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Having good credit gives you many financial advantages, including low-interest rates on loans and the ability to rent an apartment easily. If you’re starting to build your credit, one of the simplest ways to grow it is to open your first credit card account.

Below we’re sharing the best first credit cards for beginners and first-time credit cardholders.

Best Beginner Credit Cards—Top Picks

Instant Approval Credit Card (Fair-to-Good Credit)
Instant Approval Credit Card (Low-to-Fair Credit)
No annual fee
No annual fee
Instant Approval Credit Card (Fair-to-Good Credit)
Instant Approval Credit Card (Low-to-Fair Credit)

Best First Credit Card Options – Unsecured Credit Cards

1. Petal® 2 “Cash Back, No Fees” Visa® Cash Rewards Credit Card – Annual Fee: $0

Petal 2 signup

The Petal® 2 “Cash Back, No Fees” Visa® starter credit card wants to take to heart people’s thoughts on it being time for a card company to help people succeed financially. To heed this call, Petal® has used modern technology to design credit card products that help you budget, control your spending, and build credit.

This card is best for those with thin to no credit files because Petal® accepts applicants based on cash flow underwriting alone—meaning no credit history is required. And if you have a credit score, you can get the opportunity for acceptance with a fair credit rating, meaning you need a minimum credit score of 600 or better. If you have a credit score of 720 or better, Petal® auto-approves your application.

This credit card issuer reports your payment history to all 3 major credit bureaus, helping you build credit.

With credit limits as low as $300 and a higher credit line up to $10,000, 2% – 10% cash back at select merchants and up to 1.5% cashback on eligible purchases after making 12 on-time monthly payments, Petal® 2 might be an excellent choice to consider as a beginner credit card.

This credit card charges no fees whatsoever, letting you avoid simply holding the card in your wallet.


2. Petal® 1 “No Annual Fee” Visa® Credit Card

Petal 1 signup

Like the first Petal® starter credit card above, this alternative uses modern technology to design credit card products that help you budget, control your spending, and build credit. The Petal® 1 “No Annual Fee” Visa® card is also best for those with no credit or a thin credit file because Petal accepts applicants based on Cash Flow underwriting alone.

And if you have a credit score, you can get the opportunity for acceptance with a low to a fair credit rating of 550 or better. If you have a credit score of 720 or better, Petal® auto-approves your application.


3. Deserve® EDU Mastercard for Students – Annual Fee: $0

Deserve EDU signup

The Deserve EDU Mastercard for Students is an award-winning student credit card for all students—both from the U.S. and visiting from abroad. For international students, you do not need a SSN to apply.

The Deserve EDU starter credit card is a non-conventional option that acts as neither a secure credit card nor a sub-prime card. This card works well for international college students who lack a Social Security Number.

For signing up, you can receive one year of Amazon Prime Student after making $500 of purchases in the first three billing cycles (Lifetime Value of $59).

Likewise, you can also earn 1% cashback on all purchases, receive cell phone protection of up to $600 and not have international transaction fees on purchases abroad.


4. Chase Freedom® Student Credit Card – Annual Fee: $0

The Chase Freedom® Student Credit Card serves as the entry-level option in the Chase Freedom® line of credit cards. While lacking in comparison to its more fully-featured Chase Freedom® credit card family members, it still offers some good benefits in terms of simplicity and protection.

For example, the card offers a flat 1% cashback on all purchases and purchase protection, travel insurance and extended warranty protection.

Further, you also have the chance to earn a $50 Bonus Offer after making your first purchase on the credit card for students within three months of account opening.

The Chase Freedom® Student Credit Card has no annual fee and even offers $20 per year for keeping the account in good standing for up to the first five years of carrying the credit card for students in your wallet.

As a qualified student credit card cardholder, you can request a credit limit increase after making payments on time for five months in ten months.

5. Capital One Quicksilver Student Cash Rewards Credit Card – Annual Fee: $0

Capital One’s Quicksilver Student Cash Rewards Credit Card offers simplicity through a respectable 1.5% unlimited cashback rate on all purchases.

The card carries no annual fee and offers price protection, cell phone protection coverage. The downside, however, comes from failing to pay off your bill in full each month. These credit cards for students charge a high variable APR (26.99%), pushing the student credit card lower on our list.

Suppose you can pay your bill in full each month. In that case, this college student credit card makes a welcome addition to your wallet by earning 1.5% cashback not just in particular categories like gas stations and restaurants but on every purchase made after account opening.

6. Bank of America® Customized Cash Rewards Credit Card for Students – Annual Fee: $0

The Bank of America® Customized Cash Rewards Credit Card for Students offers great cashback categories you can change every month. This card’s categories allow 3% cashback with monthly category options but a generous 2% cashback every day at grocery stores and wholesale warehouse clubs.

The amount of cashback you can earn comes with limits, however. Specifically, you can earn cashback of up to $2,500 in the 3% and 2% categories combined each quarter with 1% unlimited on all other purchases.

You can choose between categories like gas stations, online shopping, restaurants, travel, drug stores and home improvement for your 3% categories.

The card comes with no annual fee ($0) and offers a $200 cash rewards bonus after making $1,000 or more in purchases within the first 90 days of account opening.

7. Discover® it Student Cash Back – Annual Fee: $0

Discover® it Student Cash Back offers several benefits students might find helpful as a starter credit card.

This serves as one of the better cards for no credit because it allows you to earn a high rewards rate when used on rotating quarterly bonus categories, up to 5% cashback. Further, you can participate in the Unlimited Cashback Match — only from Discover.

The Unlimited Cashback Match will have Discover automatically match all the cash back you’ve earned with your card over your first year.

There’s no minimum or maximum rewards, just a dollar-for-dollar match on all the cash back you’ve earned. Outside of the bonus categories listed by the card, all other purchases receive 1% cashback.

This card has no annual fee from the Discover® it Student Cash Back and even allows you to earn a statement credit each time you refer a friend, and they’re approved for this no annual fee unsecured credit card for students.

Keep track of your credit score on this unsecured card with a free Credit Scorecard.

Best First Credit Card Options – Secured Credit Cards

8. OpenSky® Secured Visa® Credit Card

The OpenSky® Secured Visa® Credit Card requires no credit check (no minimum credit score required) and offers a refundable deposit* that becomes your credit line limit on your Visa Card.

The OpenSky® Secured Visa® Credit Card reports to all three major credit bureaus, allowing you to build credit. You can use the dedicated credit education page from OpenSky to learn more about improving credit scores and how to manage starter credit cards wisely.

* The refundable deposit you make when opening your account is important, because it means you can open an account without a credit check. Your refundable security deposit is returned to you once your credit card account is closed and the balance is paid in full. OpenSky may use your refundable security deposit to expedite the pay down of your outstanding balance. Please refer to the Cardholder Agreement for additional details related to the refundable security deposit.

9. Discover® it Secured Card – Annual Fee: $0

Discover® it’s secured card is another card from the Discover credit card issuer that can provide a way to build or rebuild your credit history.

You get an actual card with no annual fees, and Discover® will report your progress to all three major bureaus, unlike most debit cards or prepaid cards.

When you apply for your Discover® it secured credit card, you place a minimum $200 refundable deposit down at opening. Your maximum credit line will equal that amount (up to $2,500) but will be determined by your income and ability to pay.

You’ll then be able to use this as a way of building good habits, like responsibly paying back what you owe each month and never going into debt.

It’s also risk-free to see if you qualify. You can see if you’re pre-approved for the Discover® it secured credit card that requires a security deposit without affecting your credit—there are no credit check implications on your credit score.

10. Secured Mastercard from Capital One

The Secured Mastercard from Capital One offers no annual fees and instant credit approval, meaning you can get a credit card in seconds.

You put down a refundable deposit starting at $49 to get an initial $200 credit line. With enough responsible card use, you could earn back your security deposit as a statement credit.

You can also be considered for a higher spending limit in as little as six months without an additional deposit required.

How to Find the Right First Credit Card

young woman credit debit card smartphone glasses

1. Look at where you currently bank

If you enjoy the bank or credit union where you currently have a bank account, that’s a great place to look into first. It may be easier for you to get approved for a card with your current bank because a relationship already exists.

However, if competitors have far better deals, don’t worry about being loyal to a bank and instead pick the best card.

2. Look at available offers – secured cards, pre-approved unsecured credit cards

Depending on the offers, it may be best to get a secured card (where you give a security deposit), a pre-approved unsecured card, or something else. See which cards you’re likely to be approved to get. There might be some that require an established credit score.

3. Understand the terms, trade-offs and how each type of credit card works

Read the fine details for each card. Check interest rates, the credit card limit, whether there is an annual fee or other fees, and if they report your card usage to credit rating bureaus.

4. Target cards with low fees, report credit to credit bureaus

Focus on cards with low or no credit card fees. Try to get a card with no annual fees, if possible. If you plan to travel abroad with your card, you’ll also want to consider whether your card assesses a foreign transaction fee on your purchases.

Fortunately, there are cards without foreign transaction fees if that’s a priority for you. You want your card use to be reported to major credit bureaus to establish credit and help towards a high credit score.

Don’t let a foreign transaction fee cost you more than it should. Further, make sure you avoid cards with annual or hidden fees if you can. Many of the best starter credit cards avoid an annual fee while also allowing you to build credit and eventually earn a higher credit line.

Some of the best starter credit cards rely on alternative means for assessing your creditworthiness, such as the Petal® 2 and Petal® 1 cards’ use of cash flow technology. The credit card company uses this to understand how your available financial resources can support paying your unsecured line of credit offered through the card.

These cards also offer a free credit scorecard to track your score over time. You can earn cashback, avoid an annual fee and build your credit score (Petal® reports to all three major credit rating bureaus).

5. Apply to rewards credit cards if possible

If you might qualify for a rewards credit card, apply for it. The sign-on bonuses can sometimes be substantial, and you could earn cashback or other rewards.

Typically, you can apply cashback earnings right to your balance, and the lower your balance, the easier it is to pay off each month. Your rewards card might have an annual fee, but if you earn back more than you spend, it’s still a good deal.

Related: Secured Credit Card vs. Unsecured: What’s the Difference?

Starter Credit Card Tips

young woman credit debit card smiling white background

When thinking about which starter credit card to consider, also take to heart some of these tips to manage it wisely.

1. Avoid annual fees when starting to build credit

When applying for your first credit card, be wary of cards that have annual fees. According to the 2022 Credit Card Fee study, “Nearly 70 percent of credit cards don’t charge an annual fee.” So, that’s good news to consumers who are hoping to find a card without one.

The bad news, though, is that of the credit cards that charge a fee, the average cost is around $110 annually. If you’re getting used to credit card ownership and you didn’t know your card came with a fee, it might come as a surprise. Plus, many cards waive fees the first year, making it easy to forget about them until you have a sudden charge on your account.

Additionally, starter credit cards typically have lower credit limits, so having an annual fee on top of your regular balance might prove to be financially stressful.

2. Consider authorized user status first

Becoming an authorized user of someone else’s credit card can be a great way to build credit. It’s also known as “piggybacking” and allows you to use someone else’s established credit history when applying for new lines of credit. In most cases, the person who adds you to their account should be someone you trust, like a parent. Typically, they’ll add your name along with a notation that you are an authorized user.

This option is great because it doesn’t require a security deposit or responsibility for the account balance. In most cases, all you have to do is ask someone you trust willing to add you as an authorized user.

As long as the credit card owner pays their bill on time, that will reflect positively on your payment history. This, in turn, will help your credit score to improve over time until you can eventually apply for your cards.

3. Apply for student credit cards if possible

Student credit cards can be a great way to start building your credit and earning rewards.

Some student cards offer perks like cash back, travel rewards, and even statement credits when you report good grades. There are also student cards that offer sign-up bonuses, statement credits if you are responsible with your accounts, and even Amazon Prime student memberships.

When choosing a student credit card that offers perks after a minimum spending requirement, be sure to read the fine print. Don’t overextend yourself by spending too much to earn points or rewards.

A student credit card is a way to build your credit history. If you use it responsibly, it could pave the way to cards with even better rewards in the future.

4. Secured cards are a great place to start

Secured cards are a great way to start building your credit or repairing a poor credit history. They require an initial security deposit that you can typically get back after making a certain amount of payments on time or closing the account.

Secured cards help you prove that you can make payments on time and that you’re a reliable borrower. They are a significant first step, especially if you can’t get approved for other credit cards.

Of course, this is just one of many options available when it comes to building your credit. Becoming an authorized user on someone else’s card or getting approved for a starter credit card with a small limit is preferable. But, if those options don’t work, a secured card is the next best option.

5. Always pay your bill on time and in full

It’s essential to keep in mind that if you don’t pay your credit card bill on time and/or in full, it can negatively affect your credit score.

Once you are 30 days late on a payment, you will see it on your credit report. According to FICO, the most widely recognized credit score, your payment history makes up 35% of your credit score, more than any other category.

So, if possible, always try to make at least the minimum payment by the due date, and pay more than the minimum if you can afford to. A great way to make sure this happens is to set up automatic minimum payments with your credit card company.

You can always pay more than the minimum, but if you forget to pay, this automatic payment can help protect your credit history.

6. Not every rewards program is for everyone

Some credit cards come with very flashy rewards. You might even know someone or follow someone who takes free trips with airline miles they get from credit card bonuses.

However, not every rewards program is for everyone. If you don’t travel very often, a credit card that offers airline miles may not be the best option for you.

Try to seek rewards programs that offer what you value, whether it’s discounts on your groceries, gas discounts, airline miles, or something else.

Keep in mind that most reward programs require minimum spending. If you know you won’t spend as much as the card needs to receive the perks, it’s probably not the best option for you.

7. Cash (back) is king when in doubt

Cashback credit cards are one of the best ways to earn rewards for your spending. These types of cards vary in terms of how much you can earn each year, as well as what you have to do to qualify for those rewards.

Some require minimum spending thresholds while others don’t. You may even be able to select the categories that work best for you.

If you doubt which rewards card to pursue, cashback is always a good bet since you can use it for everything.

8. Keep it simple, stupid (don’t overcomplicate)

Ultimately, don’t overcomplicate things when it comes to choosing a credit card. If this is your first time applying for a credit card, you should prioritize finding one that does not have an annual fee and low spending requirements to maximize rewards as much as possible.

You can always apply for more interesting cards with better rewards as your credit history grows. For now, though, keep things simple as you get started on your credit-building journey.

How Many Credit Cards Should I Have?

debit credit card

It’s essential to keep in mind that there is technically no limit on how many credit cards you can have. There are some benefits associated with having multiple credit card accounts, such as the ability to transfer a balance or consolidate your spending into one account while earning rewards for it.

On the other hand, if you want an easy way to track your spending or haven’t been responsible with money in the past, having multiple credit cards may not be the best choice.

If you are brand new to credit cards, consider only applying for one or two to start. You can always apply for more later if you need to. Having two is great because one can serve as a backup if someone steals your first one or if you lose it.

How Long Should I Keep My Starter Credit Card?

teen with debit credit card laptop

It’s essential to keep in mind that you can close your starter credit card account at any time as long as it is paid off and not currently being used. However, consider keeping the account open.

The length of your credit history factors into your credit score. Your first credit card marks the beginning of your credit file, and keeping it open helps show a more extended credit history, which can help your credit score.

If you do decide to cancel the account, make sure there are no fees involved if possible.

What Should I Know Before Using a First Credit Card?

teen girl smiling with card in hand

There are lots of things to keep in mind when using a first credit card. One of the most important is that you don’t spend more than you can afford on it, especially if it’s your only option for making purchases online.

Another thing to consider is your interest rate. If you don’t pay off your balance each month, take the time to understand how much interest you’ll have to pay. If possible, try out one or two cards first to make sure you can handle them responsibly.

It’s essential to remember that a credit card can be a powerful and valuable tool, especially if you’re trying to build a good credit history.

If you decide to open an account, make sure you are always responsible with money and never spend more than you can afford.

How Do I Know If I’m Ready for a First Credit Card?

credit debit card online ecommerce purchase

If you aren’t responsible with money, applying for a credit card may not be your best choice. However, if you’re ready to build your credit history and you’re committed to paying your cards off each month, it could be a great time to start.

Also, if you have significant financial goals in the future, like buying a car or a house, you may be ready to start your credit file now, so you have a chance to improve your credit score in the future.

How Can I Track My Credit Score?

mother daughter teen smartphone app online

You can track your credit score by signing up for a free account on Credit Karma. This website will allow you to look at how well (or poorly) you are doing with paying off debt and other factors that affect your overall score.

It may even show what things could be affecting it negatively so you can start addressing those problems.

It’s essential to remember that many factors affect your credit score, including how well you pay off debts and if you are using up too much of your available credit limit.

Those services can help you better understand how to improve your score.

How Do First Time Credit Cards Compare to Traditional Credit Cards?

young teen with debit credit card yellow background

When you are just starting to build credit, your first credit card will likely have a low limit. With starter cards, you might not have to provide income verification because they are meant to help you establish or rebuild your credit profile.

Some first-time credit cards offer many of the same benefits as traditional credit cards like cashback, rewards points or travel assistance. Others might have a lower limit but not provide any of the perks that traditional cards do.

Your first credit card is an essential step in building your relationship with a major financial institution and will likely be easier to qualify for than some traditional credit cards.

Traditional credit cards can offer several benefits, including lower interest rates, more advanced fraud protection, and legal protections.

Some traditional cards have a higher limit or offer exclusive rewards points that aren’t available anywhere else. Some might even waive the annual fee in your first year if you spend a certain amount on purchases within three months.

If you’re looking for an account that offers more perks, you might want to consider a traditional card. However, a first-time credit card is best for younger consumers who are just starting their credit journeys.

What are the Requirements for Getting a Student Credit Card?

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There are different rules for young adults under 21 years old because of laws on how financial companies market cards towards this demographic.

As a result, you’ll need a few pieces of information, financial resources or help from another. Specifically, you’ll need the following in most cases:

  • Identifying information. This includes a Social Security number or an individual taxpayer identification number (though some cards don’t require you to have this as you might be an international student applying for a card).
  • Income sources or financial resources. This money can be earned or owned by yourself, but it can also be money you have a reasonable expectation of accessing for repaying the debts incurred on the card. This means you can have money from a third-party source count as income, such as if you have a spouse who works or has money and don’t work yourself.
  • Monthly cost-of-living information. This includes costs like rent or housing payments.

If you don’t have income sources of your own and are between 18 and 21, you may need to ask someone to co-sign your application, add you as an authorized user on their card, or apply as a joint applicant.

Related: How Old Do You Have to Be to Get a Credit Card? [Minimum Age]

What to Look for in Student Credit Cards

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1. No Annual Fee

Just because you’re beginning your credit-building journey doesn’t mean you need to carry a credit card with an annual fee associated with it. Not all credit cards with an annual fee are bad, but holding off on the annual fee makes sense when you want starter credit cards.

2. Payment History Reported to Major Credit Bureaus

The purpose of starter credit cards is to assist with building credit as you have no or limited credit history. If your timely payments don’t get reported, you won’t make progress on building credit.

3. Rewards Programs

Having a rewards program can make using a credit card more useful, though only if you can control your spending.

You can earn rewards while you build credit history through making purchases on your charge card and making timely payments.

4. Cashback

A cashback credit card rewards you with a percentage of everyday purchases made on the credit card in cash rather than points or miles that you can only redeem for specific items.

Cashback cards are typically a flat percentage of all everyday purchases made. Cashback makes card purchases earmark a portion of your spending for future use.

Some card options allow unlimited cashback, an unlimited cashback match, dollar-for-dollar match and more.

5. Rotating Cash Back Bonus Categories

Some card issuers rotate cashback bonus categories to incentivize you to make certain purchases on your cashback credit cards or debit cards.

They will likely still offer a flat cashback rate on all other purchases, like 1% on all other purchases not included in one of the bonus categories.

6. Sign Up Bonus

Some credit cards offer a sign-up bonus to entice new cardholders. This can be anything from an intro APR period, free rewards points or cashback bonuses.

Secured credit cards don’t typically offer such bonuses, but other types of credit cards found in this article may.

7. Balance Transfer

If you have credit card debt, a balance transfer may be the right choice for you.

A balance transfer card enables you to move your existing card balances over at either an intro APR or a low-interest rate.

A balance transfer credit card can keep short-term financing costs low until you can pay off your balance.

Though, be warned that using balance transfers indefinitely isn’t a strategy for controlling debt. Instead, balance transfers should focus on a short-term solution, not a long-term crutch to financing.

Also, using balance transfer credit cards to transfer a balance may entail a balance transfer fee. That’s why you should always read the fine print on what using balance transfer credit cards may mean for your bottom line.

If applying for a balance transfer offer, understand how it works, the balance transfer fee you may face and the overall terms on repayment.

You might even have an intro APR which converts to a standard APR with a higher interest rate after a certain period of time.

8. Low to Mid-Size Credit Limit

If you are trying to build credit, it makes sense that your initial credit limit isn’t very high.

You need time to prove yourself responsible with monthly payments before increasing the size of your available balance.

If you make your payments on time and maintain a low credit utilization ratio for a period, the credit card issuer should award you with a higher credit limit if you ask or apply.

9. No Foreign Transaction Fees

When traveling abroad or shopping online at a foreign store, having no foreign transaction fees (or international transaction fees) is vital for keeping costs low when spending money.

Keep in mind that if you are planning to travel internationally, you will want a credit card or debit card with no foreign transaction fees and EMV chip technology for added security against fraud.

10. Authorized User

An authorized user on a credit card enables you to add your friend, family member or significant other as an authorized user on a credit account.

If they build up their credit history and score with this method of using someone else’s available credit, it may be beneficial for them in the long run.

11. Co-signer Eligible

If you have a friend or family member willing to co-sign your credit card application, it’s an option. Keep in mind that if you miss payments and default on the account, they will be held liable for repayment of the debt.

12. Mobile App

Having a mobile app is very convenient if you plan to carry your card with you on the go.

This can allow you to monitor your account activity, make payments quickly and easily (and securely) over the phone or mobile device.

13. Minimum Credit Score Needed for Approval Marketing

Before applying, ensure that your chances of approval are high by checking what’s called a “pre-approval” or pre-qualification rate online.

14. Credit Score Monitoring

Keeping track of your credit score over time makes it easy to spot any changes that may have occurred. Having ongoing credit monitoring can be a great way to track whether or not you are making progress on building credit scores.

15. Credit Score Improvement Tips

If your score isn’t as high as it could be, there may be ways that you can improve your credit score with some effort and patience over time.

The card issuer should offer tips on how to improve credit scores and help you understand how to establish a history of on-time payments.

16. Customer Support

Some credit cards offer 24/7 customer support in the form of live chat, phone and email. This is an excellent feature if any issues arise with your account or you need assistance when traveling abroad.

17. Emergency Assistance Services

Even though emergencies are unexpected, it’s crucial that emergency assistance services be available when help is needed most.

Access to emergency assistance in events like a lost or stolen credit card or debit card, travel delays, issues with car rental agencies, running out of money when traveling abroad, and more can provide remarkable value.

18. Purchase Protection

When traveling abroad, there are many important factors to consider before hitting the road. Fraudulent charges and issues with purchases made while traveling can be a headache if you don’t have purchase protection in place.

Make sure your credit cards or debit cards carry purchase protection against fraud if you lose or have your card stolen.

How Do I Get a Credit Card with No Credit History?

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You can get a credit card with no credit history by applying for a secured credit card. A secured credit card is backed by a security deposit that you can put on the card.

If you choose a secured credit card, make sure that the bank doesn’t charge an application fee.

A good place to start is with your local community bank or credit union since they are more likely to approve first time applicants for their services.

You can also try applying at major financial institutions who offer secured credit cards that require a deposit.

Make sure to ask about any fees associated with the card or if your security deposit is refundable.

When you are shopping around, compare interest rates and annual percentage rates (APR) of different secured credit cards so that you can find one with terms that work for you financially.

How Do I Make the Most of My First Credit Card?

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Your first credit card is an essential step in establishing your relationship with a major financial institution. Use it responsibly. Your credit score is determined primarily by handling your debt, so always pay on time and in full.

Don’t be tempted to spend more than you can afford just because you have a new card. Make a list of everything that you need before going shopping or buying anything online. Only purchase what’s on the list, even if something catches your eye while browsing through other items.

Finally, don’t be afraid to ask for help. The more educated you are about credit, the better you will understand how to improve your credit score over time.

How Else Can You Build Credit with a Limited Credit History—or No Credit at All?

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Building up credit can sometimes be a bit of a chicken and egg problem because many methods already require you to have some financial history.

Fortunately, there are ways to start up your credit history—some with the help of friends or family—without already having a high FICO score.

1. Authorized Users

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By becoming an authorized user on someone else’s credit card—be it a parent, guardian, or other trusted adult—the credit card issuer will send a card to the primary cardholder having your name appear on the card.

The credit card company holds the person who signed up to be the primary account holder responsible for paying charges on their account.

If an authorized user on an unsecured card makes purchases but doesn’t pay toward the balance, they are not responsible for repaying the balance.

Before getting an unsecured card and being added as an authorized user, make sure you and the primary account holder have agreed on whether or not to use the card you receive.

Further, you should determine this ahead of time because any charges that you make will be their legal responsibility, even if you agree to pay them.

Credit card issuers report your balance and payments every month to credit bureaus. So, even if you don’t receive a physical card, it affects your credit in the same way.

If you don’t meet the requirements for credit cards on your own, having an authorized user status on a cardholder’s account might be beneficial to your credit history and “payment history,” a credit scoring component.

It may cut the time it takes to get a FICO score—one of the most common credit-scoring models—down to less time if you don’t already have one used by credit reporting agencies to mark your creditworthiness. Further, it might also get credit cards in your hands sooner than later.

2. Credit Builder Loans

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Credit builder loans and credit cards are very different in how you fund and use them, but both are useful for building credit.

A credit builder loan functions as a tool for people who have low or no credit history. They can use them to begin building up their credit scores by establishing a credit history.

If you build up your score enough, you can qualify for better terms on a credit account, car loan, or other forms of financing.

These loans do not require you to have stellar credit to receive approval, just the income to make payments. They work by depositing money into a bank account and borrowing money from it while making repayments.

You’re essentially taking money out of one pocket and putting it in the other, though you’re doing so with the understanding it builds credit for you.

This will help establish better credit limits on a future credit card account, earn a better interest rate, or receive better overall terms on credit.

Typically offered by credit unions or other smaller financial institutions like a community bank, these loan payments will get reported to the credit bureaus, helping you build your credit.

3. Student Loans

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As previously mentioned, an essential part of one’s credit score is a history of on-time payments. If you are timely in your student loan payments, this will help improve your credit. As the amount of money left on your loans gets lower, your score improves.

These loans also help lengthen your credit history. Loans appear on your credit report as soon as they are disbursed, even if you don’t start paying towards them until after you graduate.

An installment loan can also help you have multiple types of debt, beneficial to your credit.

4. Secured Credit Cards

young woman credit card smartphone yellow background

When you turn 18, you become eligible to apply for a credit card in your name. However, you might not have the positive credit history that credit card companies want to see (or any credit history at all).

If this is the case, you might consider applying for a secured credit card to establish credit in college and make payments on time. With enough time, these card payments and good credit habits should be reported to credit bureaus, reflecting on your credit report.

Secured credit cards often serve as the first step for young adults or people who don’t have an established credit history to have access to credit.

Secured credit cards work by having the cardholder make an upfront security deposit to open an account, reducing the risk to card issuers of you defaulting or missing a payment.

Usually, minimum deposits are in lower denominations, between $200 to $500 to start. This represents your credit limit.

Once you apply for a secured credit card and make the security deposit, these secured credit card options work like any other card.

Unlike prepaid cards, the security deposit funds don’t load onto your card and do not get directly used for purchases. Instead, this deposit will be forfeited if you fail to pay your credit card bill.

So, if you make your payments on time, your regular spending activity and collateral will help you to build your credit. To provide you more financial flexibility with time, you may opt to move to unsecured credit card issuers’ options.

Secured cards work best for people with no or bad credit.

5. Apply for Low Limit Unsecured Credit Cards

couple laptop coffee debit credit card

If you have developed good money habits and think you can handle a line of credit, you may want to start with a low-limit unsecured credit card.

You have several options like a student credit card, gas card, or another low-balance credit card available from credit card companies.

These are all great options if your children attend college and need a credit card that works for expenses away from home.

Likewise, the unsecured card option works for young adults who work full-time and need a way to access credit while possibly earning rewards, cashback, or other benefits from using unsecured credit cards.

You can apply for a card like the Petal® One or Petal® Two credit cards. These cards have low initial credit limit options, offer cashback, and avoid annual fees—all features you should look for in a first card.

These types of cards can help with beginning to build a credit history. Further, if your children have student loans, these will factor into their credit history and build a credit profile for lenders to evaluate future credit needs.

However, if you’d like the card to be under their name and they are underage, they’ll need to look first at getting a prepaid debit card for kids and teens.

Further, you might consider a college student credit card like DeserveEDU.

6. Apply for a Credit Card with a Co-signer

happy couple cooking kitchen

If you can’t become an authorized user on a credit card, you might consider becoming a co-signer on one. Generally harder to find, these types of cards carry a legal responsibility for both account owners.

Authorized users don’t need to face the music if they can’t pay their credit card bill, as the primary cardholder remains liable to the lender.

Having a co-signer credit card works similar to carrying a joint brokerage account or bank account—you both have access to the funds. However, they differ because joint accounts list both owners as equals, meaning they share the account title and legal responsibility.

Co-signer cards usually only list the primary cardholder as the account owner. Both face legal responsibility for making payments, and the debt appears on both users’ credit reports.

What is a Secured Credit Card?

student credit debit card white background

A secured credit card is a type of credit card that requires you to put down an upfront cash deposit, usually equaling the amount of your credit limit.

This cash security deposit helps to protect the credit card company from recognizing a loss by issuing you a credit card, and then you failing to make payments.

Secured cards typically work best for individuals with no credit or looking to rebuild bad credit. The cash deposit establishes collateral the credit card issuer may claim in the event of default or failure to make on-time payments.

Who Uses Secured Credit Cards?

young woman teen smartphone debit credit card blue

Secured cards are often used as a starter credit card for people without credit history or as an alternative for those who have poor credit.

Anyone who has never had a credit card before and has never served as an authorized user on another person’s credit card likely has no credit history and thus no credit scores from major credit bureaus.

A credit card company will often approve an application for someone who has what scoring systems as bad or with limited credit as long as they meet the minimum deposit required along with other terms of that particular issuer’s offering.

People may have earned bad credit from missing payments accidentally or not meeting a minimum payment often enough.

After using a secured card responsibly, cardholders may find the issuing financial institution sees their financial situation in a better light.

They recognize an ability to make credit card payments quickly and may eventually clear the way to another favored line of credit used by millions: unsecured credit cards.

How Can a Secured Card Help Build Credit and Improve Your Credit Score?

young woman online banking credit debit card

When you turn 18, you become eligible to apply for a credit card in your name, though you’ll need to meet certain age and income requirements.

Though, because you’re so young, you might not have the positive credit history that credit card companies want to see—or any credit history at all.

If this is the case, you might consider applying for a secured credit card to establish credit and make on-time payments while keeping your balance low relative to your overall available credit. Secured cards work best for people with no or bad credit.

You’ll need to make an initial deposit that becomes your credit limit to receive an actual credit card, but you will receive a secured card account in your name to build credit.

With enough time, making on-time payments and maintaining an overall good payment history will show you can use the card responsibly. These good credit and personal finance habits should be reported to major credit bureaus, reflecting on your credit report.

If you make timely payments and keep your balance low over time, this can help build up your credit line and scores.

This especially matters for building credit because showing you can make your monthly payments on time and not overuse your credit demonstrates creditworthiness to credit reporting agencies and credit card issuers.

The security deposit keeps skin in the game for you to make good on payments.

Unlike prepaid cards, the security deposit funds don’t load onto your card and do not get directly used for purchases. Instead, this deposit will be forfeited if you fail to pay your credit card bill.

So, if you make your payments on time, your regular spending activity and collateral will help you to build your credit. To provide you more financial flexibility with time, you may opt to move to unsecured card issuers’ options.

Related: Banking Apps for Kids and Teens [How Minors Can Bank]

Pros and Cons of Secured Credit Cards

young woman credit debit card online laptop

While there are many benefits to getting and using secured credit cards, there are a few disadvantages.

Whether or not a secured card is a good idea for you depends mainly on your current financial situation and how responsible you consider yourself.


  • Easy to get: You’re much more likely to be approved for a secured card than an unsecured one.
  • No annual fee: A secured card often doesn’t have annual fees and is free to use (except for your refundable deposit). No annual fee can also make these good to hold on to for more extended periods to show you can control your access to credit while applying for other credit card options to build a diversity of credit.
  • Builds credit history: A secured card is one of the quickest ways to create a credit history. Credit history can be necessary for getting car loans, an apartment, insurance, and more.
  • Can raise your credit score: If you have a low score, making regular payments to a secured card can show you’re reliable, increase your credit score and lead to a higher credit line. A higher credit score may be what you need to become approved for an unsecured card, which has additional benefits. However, if you are irresponsible with the card, it won’t help increase your score or improve your chances of getting unsecured cards.

Related: Best Credit Cards for Kids: Building Credit & Money Habits Early


  • Requires a deposit: You have to pay a security deposit on a secured card. If it’s challenging for you to save a few hundred dollars that you won’t get back right away, this could be tricky.
  • Secured cards don’t typically offer rewards: While it does happen, it’s infrequent for a secured card to offer rewards. If you qualify for unsecured cards, you might have the ability to earn cash back and other benefits that you’re missing out on with a secured card.
  • High fees and interest rates: Depending on which secured card you choose, there may be fees, such as an application or processing fee. Just like with a traditional card, if you don’t make payments, you incur interest. Secured credit card accounts usually have very high-interest rates, meaning missing too many payments could cost you a significant amount of money.
  • Low credit limits: Secured cards typically have low credit limits. If you max out your card, it might hurt your ability to get an unsecured card in the future, alongside lowering your credit score. You want to have a low credit utilization ratio calculated by dividing your credit card balances by your available credit lines. When your credit limit is low, you need to keep your usage amount equally low and not use your card for any major purchases.

The Best First Time Credit Cards are Used Wisely

Getting your first credit card can be exciting, and it opens up a lot of new possibilities, but it comes with responsibilities.

Here are some tips on how to use your first credit card successfully.

  • Make sure that you have enough money in the bank to pay off your balances.
  • If possible, wait until you are comfortable with your first credit card before applying for a new card.
  • Don’t be tempted by offers of instant approval when shopping around for cards.
  • Find the right card with the lowest interest rate available when looking at different options.
  • Make sure the card has no annual fee and that you can use it at more than one store or place.
  • Never spend on things that your budget does not allow to get credit card rewards.
  • Consider applying for a secured credit card if you don’t get approved for a traditional card.
  • Make sure to shop around and compare rates before you apply.
  • If your income is low, consider asking someone you trust with good credit if they can add as an authorized user on their account.
  • Check the terms of any offer carefully before signing up. Some cards will have high fees or interest rates that could make them challenging to use. Take time to review everything.

Some people might feel overwhelmed by these suggestions, but it doesn’t have to be complicated once you get started.

Pick a card, practice using it, pay your bills, and soon, you’ll see the benefits of responsible card ownership reflected on your credit report and in your credit score.

Related: How Parents Can Help Their Children Start to Build Credit

About the Author

Riley Adams is the Founder and CEO of WealthUp (previously Young and the Invested). He is a licensed CPA who worked at Google as a Senior Financial Analyst overseeing advertising incentive programs for the company’s largest advertising partners and agencies. Previously, he worked as a utility regulatory strategy analyst at Entergy Corporation for six years in New Orleans.

His work has appeared in major publications like Kiplinger, MarketWatch, MSN, TurboTax, Nasdaq, Yahoo! Finance, The Globe and Mail, and CNBC’s Acorns. Riley currently holds areas of expertise in investing, taxes, real estate, cryptocurrencies and personal finance where he has been cited as an authoritative source in outlets like CNBC, Time, NBC News, APM’s Marketplace, HuffPost, Business Insider, Slate, NerdWallet, Investopedia, The Balance and Fast Company.

Riley holds a Masters of Science in Applied Economics and Demography from Pennsylvania State University and a Bachelor of Arts in Economics and Bachelor of Science in Business Administration and Finance from Centenary College of Louisiana.