommon feature among starter credit cards.
Cons:
- Higher APR: The card does have a higher APR, so it's essential to pay off balances in full each month to avoid interest charges.
- Limited Initial Credit Limit: Initial credit limits may be lower compared to other cards, which might limit purchasing power.
Why it Stands Out?
The Tomo Credit Card stands out for its innovative approach to underwriting, making it accessible to individuals without traditional credit history. It also offers cashback rewards and doesn't have an annual fee, making it an attractive choice for newcomers to credit.
10. Citi® Double Cash Card
Pros:
- Double Cashback: The Citi Double Cash Card offers a straightforward and appealing cashback structure. Cardholders earn 2% cashback on all purchases—1% when making a purchase and an additional 1% when paying off that purchase, effectively encouraging responsible card usage.
- No Annual Fee: With no annual fee, it is a cost-effective choice for individuals looking to build credit and enjoy cashback rewards.
- Balance Transfer Option: The card can be used for balance transfers, providing versatility for those looking to consolidate existing debt.
Cons:
- Higher Credit Score Requirement: It generally requires a good to excellent credit score, which may not be attainable for those with limited or damaged credit history.
- No Introductory APR: Unlike some other cards, it doesn't offer a 0% introductory APR period for balance transfers or purchases.
Why it Stands Out?
The Citi Double Cash Card is unique for its simple yet effective cashback structure, which rewards responsible card usage. It provides an opportunity to earn cashback on all purchases, encouraging a responsible approach to credit while enjoying rewards.
Conclusion
Did you know that the average first-time credit limit is $500-1,000? Choosing the right starter credit card is a crucial step in building credit. The best card for you depends on your credit score, financial goals, and spending habits. Whether you're a student, someone with a limited credit history, or looking for cashback rewards, there's a starter credit card on the market that can help you achieve your financial objectives.
Remember that responsible credit card use, including making timely payments and also keeping your credit utilization low, is key to establishing a strong credit foundation for your future financial endeavors.
Recommended Reads:
Should I pay my credit card bill as soon as I get it?
3 reasons to use personal loans to pay off debt
FAQs
1. What is a starter credit card?
A starter credit card is intended for people who have little or no credit history and for those who want to establish new credit. These cards may provide features and perks appropriate for novices and frequently have lower credit score restrictions.
2. Why should I consider a starter credit card?
Starter credit cards are valuable for building credit, which is essential for future financial opportunities such as loans, mortgages, and better credit cards. They also provide a safe and convenient way to make payments and build responsible financial habits.
3. What are the advantages of using a starter credit card?
Advantages include building credit, potentially earning rewards, gaining access to financial tools and education, and establishing a credit history for future financial goals.
4. How do I choose the right starter credit card for me?
To select the best starter credit card, consider factors like your credit score, financial goals, spending habits, and preferences. Choose a card that suits with your specific needs and objectives.
5. Do starter credit cards have annual fees?
Some starter credit cards have annual fees, while others do not. It's important to review the terms and conditions of each card to understand any associated fees.
6. Can I get a starter credit card with no credit history?
Yes, there are starter credit cards designed specifically for individuals with no credit history or limited credit history. These cards often have more lenient approval criteria.
7. What is a secured credit card, and how does it work?
A secured credit card needs a security deposit as collateral, which becomes your credit limit. It's an excellent option for individuals with limited or damaged credit. Responsible use can lead to an increase in your credit limit and improved credit score.
8. How can I maximize the benefits of my starter credit card?
To maximize the benefits of your starter credit card, make on-time payments, keep balances low, and use the card responsibly. Additionally, consider cards that offer rewards or cashback to make the most of your spending.
9. Can I upgrade to a better credit card in the future?
Yes, as you build credit, you'll likely become eligible for credit cards with better terms, higher credit limits, and more rewards. Many people start with starter cards and later upgrade to more advanced options.
10. What should I do if I'm struggling to make payments on my starter credit card?
If you're having difficulty making payments, contact your card issuer as soon as possible. They may be able to offer assistance or provide options for managing your debt. It's important to address financial challenges proactively to avoid negative credit consequences.
References:
https://www.lendingtree.com/credit-cards/credit-card-debt-statistics/
https://www.forbes.com/advisor/credit-cards/credit-card-statistics/
