Best Credit Cards for Building Credit of January 2021

0

How Can You Choose the Right Starter Credit Card?

Before you get a starter credit card, make sure you’re ready for the responsibility. This means you have a budget in place and a way to track your spending.

Once you’re ready to apply for a starter credit card, you need to decide these two things: what type of purchases you want to use the card for and what the card’s spending limit should be each month.

Next, decide if you want a rewards credit card. You won’t have the multitude of choices you’ll have once you start climbing the credit ladder. But some of the best starter cards for building credit offer cash back and travel rewards. Take a look at your budget and see where your big expenses are. This exercise will help you decide which starter credit card can help you save some money.

But often, it’s a good idea to start your credit life with a nonrewards card – sometimes called a “plain vanilla” credit card – while you develop good credit habits. These cards are simple to use, and you won’t be tempted to spend money just to earn rewards.

Once you choose a starter card, you need to set a monthly dollar limit for your card. Setting a spending limit and sticking to it will prevent overspending, which usually leads to credit card debt.

Some starter cards for building credit are secured credit cards. They work just like regular credit cards, but you’ll need to make a refundable security deposit to open a secured card. The deposit limits the issuer’s risk just in case of default on the debt.

Your credit limit with a secured credit card usually equals your deposit, but this can vary among issuers. Many secured credit cards have fees, such as annual fees, application fees or monthly maintenance fees, so you need to read the fine print carefully.

A secured credit card is a great way to build a credit history, if the card is used responsibly. The best starter cards for building credit report your payment history to all three major credit bureaus. But make sure you confirm with the issuer that your payment history will be reported to the bureaus before applying for the card.



Source

Leave A Reply

Your email address will not be published.