Building good credit is one of the most important financial steps you can take, and a great way to get started is by choosing the right credit card. If you’re new to credit, or you’ve had some trouble in the past, the right credit card can help you get back on track. But with so many options out there, it can be tough to decide where to begin. So, let’s break down the best credit cards for building credit and how you can use them to boost your score in no time.
Why Your Credit Score Matters
Your credit score is like a financial report card. It tells lenders how risky you are as a borrower and influences everything from your mortgage rate to your car loan. If you’ve never had a credit card, or you’ve had trouble keeping up with payments, your credit score may be low. But don’t worry – there’s hope. The good news is that getting a credit card is one of the fastest ways to build or rebuild your credit.
What to Look for in a Credit Card for Building Credit
When you’re in the process of building your credit, not all credit cards are created equal. Here are the key things you should look for when choosing the right credit card:
- No Annual Fee – As a beginner, you don’t want to spend more on fees than you have to. Look for credit cards with no annual fee. This way, you won’t be hit with a large charge just for holding the card.
- Low Interest Rates – While you should always aim to pay off your balance in full each month, having a low interest rate is important if you occasionally carry a balance.
- Credit Reporting – Make sure the card issuer reports to the three major credit bureaus (Equifax, TransUnion, and Experian). This ensures your payments will help build your credit.
- Secured or Unsecured – If you’re just starting out or rebuilding your credit, a secured credit card might be your best option. These cards require a deposit that acts as your credit limit. If you have a higher score, you may be eligible for unsecured cards, which don’t require a deposit.
Top Credit Cards for Building Credit
Here are some of the best credit cards for building credit that have been designed to help you improve your score over time. Each one comes with its own unique set of benefits, so choose the one that fits your situation best!
1. Capital One Platinum Credit Card
The Capital One Platinum card is one of the most popular choices for building credit. This unsecured card doesn’t require a security deposit, making it a great option if you’ve built up a little credit history but aren’t quite ready for a premium card.
- Key Benefits:
- No annual fee.
- Access to a higher credit limit after making your first five monthly payments on time.
- Reports to all three major credit bureaus.
- Credit line increase after consistent, responsible usage.
With its straightforward features, the Capital One Platinum card is a solid choice for anyone looking to boost their credit without paying hefty fees.
2. Discover it® Secured Credit Card
For those who are just starting to build credit, the Discover it® Secured Credit Card is one of the best options available. This secured credit card requires a deposit, but the good news is that it comes with a host of rewards and features that make it stand out.
- Key Benefits:
- Earn 2% cash back at restaurants and gas stations (on the first $1,000 in combined purchases each quarter).
- 1% cash back on all other purchases.
- No annual fee.
- Reports to all three major credit bureaus.
- Free FICO credit score on your monthly statement.
The Discover it® Secured Credit Card also offers a cashback match at the end of your first year – so all the rewards you earn are doubled.
3. Chase Freedom® Student Credit Card
If you’re a student trying to build credit, the Chase Freedom® Student Credit Card is a great option. It’s designed with students in mind and comes with benefits that can help you stay on track.
- Key Benefits:
- $50 bonus after making your first purchase within the first three months.
- Earn 1% cash back on all purchases.
- No annual fee.
- Reports to all three major credit bureaus.
- Credit limit increase after making five monthly payments on time.
Plus, students can benefit from Chase’s fraud protection and other security features that help you feel safe while using the card.
4. OpenSky® Secured Visa® Credit Card
If you have trouble getting approved for other cards, the OpenSky® Secured Visa® Credit Card might be the perfect choice for you. This card doesn’t require a credit check to apply, which means it’s accessible to those who are just starting out or trying to rebuild their credit.
- Key Benefits:
- Low $35 annual fee.
- Reports to all three major credit bureaus.
- Flexible deposit options, starting at $200.
- Use your OpenSky® Visa® Card anywhere Visa is accepted.
While it’s a secured credit card, the OpenSky® Secured Visa can be an excellent tool for getting your foot in the door if your credit history is limited.
5. Petal® 2 “Cash Back, No Fees” Visa® Credit Card
The Petal® 2 Visa® Credit Card is an excellent option if you’re looking for a credit card without fees. Unlike traditional cards, the Petal 2 doesn’t require a security deposit or annual fee, making it an attractive option for those looking to build credit without upfront costs.
- Key Benefits:
- Earn 1% cash back on all purchases, 1.5% cash back after making 12 on-time monthly payments.
- No annual fee, no late fees, no foreign transaction fees.
- Reports to all three major credit bureaus.
- No security deposit required.
It’s one of the few cards that rewards you with cash back as you build credit, and it’s available even if you don’t have a credit history, thanks to its alternative approach to evaluating applicants.
6. Discover it® Student Cash Back
If you’re a student and you want a card that gives back while helping you build credit, the Discover it® Student Cash Back is a top choice. It’s a cashback credit card that combines great rewards with a low barrier to entry.
- Key Benefits:
- Earn 5% cash back in rotating categories (on up to $1,500 in purchases each quarter) and 1% on all other purchases.
- $20 in cashback rewards each school year your GPA is 3.0 or higher.
- No annual fee.
- Reports to all three major credit bureaus.
- Free FICO credit score on monthly statements.
Plus, you get the benefit of cashback that you can put towards paying off your balance or saving for something big.
7. Secured Mastercard® from Capital One
Another secured card option that’s ideal for building credit is the Secured Mastercard® from Capital One. While it requires a deposit, it’s a straightforward and effective way to improve your credit score.
- Key Benefits:
- Low deposit requirement.
- No annual fee.
- Reports to all three major credit bureaus.
- Credit limit increase after making timely payments.
This card provides you with an opportunity to build your credit with low fees and an easy-to-manage payment system.
How to Use a Credit Card to Build Credit
Once you’ve chosen a credit card for building credit, using it responsibly is key. Here’s how to make the most out of your card:
- Make Timely Payments: Always make sure to pay at least the minimum payment on time each month. Late payments can hurt your credit score, and the longer you wait, the worse it gets.
- Keep Your Balance Low: It’s ideal to use only a small portion of your credit limit. Keeping your credit utilization ratio (the percentage of your credit used) below 30% is a good rule of thumb.
- Check Your Credit Score: Regularly monitor your credit score and report. Many card issuers provide free access to your score, and you can use it as a tool to see your progress.
- Avoid Over-Spending: Use your credit card like a tool to build credit, not a way to rack up debt. Keep your purchases within your budget and always pay them off in full each month.
Final Thoughts
Building credit doesn’t have to be complicated. With the right credit card, you can make steady progress towards improving your credit score. Whether you’re a student, a first-time cardholder, or someone rebuilding their financial life, choosing the right card and using it wisely can make all the difference.
Remember, the key to success is making consistent, on-time payments and keeping your credit utilization low. With time, your credit score will improve, opening up more financial opportunities for you in the future. So, choose a credit card that fits your needs, start building your credit, and soon enough, you’ll be reaping the rewards of your hard work!