What Are the Best Credit Cards to Build Credit?
Posted on 20 February, 2021 by Miranda Bottas in Passive Income Selling Tradelines
Which Credit Cards Are Best for Building Credit?
Before applying for any credit card, you should always think about what you are trying to accomplish. Credit is an extremely useful tool, and some cards will suit your needs better than others. Maybe you are trying to achieve one or more of the following:
- Build Credit
- Manage Your Debt
- Earn Rewards
If you don’t have any credit history or your credit history is insufficient, there are several proven techniques that can help you change that. Building credit with a credit card and using it wisely is one of the most basic and common methods.
When choosing the best credit card for your needs, you should become familiar with your credit report and decide which type of card(s) you should apply for based on your currrent and future personal use plans. Knowing your score not only improves your chances of getting the card issuer’s approval but also it can also help to avoid possible denials and unnecessary hard credit inquiries.
Whether you are new to credit or currently working on improving your credit profile, you should be careful not to apply for multiple credit cards within a short period of time. Doing so may show a sign of risk to lenders and have a negative impact on your credit score.
Types of Credit Cards to Build Credit
In general, there are two main types of credit cards available for today's consumer - secured credit cards and unsecured credit cards.
If you are a new-comer, a secured credit card can be a good starter card for building credit. To open a secured card, you will need to make a refundable deposit. This gives the card issuer protection against the risks of non-payment while showing that you're genuinely interested in being responsible with your credit line. Security deposit amount often equals the amount of your credit limit and normally is refunded back to your account at some point, but this rule may vary among depending on the card issuer or bank that you're working with.
Many secured credit cards are used just like regular cards for daily purchases and payments. They may also have different kinds of fees like application or maintenance fees. So, opening a secured credit card may be intended for temporary use with the purpose to practice good credit habits until you reach a stronger credit score to qualify for a more common unsecured card.
Generally speaking, the decision of what card is best for you depends on many aspects, including your purposes and intentions. After spending a little time thinking about your financial priorities and looking into the options available, it will be easier for you to shop around and find the perfect card for your needs.
The list of the best credit cards for 2021
While this list may not apply for everyone, here's what we have found to be the best credit cards for building credit, as published by www.creditcards.com:
- Best starter credit card: Capital One Quicksilver Cash Rewards Credit Card
- Best credit card for no credit history: Secured Mastercard® from Capital One
- Best credit card for bad credit: Credit One Bank® Visa® for Rebuilding Credit
- Best balance transfer credit card: Citi® Diamond Preferred® Card
When choosing among the starter credit cards for building credit, remember to check with the issuer whether your payment history will be reported to all three major credit bureaus - Equifax, Experian, and TransUnion. You can get a closer look at each of them by reading the following article, The 3 Major Credit Bureaus in the USA.
How is Your Credit Score Calculated?