Best Credit Cards to Build Credit in 2023
More and more people are now faced with the need to get a credit card. You can use it to borrow money from the bank and then pay it back. It sounds appealing, but you need to be careful when choosing this type of card. How to do this properly and without dire consequences? Our article will introduce you to the best credit cards to build your credit history, so trust us and keep reading!
Best Credit Cards to Build Credit
The market is full of different card solutions. Every offer is not similar to each other. Banks offer different terms and conditions: from the size of the limit and the length of the grace period to additional benefits in the form of bonuses and privileges for holders. You’ll need to know how to pick a secured card that suits your profile and doesn’t charge excessive fees if you can’t get an unsecured credit card with features that can raise your credit score. That’s why we have selected for you the best credit cards that offer loyal terms to their users.
Petal® 1 “No Annual Fee” Visa® Credit Card
The Petal® 1 “No Annual Fee” Visa® (issued by WebBank) can be a good option for those with a less-than-perfect credit history. It’s also one of the few cards designed for people without a big antecedent that doesn’t require an upfront deposit.
The Petal 1 Visa is especially attractive due to the 0% annual fee and the possibility of earning respectable rewards through Petal Offers, which may bring you 2%–10% cash back at particular stores that is a respectable rewards rate. The interest rate is 22.24% – 31.74%. Moreover, you may boost your credit line with the Petal® 1 in as little as six months.
Petal® 2 “Cash Back, No Fees” Visa® Credit Card
Consider applying for the Petal® 2 “Cash Back, No Fees” Visa® (provided by WebBank) if you are just beginning your credit history. The secured card, which employs the Visa network, is among the top available when it comes to credit-challenged individuals’ credit cards. You won’t need to pay an annual fee or make a security deposit if you use the Petal 2 card, and eligible transactions will reward you with 1% cash back. If you consistently make on-time payments, that amount will increase to a respectable 1.5% cash back.
Moreover, the range of variable interest rate is 15.24% to 29.24%, and limits are from $300 to $10,000.
Avant Credit Card
If used appropriately, Avant is a straightforward choice that may assist you in improving your loan. This card requires no upfront security deposit, but it has a higher annual charge than some other options ($0 to $59 depending on your creditworthiness). Its variable interest rate is 27.99% and applies to both purchases and cash advances. It is rather high when compared to the average interest rates. The card also has late fees of up to $39. In addition, there is a cash advance cost of 3 percent of the cash advance amount, or $10, which would be even greater.
Discover it® Secured Credit Card
Discover it® is a leader among secured cards. It is one of the few that provides all the cash back and a welcome bonus. You have an opportunity to get 2% cash back with Discover it® up to $1,000 in combined purchases at gas stations and restaurants each quarter. You can get 1% cash back on any other purchases indefinitely as well, which is equivalent to other of Discover’s unsecured options.
The Discover it® Secured offers customers who want to build a higher credit profile a card they can be thrilled about with no annual fee and access to a FICO score each month. It also provides a dollar-for-dollar match, but nevertheless, the interest rate is still high at 25.24%.
U.S. Bank Altitude® Go Visa® Secured Card
The U.S. Bank Altitude® Go Visa® stands apart from the crowd of secured cards currently on the market. Strong rewards across several areas of everyday spending, 0% annual fee, no foreign transaction fees, and the option to “upgrade” to the unsecured version with dependable excellent payment habits are all features that the Altitude Go Secured checks off your list of requirements for a credit-building card.
After using it to purchase streaming services for 11 consecutive calendar months, you’ll get a once-per-year $15 loan against qualified annual streaming subscriptions. The variable interest rate is 28.99%.
U.S. Bank Cash+® Visa® Secured Credit Card
The U.S. Bank Cash+® Visa® is one of the best available options made for those who want to build or recover their loan. It doesn’t have an annual fee, gives high cash-back rewards, and over time you might be able to advance to the unsecured card. Anyone looking for a card to help establish should give this one a try.
Furthermore, you may receive up to 5% cash back across several categories. But to open and keep your account active, you have to make a cash security deposit. Additionally, the minimum deposit requirement is greater than those of many other secured credit cards at $300.
Tomo Credit Card
Issued by Mastercard, Tomo is one of the few credit cards available to people with limited or no antecedent and is authorized using banking and other financial criteria to decide acceptance and credit limit. It has a 0% annual fee and APR charges and provides 1% of all the cash back on each purchase you make.
However, the approval procedure can take some time, and you’ll need to consent to connect to your bank account so that your bill can be paid automatically every week. Tomo might be a perfect starting point if you’re just thinking about building credit because it’s more affordable than many other credit cards. It is a fantastic choice if you are not a citizen of the United States or do not currently have a borrowing history here.
Capital One Platinum Secured Credit Card
One of NerdWallet’s best-secured cards, the Capital One Platinum Card makes deposits a bit less intimidating. It is a reliable alternative for establishing credit because it has a 0% annual fee, a few characteristics that are especially useful for those trying to raise their credit score, and no foreign transaction fees. The ongoing APR is 26.99%. Applicants may be eligible for a borrowing limit higher than their deposit, unlike most cards with a cash security deposit.
The Capital One Platinum Card needs a refundable security deposit, just like other secured credit cards do. For a beginning borrowing line of $200, your deposit options are $49, $99, or $200. By making a larger deposit than the required amount before activating your account, you can raise your limit to $1,000.
Deserve Digital First Card™
Only Apple users can now access the Digital First Card, although an Android-compatible version is currently in process. It has no annual fee and offers statement credit for up to 1.5% of combined purchases. However, it is more complex and may offer lower rewards than the many other options that also claim to offer rewards at a rate of 1.5%. The Digital First provides privileges from Mastercard World and has no international transaction fees.
Mobile functionality is its main attraction. It just takes five minutes from the time you apply for the card in online banking to receive a decision and be able to use it.
What Is Considered Bad Credit?
Every borrower has a credit history stored in TransUnion, Experian, or Equifax, the three major credit bureaus. Most Americans who have ever taken out a loan or applied for a card will have a debt file at one or more of these credit bureaus. If payments were not made on time, there were delinquencies, and there is excessive indebtedness, the borrower may not be approved for a new loan on favorable terms, saying he has a bad credit history.
It is almost impossible for an ordinary borrower (or even a not-so-simple borrower) to know his chances of getting a new loan from his antecedent.
Credit Card for Building Credit Requirements
Forming a positive rating usually starts with getting a credit card. You can apply for it in America at every step, providing only identity documents and some personal information to the company. Most banks have basic requirements:
- Meeting a certain level in the credit rating.
- Availability of a permanent source of income (If you have a stable job and income, you have a better chance because this will significantly impact whether you will be approved for the card and, if so, what your credit limit will be).
- Social security number.
Credit Card vs. Debit Cards to Build Credit
Although they may have similar features, only credit card activity affects your antecedent and credit utilization ratio. While credit card transactions are made using money drawn from a higher credit line authorized by an issuer, debit card purchases are made using your own money. Your credit score won’t be impacted if you decide to terminate your debit account or switch banks. However, if you want to raise your credit score, it could be preferable to use a credit card. By using your card a few times each month to make purchases that you can pay off in full each month, you may see a gradual rise in your credit rating.
Why Is Building Credit History Important?
Approximately 26 million U.S. citizens choose to take out loans nowadays, but they have never used any of the three major credit bureaus mentioned above. Nevertheless, antecedent was created to help banks assess the integrity of a potential borrower. Records of previous loan services expedite the right decision, allowing the approval of the application and offering better loan terms, depending on the integrity of the subject.
In addition to banks, information about the bona fides of the borrower is in demand by insurers, employers, telecom operators, and even management companies. But the main beneficiary is the subject of the antecedent itself. That is why it is very important to treat this issue responsibly because the antecedent is evidence of your good financial reputation, which will not only get a loan at the best price but also other services, etc.
How to Build Credit with a Card: 4 Ways
The practice of bank loans is widespread today and allows you to solve many financial issues. But for a loan to be very useful, it is not enough just to borrow money from a bank or other financial institution. You need to know how to do it properly. We will tell you below about 4 ways to improve your credit score with a card.
Pay Your Bills on Time
Always pay on time and not less than the set monthly payment. Otherwise, penalties are inevitable. As long as the obligations under the loan agreement have not been terminated, the borrower may not stop paying the loan under any circumstances. Check your account balance regularly and make sure that you always have the right amount in your account when you pay or refer to mortgage refinance companies.
Keep Your Utilization Low
Maintain low balances on revolving credit card account. Your utilization ratio should be no more than 30% and ideally closer to 10%. So, if you have a borrowing limit of $1,000, try not to have more than $300 in debt at any time. This also applies to the things you can do to enhance your loan.
Use Your Card Regularly
It is important to the bank that payments are made on the card. Otherwise, the bank will decide that you don’t need a loan and won’t raise your borrowing limit. The more money you spend on your card, the more chance you have of having your limit increased. If you use the card regularly and avoid delinquencies, it will also have a positive effect on your credit score and improve your rating.
Increase Your Credit Limit
In addition, you should not forget that the borrowing limit can be increased during the time you use the card. You just need to be a careful and reliable borrower, regularly spend money from it, and repay the credit card debt on time. You will then be able to spend more money using your credit line as well.
How to Build Loan Without a Card
Credit cards aren’t your sole option for increasing the credit score required to request a loan. So, we thought we’d share with you two of the many options for getting loan if your current score isn’t high enough to qualify for the card.
- Request a personal loan. By making timely payments and repaying the loan in full as soon as possible, personal loans provide an additional way to establish credit without applying for a card. Even while the APRs on these loans are often higher than those, for example, on credit builder loans, they can help develop a strong foundation for your loan.
- Join as an authorized member. Clients of many credit card issuers can add authorized users. Without doing a credit check, you get a physical card as an authorized user and access to the main cardholder’s borrowing line. With no need to independently apply for a card, you may make transactions and have your total card activity recorded to the bureaus.
Whatever the situation that makes you decide to borrow, you need to be sure you can pay it back. Your choice of a loan depends on what you are going to spend the money on and how much you need for it. The purpose will determine which loan terms are right for you.
For this, you need a credit card, and the best is the one that combines low interest or a large interest-free period, combined with other conditions, free or advantageous service, cashback, bonuses for purchases, etc. In any case, this question should not be approached too hastily, it is necessary to weigh everything carefully and think about it, but we hope that in our article, you still found a suitable option for you.
- What is the fastest way to get loan with a card?
In fact, there is no magical, easy solution. You need to approach this issue with responsibility and meet all the requirements.
- How long does it take to establish credit with a card?
Your loan report’s data is used to establish your score. Therefore, you normally need three to six months of credit activity before a credit score can be generated.
- How much will a credit card raise my credit score?
If you still don’t have one, adding it is a great idea! Just be aware that your credit score will only be generated after you have made 6 monthly payments.