The Ultimate Guide to Credit Cards
Wednesday, June 29, 2022

Low Interest Credit Cards For Beginners in 2022

Low Interest Credit Cards For Beginners

credit card advice

Eric Bank

Written by: Eric Bank

Eric Bank

Eric Bank has been covering business and financial topics since 1985, specializing in taking complex subject matters and explaining them in simple terms for consumer audiences. In addition to his work on CardRates.com, Eric has appeared regularly on Credible.com, eHow, WiseBread, The Nest, Get.com, Zacks, Chron and dozens of other outlets. A former software engineer, Eric holds an M.B.A. from New York University and an M.S. in finance from DePaul University.

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Edited by: Lillian Guevara-Castro

Lillian Guevara-Castro

Lillian brings more than 30 years of editing and journalism experience. She has written and edited for major news organizations, including The Atlanta Journal-Constitution and the New York Times, and she previously served as an adjunct instructor at the University of Florida. Today, she edits all CardRates content for clarity, accuracy, and reader engagement.

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Advertiser Disclosure

If you’re young and want it all, check out our roundup of low interest credit cards for beginners. These are genuinely great deals. Not only do you get your first credit card, but you also get one with a relatively low interest rate. 

For credit newbies who need to watch every penny, these cards can save you some significant coinage over the course of a year.

Low Interest Student Credit Cards For Beginners

Student credit cards are the best deal in the industry. You can get one of these cards if you attend college at least half of the time despite having a blank credit history. These are more than just good credit cards for beginners — they offer perks that would put many other cards to shame. 

Discover it® Student Cash Back Review

at Discover Card’ssecure website

LOW APR RATING

★★★★★

4.5

OVERALL RATING

  • No credit score required to apply.
  • INTRO OFFER: Unlimited Cashback Match – only from Discover. Discover will automatically match all the cash back you’ve earned at the end of your first year! So you could turn $50 cash back into $100. Or turn $100 into $200. There’s no minimum spending or maximum rewards. Just a dollar-for-dollar match.
  • Earn 5% cash back on everyday purchases at different places each quarter like Amazon.com, grocery stores, restaurants, gas stations and when you pay using PayPal, up to the quarterly maximum when you activate. Plus, earn unlimited 1% cash back on all other purchases – automatically.
  • NEW! Discover helps remove your personal information from select people-search websites. Activate by mobile app for free.
  • No annual fee and build your credit with responsible use.
  • 0% intro APR on purchases for 6 months, then the standard variable purchase APR of 13.74% – 22.74% applies.
Intro (Purchases)
Intro (Transfers)
Regular APR
Annual Fee
Credit Needed
0% Intro APR for 6 months
10.99% Intro APR for 6 months
13.74% – 22.74% Variable APR
$0
Fair/New to Credit

Discover it® Student Cash Back is our favorite card for college students looking to establish credit. The low interest rate and subdued fee structure enhance the value of this cash back card. In addition, it provides security features to guard you against potential fraud, letting you instantly freeze the card if it’s ever stolen or lost.

Discover it® Student chrome Review

at Discover Card’ssecure website

LOW APR RATING

★★★★★

4.5

OVERALL RATING

  • No credit score required to apply.
  • INTRO OFFER: Unlimited Cashback Match – only from Discover. Discover will automatically match all the cash back you’ve earned at the end of your first year! So you could turn $50 cash back into $100. Or turn $100 into $200. There’s no minimum spending or maximum rewards. Just a dollar-for-dollar match.
  • Earn 2% cash back at Gas Stations and Restaurants on up to $1,000 in combined purchases each quarter. Plus, earn unlimited 1% cash back on all other purchases – automatically.
  • NEW! Discover helps remove your personal information from select people-search websites. Activate by mobile app for free.
  • No annual fee and build your credit with responsible use.
  • 0% intro APR on purchases for 6 months, then the standard variable purchase APR of 13.74% – 22.74% applies.
Intro (Purchases)
Intro (Transfers)
Regular APR
Annual Fee
Credit Needed
0% Intro APR for 6 months
10.99% Intro APR for 6 months
13.74% – 22.74% Variable APR
$0
Fair/New to Credit

The Discover it® Student chrome card confirms the issuer’s commitment to the student credit card market by offering students an alternative card. Its simplified cash back structure will appeal to many folks who’ve never owned a credit card and don’t want to fuss with rotating categories. Plus, you get the usual Discover goodness, including excellent customer service, Cashback Match for the first year of ownership, a full-featured mobile app, and no annual fee.

Bank of America® Customized Cash Rewards Credit Card for Students Review

at the issuer’ssecure website

LOW APR RATING

★★★★

4.4

OVERALL RATING

  • Earn a $200 cash rewards bonus after making at least $1,000 in purchases in the first 90 days of your account opening
  • Earn 3% cash back in the category of your choice: gas, online shopping, dining, travel, drug stores, or home improvement/furnishings and 2% cash back at grocery stores and wholesale clubs on the first $2,500 in combined choice category/grocery store/wholesale club purchases each quarter, then earn 1%
  • Unlimited 1% cash back on all other purchases
  • 0% Introductory APR on new purchases and balance transfers for 15 billing cycles (balance transfer fee applies), then a variable APR applies
  • Optional overdraft protection option helps prevent declined purchases, returned checks, or other overdrafts when you link your eligible Bank of America® checking account to your credit card. Transfer fees may apply.
  • $0 Annual fee
Intro (Purchases)
Intro (Transfers)
Regular APR
Annual Fee
Credit Needed
0% for 15 billing cycles
0% for 15 billing cycles
14.24% – 24.24% Variable
$0
None/Limited

The Bank of America® Customized Cash Rewards Credit Card for Students is a natural choice for BoA customers. This card from a large U.S. bank offers beginners valuable perks that reward them for eligible purchases, protect against potential fraud, and provide free FICO scores. Your inner geek will appreciate the card’s digital wallet compatibility and excellent mobile app.

Low Interest Unsecured Credit Cards For Beginners

Unsecured cards are traditional credit cards that don’t require a deposit for approval. It’s unusual for a credit card to offer relatively low APRs to consumers who have no credit history. You won’t see Chase Ultimate Rewards® cards or Citi rewards cards in this category.

While not the screaming bargains represented by student credit cards, these three cards charge less interest than most competitors. 

NO/LIMITED CREDIT RATING

★★★★★

4.7

OVERALL RATING

4.0/5.0
  • No annual or hidden fees. See if you’re approved in seconds
  • Be automatically considered for a higher credit line in as little as 6 months
  • Help build your credit through responsible use of a card like this
  • Enjoy peace of mind with $0 Fraud Liability so that you won’t be responsible for unauthorized charges
  • Monitor your credit score with CreditWise from Capital One. It’s free for everyone
  • Get access to your account 24 hours a day, 7 days a week with online banking from your desktop or smartphone, with Capital One’s mobile app
Intro (Purchases)
Intro (Transfers)
Regular APR
Annual Fee
Credit Needed
N/A
N/A
26.99% (Variable)
$0
Average, Fair, Limited

The lack of a credit history won’t prevent you from getting the Capital One Platinum Credit Card. The card welcomes applicants with no credit score, and you may be able to boost your credit limit with responsible use. You won’t be charged an annual fee or any other account maintenance fees for this card.

DCU Visa® Platinum Credit Card Review

at the issuer’ssecure website

LOW APR RATING

★★★★★

4.8

OVERALL RATING

  • DCU’s Visa Platinum Credit Card offers a rate lower than you’ll find on most other bank or store cards. Annual fees or additional fees for balance transfers? You won’t find either of those here.
  • Embedded EMV chip – this tiny chip protects your information in a big way.
  • Mobile Wallet Compatible – works with Apple Pay®, Google Pay™, and Samsung® Pay.*
  • Optional overdraft protection – We’ll transfer the balance of any overdrafts from your DCU checking account to your DCU Visa Platinum account up to your available limit.
  • $0 Annual fee
Intro (Purchases)
Intro (Transfers)
Regular APR
Annual Fee
Credit Needed
N/A
N/A
8.50% – 18% Variable
$0
Average/Good

The DCU Visa® Platinum Credit Card is marketed for those with average credit, but you may be able to get your hands on one without a credit score at all. Credit unions generally have more lenient approval standards than big banks do, and this card has one of the lowest possible rates you can get. 

Milestone® Mastercard® - Less Than Perfect Credit Considered Review

at Milestone Mastercard®’ssecure website

NO/LIMITED CREDIT RATING

★★★★★

4.5

OVERALL RATING

  • Prequalify for a card today and it will not impact your credit score
  • Less than perfect credit is okay
  • Mobile account access at any time
  • Protection from fraud if your card is stolen
  • Account history is reported to the three major credit bureaus in the U.S.
  • *Dependent on credit worthiness
Intro (Purchases)
Intro (Transfers)
Regular APR
Annual Fee
Credit Needed
N/A
N/A
24.9%
$35 – $99
Poor/Bad

The Milestone® Mastercard® – Less Than Perfect Credit Considered offers a decent variable APR to applicants with poor, limited, or no credit history. It’s easy to prequalify for this card even if you lack a credit history. Unlike several similar cards, this one does not charge a monthly maintenance fee.

Low Interest Secured Credit Cards For Beginners

A secured credit card is a natural fit for beginners because approval relies on your security deposit rather than your credit score. These three secured credit cards offer APRs much lower than those offered by the reviewed unsecured cards.

Applied Bank® Secured Visa® Gold Preferred® Credit Card Review

at the issuer’ssecure website

LOW APR RATING

★★★★★

4.5

OVERALL RATING

  • Better than Prepaid…Go with a Secured Card! Load One Time – Keep On Using
  • Absolutely No Credit Check or Minimum Credit Score Required
  • Automatic Reporting to All Three National Credit Bureaus
  • 9.99% Low Fixed APR – Your Rate Won’t Go Up Even if You Are Late
  • Activate Today with a $200 Minimum Deposit – Maximum $1,000.
  • Increase Your Credit Limit up to $5,000 by Adding Additional Deposits Anytime
Intro (Purchases)
Intro (Transfers)
Regular APR
Annual Fee
Credit Needed
N/A
N/A
9.99% Fixed
$48
Poor/Fair/Limited/Damaged

The Applied Bank® Secured Visa® Gold Preferred® Credit Card has the lowest annual percentage rate than that available among the reviewed cards. The low interest rate helps offset the card’s lack of a grace period for your everyday purchases. This card doesn’t charge many nuisance fees that detract from unsecured cards for consumers with no credit history.

OpenSky® Secured Visa® Credit Card Review

at Capital Bank N.A.’ssecure website

LOW APR RATING

★★★★

4.3

OVERALL RATING

  • No credit check to apply and find out instantly if you are approved.
  • OpenSky gives everyone an opportunity to improve their credit with an 85% average approval rate for the past 5 years
  • Get considered for a credit line increase after 6 months, with no additional deposit required
  • You could be eligible for the OpenSky Gold Unsecured Card after as few as 6 months
  • Reports to all 3 major credit bureaus monthly, unlike a prepaid or debit card
  • Nearly half of OpenSky cardholders who make on-time payments improve their FICO score 30+ points in the first 3 months
Intro (Purchases)
Intro (Transfers)
Regular APR
Annual Fee
Credit Needed
N/A
N/A
17.64% (variable)
$35
Poor

The OpenSky® Secured Visa® Credit Card has no credit score requirements, making it an excellent first credit card. It features a low variable APR and a small minimum deposit. The card’s annual fee is competitive with those of similar cards.

nRewards® Secured Credit Card Review

at the issuer’ssecure website

LOW APR RATING

★★★★★

4.5

OVERALL RATING

  • Earn 1X points per dollar spent with no limit on the amount of rewards you can earn; rewards expire after 4 years.
  • Deposit at least $200 into your membership savings account (before submitting your application) to back your spending. If approved, we’ll hold your deposit in your account as your card’s credit limit. As you use your card, you’ll earn rewards just like any other credit card, while also earning dividends on your deposit—just like any other savings account.
  • No annual fees, no balance transfer fees, no foreign transaction fees, and no cash advance fees.
  • After just 3 months, you could be eligible for an upgrade. If you qualify, we’ll provide you with additional credit to allow for spending beyond your deposit. Then, at 6 months, we’ll review your account monthly to see if you’re eligible to have your hold removed and be upgraded to a cashRewards unsecured card.
  • Rental car coverage
  • Must be a member of Navy Federal Credit Union to qualify
Intro (Purchases)
Intro (Transfers)
Regular APR
Annual Fee
Credit Needed
N/A
N/A
18.00%
$0
None/Poor

The nRewards® Secured Credit Card from Navy Federal Credit Union offers a low APR, unlimited cash back, and several attractive benefits. For example, the card provides a secondary cellphone protection benefit of $250 per claim with a $50 deductible, and you can file up to two claims every 12 months. It also offers secondary collision damage waiver coverage when you use it to pay for car rentals.

This card is for military families only — membership is only open to those who have ties to the armed forces, DoD, or National Guard.

What Are Low Interest Credit Cards For Beginners?

The two important concepts that characterize low interest credit cards for beginners are how credit cards calculate interest and how your credit score affects your interest rate.

How Credit Card Interest Works

To understand how credit cards compute interest, you need two pieces of background information:

  • Billing cycles: Credit cards divide the year into 12 or 13 billing cycles of approximately 27 to 30 days each. At the end of each cycle, the credit card issuer publishes your account statement listing the charges and payments for the period, the interest accrued during the interval, your outstanding balance, and how much you need to pay by the payment due date, among other things.
  • Grace periods: Virtually all cards allow you to avoid interest by paying your bill in full by the end of a grace period. Grace periods, when offered, coincide with the payment due date and must extend beyond a card’s billing cycle end date (the statement date) by at least 21 days.

Credit card issuers make money by charging cardholders interest and fees. All cards must reveal these costs to prospective applicants. In particular, regulations require that cards disclose their annual percentage rates (APRs), a standardized metric that allows you to compare competing cards directly.

As its name denotes, the APR expresses your credit card interest rate as an annual cost. But when credit cards accrue interest, they do so daily, based on the day’s balance subject to interest. The daily periodic rate (DPR) is the APR divided by 365. 

APR vs DPR

Each day, a credit card updates the previous day’s balance with new charges and payments. It keeps track of each daily balance in the billing cycle and uses them to calculate an average daily balance (ADB)

On the statement date (i.e., the billing cycle’s closing date), the card multiplies the average daily balance by the daily percentage rate and the number of days in the cycle:

Potential interest charge = ADB x DPR x number of days in the billing cycle.

The result is the amount of interest you’ll face if you don’t repay the entire balance by the payment due date (i.e., the grace period’s end date). In other words, you can enjoy a permanent 0% APR by always paying your entire balance each cycle.

A few credit cards do not offer a grace period, meaning your everyday purchases accrue interest starting on the transaction date and continue until paid. Cash advances and balance transfer transactions have no grace periods and accrue interest immediately at APRs that may differ from the purchase APR. 

However, many cards offer new cardmembers a 0% introductory APR on balance transfer transactions that last from six months to 18 or more. You will pay a balance transfer fee in most cases. The amount of the balance transfer fee is typically a fixed percentage of the transferred amount.

Typically, credit cards charge APRs between 9.99% and 36% on the balances subject to interest. We consider a variable APR to be low if it’s below the average value for the credit category. 

Credit Scores

Now that you understand how credit card interest works, it’s essential to know how credit scores affect interest rates. Credit card interest rates usually relate directly to the cardowner’s credit score.

Average APR by FICO Score

Remarkably, the cards reviewed in this article offer credit card interest rates that are no worse than those for consumers with fair credit. Moreover, the student and secured cards offer APRs you’d generally find on unsecured cards for good to excellent credit.

Lenders and creditors need a fast way to categorize the risk they undertake when extending a loan or credit line. For better or worse, credit scores fill this need by encapsulating a person’s credit experience in a single number.

FICO is the dominant credit scoring system for consumers. Its scores range from 300 (the worst credit) to 850 (perfect credit). Credit scores of 800 and above are excellent. Scores below 580 are bad. 

You can only receive a credit score if you make use of credit. If you’ve never borrowed money or never owned a credit account, you are a credit beginner — someone with no credit score. 

It’s not surprising that first-year college students often are credit beginners. But many older consumers, especially in the millennial generation (1980 to 1995), consciously avoid any form of debt and, therefore, are also beginners.

Getting a starter credit card means you will soon be carrying a credit score. The entities responsible for assigning you a score are the three major credit bureaus (Experian, Equifax, and TransUnion). Each credit bureau collects information about credit usage, including credit utilization, debt balances, payments, and credit-related events. 

The bureaus analyze all that collected data, publish it in an individual’s credit report, and use it to calculate the person’s credit score. Consumers have three credit scores and three credit reports because the credit bureaus don’t necessarily share the same data.

The bureaus collect credit data from the parties in the best position to supply it: lenders and creditors. Data furnishers include banks, credit unions, personal loan providers, credit card issuers, mortgage lenders, and car dealerships, among other lenders.

The data furnishers send data about each account holder to one or more credit bureaus. Not all lenders and creditors are data providers — some types of loans, such as payday loans, do not report information to the bureaus

Each credit bureau calculates one or more scores (e.g., FICO, VantageScore, etc.) according to the credit score company’s algorithms. 

Your FICO score, which has a direct bearing on the credit card interest rates you are likely to encounter, derives from five sets of factors.

FICO Credit Score Factors
  1. Payment history (35% of total score): Your FICO score sinks or swims mainly on your payment history. You should eventually achieve a good credit score if you pay your bills on time, every time. A listing of payments over 30 days late can remain on your credit reports for seven years and immediately shave dozens of points off your credit score. You’ll experience even more damage from collections, repossessions, write-offs, foreclosures, and bankruptcies. These derogatory items may remain on your credit reports for up to 10 years.
  2. Amounts owed (30%): FICO uses a metric called the credit utilization ratio, which applies to your credit card balances. It equals your current outstanding card balances divided by your available credit. FICO measures the CUR of each of your credit cards as well as the overall value. A CUR above 30% hurts your credit score on the theory that it may indicate financial distress. Reducing your CUR below 30% can quickly help your score improve.
  3. Credit history age (15%): FICO rewards you for maintaining credit accounts over a long period. The scoring system measures the age of each account and the average age of all accounts. Canceling old cards can hurt your score by increasing your CUR. Getting new credit cards also harms your FICO score by reducing your average account age.
  4. Credit Mix (10%): This minor factor rewards you for having a diverse mix of credit accounts, such as credit cards, personal loans, mortgages, and auto loans. FICO doesn’t suggest you go running out and open new accounts as a way to improve your score. But if you have never owned a credit card, adding one to the mix may be beneficial.
  5. New credit (10%): Creditors pull your credit reports when you apply for a new account. These hard inquiries can hurt your credit score, mainly when several occur within a short span. Only you can authorize hard inquiries, and all other pulls of your credit (soft inquiries) won’t affect your score. New credit is not a critical factor, and its impact on your FICO score is low. While hard inquiries remain on your credit reports for two years, they only affect your score for one year. Nonetheless, if you are attempting to rebuild your credit, you may want to limit your new credit applications to one or two every six months.

Your initial credit score will be about average when you get your first credit account. You don’t start with bad credit, and if you practice good financial habits, you could quickly attain a good score. 

Can I Get a Credit Card With No Credit History?

When beginners apply for their first credit cards, issuers have no information about the creditworthiness of these applicants. To control risk under these circumstances, issuers tend to stick beginners with high interest rates. 

The cards in this review offer every beginner the best interest rates despite the newbie’s lack of a credit score.

How Do I Apply For My First Credit Card?

Starter credit card issuers welcome consumers applying for their first credit card. To get your first card, you may have to provide additional information, such as proof of income and a copy of a government-issued ID. 

Applying online for a starter credit card is straightforward — you simply fill out an online application and submit it for a fast decision.

Chase Credit Card Application
Most credit applications require the same personal and financial details, such as income and address.

You can first attempt to prequalify for a credit card if you wish. Doing so does not require a hard credit check, and it’s a fast way to know whether there’s any point in formally applying for the card. Keep in mind that even if you do prequalify, your final approval is not guaranteed.

Whether you go through the prequalification step or not, most credit cards perform a hard pull of your credit history when you apply for a card. The cards featured in this review will not necessarily reject your application if the credit inquiry comes up empty.

Since you lack credit history, you should expect card issuers to take a reasonably long time (up to two weeks) to decide on your application for an unsecured card. But student cards and secured cards can usually make quick decisions because credit history is not a factor. 

When applying for a student credit card, be prepared to prove your enrollment and income. You must deposit cash collateral for secured credit cards before the credit card company gives final approval.

If approved, the issuer will tell you your credit limit and have you sign a credit agreement. Although some issuers provide expedited shipping, it usually takes seven to 10 days for your card to arrive.

Shipping Times by Issuer

Some cards allow you to make card-not-present (CNP) transactions while you wait for your card to arrive. These are everyday purchases you perform online and over the phone. 

The credit card issuer may release your account number, expiration date, and security code to you when you sign the card agreement. Alternatively, some may issue you one or more virtual account numbers that you can use until your card arrives. 

For example, Capital One’s Eno app lets you obtain virtual cards that disguise your actual card number. You can load the virtual card into a digital wallet for in-store qualifying purchases.

How Do I Choose the Best Card For Me?

If you’ve read this far into the article, we assume you:

  • have no or limited credit history,
  • want your first credit card, and
  • are sensitive to interest rates.

We also assume that you care about interest rates because you plan to finance at least some of your eligible purchases. 

These requirements are the preliminary points for choosing a low-interest starter credit card. However, you may want to consider additional factors that are important to you, such as:

  • Rewards: Issuers use reward cards offering cash back, bonus points, or miles to recruit new cardmembers. Some credit card rewards apply equally to all qualifying purchases, while others favor combined purchases from select merchants, such as U.S. supermarkets or gas stations. Issuers know that a rewards card with cash back or bonus points can be a powerful inducement and design their cards accordingly. Several of the cards in this review, including all three student cards, offer rewards on eligible purchases. The Bank of America® Customized Cash Rewards Credit Card for Students also offers a modest signup bonus to new cardmembers in addition to cash back on combined purchases. The rewards card issuer decides how you can redeem your rewards, which may further influence your decision. 
  • Fees: If you care about low interest rates, you probably dislike fees. Several reviewed cards have no annual fees and refrain from loading on so-called junk charges, like a monthly payment for maintenance or a one-time signup fee. Secured and student cards contain far fewer charges than do unsecured cards for beginners.
  • Credit limits: If you plan to finance eligible net purchases over multiple billing cycles, you may want a reasonably robust credit limit to allow you to make larger purchases. Ample credit works to the advantage of secured cards, where you have some say over the credit limit (since it will equal your security deposit). Look for secured cards that permit large deposits.
  • Grace periods: Always check the credit card’s Schumer Box to verify the presence of a grace period for purchases. Without it, the card will charge you interest on your eligible net purchases right away. There’s little point in choosing a low-interest starter card if it doesn’t give you any time to avoid interest charges.
  • Benefits: The unsecured cards in this review offer few benefits beyond $0 liability protection. Student credit cards offer benefits that, to no one’s surprise, favor students. Secured cards may present a surprisingly rich mix of benefits. For example, the nRewards® Secured Credit Card gives you cellphone protection, collision damage waiver, and other nice perks.

So, which type of credit card is best for you? If you are a student, the answer is obvious. Otherwise, you have a choice between a secured or unsecured starter card with low interest. 

Unsecured vs. Secured Cards

If you can’t or don’t want to shell out a few hundred dollars to secure a credit card, then an unsecured card is your remaining choice. However, you may get much better value from a secured card if you can afford it. 

If you start with a secured card and pay your bills on time, you should graduate to an unsecured card within six to 12 months. Upgrading to unsecured means your deposit will be returned, and you may receive access to higher-quality cards.

What Is the Easiest Card to Get?

Secured cards are the easiest to get, as long as you can come up with the minimum security deposit. Typically, the issuers of secured cards do not perform a credit check when you apply, a perfect fit for beginners. 

The biggest obstacle keeping you from a secured card may be your income. Some issuers have minimum income requirements and may decline your application even if you can afford the security deposit.

Student credit cards are also easy to obtain. The standard requirement is that you attend an eligible post-secondary school on at least a half-time basis. Issuers of these cards assume most applicants have little or no credit history. 

The fact that these cards are so good is a tipoff that issuers want to hook you on their brand early. Additionally, some issuers may figure that parents will bail out students who run up their credit card bills.

Income may be the biggest stumbling block to get a student credit card. The law requires issuers to verify income before approving a card for a person under age 21 unless a cosigner comes to the rescue.

Unsecured cards that are the easiest for beginners to get may be the hardest to afford. By piling on the fees or revoking the grace period, the issuers of these cards charge enough upfront to reduce their risk. Less risk for issuers means easier approval for applicants. 

If you aren’t satisfied with any of these alternatives, you may want to consider getting a prepaid debit card instead. They do not charge interest or require a credit history. These cards also have fees, so you should first do some comparison shopping before taking the plunge. 

One of our favorite prepaid cards is the Serve® American Express® Prepaid Debit Account.

How Does a Beginner Get a Credit Score?

Your credit score is a distillation of your credit history. If you want a good score (and you should), you need to build a positive credit history

How to Build Credit with a Credit Card

In today’s online society, it’s easier than ever to establish and build a favorable credit record. We discussed the factors that FICO uses to quantify your credit history earlier in this article. 

It usually takes about six months to qualify for a credit score. An effective way to launch your history is to open a credit account that reports to the major credit bureaus. Suitable accounts include:

  • Auto loans
  • Home equity credit lines
  • Mortgage loans
  • Personal loans
  • Retail accounts
  • Secured credit cards
  • Student loans
  • Unsecured credit cards

If you are a new business owner, you can establish a credit profile for your company by opening trade accounts with suppliers and vendors. You can also apply for a business credit card.

Be aware that not all financial accounts can help you establish your credit history. A checking or savings account won’t do the trick. Neither will payday loans, debit cards, or pawnshop transactions. 

In addition, you may want to consider the following three strategies to establish your credit profile:

Become an Authorized User

Most credit cards permit cardholders to add authorized users. An authorized user gets a copy of the card under his or her own name and can use it just as the primary owner does (although some cards permit the owner to limit the user’s spending). Authorized users cannot request credit limit increases or authorize additional users. 

The shared account reports all activity to at least one credit bureau under the names of the primary cardholder and the authorized user. In this way, card use affects both parties. And here is an interesting factoid: Only the cardowner, not the user, is legally responsible for paying the credit card bill, although both credit scores will suffer for late payments. 

Some issuers relax the minimum age requirement for authorized users, a boon to early achievers.

Recruit a Cosigner

Some starter card issuers welcome cosigners, individuals that share credit card ownership. By enlisting a cosigner, you may qualify for high-qualify credit cards normally out of a beginner’s reach. 

Cosigners do not necessarily become users of the joint credit card. Unlike authorized users, cosigners are equally responsible for repaying any card debts neglected by the primary user. Cosigners put their own credit scores at risk. 

Benefits and Risks of Cosigners

Misuse of a cosigned card affects both cardowners, as the credit bureaus attach the card account to each owner’s credit report. Forcing a cosigner to pay the joint credit card bill can quickly destroy your relationship. 

Take Out a Credit Builder Loan

Many credit bureaus and some small banks and online providers offer credit builder loans to folks who want to establish credit. In this type of account, you borrow a modest amount ($1,500 is a popular figure) and then deposit the proceeds into a locked escrow account maintained by the lender. 

You then repay the loan in fixed monthly installments that the lender reports to all three major credit bureaus. Once repaid, the lender refunds your money. You now have a credit score, and if all your payments were timely, the score should be good.

In addition to these three strategies, you may be able to land a personal loan despite lacking a credit history. Some online lending networks specialize in arranging personal loans to consumers with bad, limited, or no credit. The same considerations apply to networks specializing in no-credit-check auto loans.

Is Having No Credit Considered Bad Credit?

You may be surprised to learn that no credit is better than bad credit. When you have no credit history, you are a blank slate in terms of your creditworthiness. On the other hand, a bad credit score gives creditors objective evidence of the risks they face. 

Some folks have bad credit due to circumstances beyond their control. We strongly feel that anyone can experience bad credit sometime in their lives. What’s important is to adopt the behavior necessary to rebuild credit.

The situation is quite different if you are a beginner. You have the opportunity to establish a good credit profile right from the start. By paying your bills on time and keeping your debt in check, you can help ensure a good credit score. 

Remember that not all types of accounts help you build credit. If you aren’t sure you’re ready to begin using credit, consider sticking to cash or debit cards. They won’t affect your credit history, but they will buy you time until you’re confident that you can handle credit.

Accounts That Don't Affect Credit

Unfortunately, many card issuers lump together folks with bad credit and no credit. Both groups must deal with unattractive credit cards. If you are a beginner and want to avoid being grouped with subprime consumers, consider the alternative ways to build your credit. 

For example, you can become an authorized user, recruit a cosigner, open a credit builder account, or get a secured loan

What Fees Do Beginners’ Credit Cards Charge?

Unsecured credit cards for beginners are usually bristling with all sorts of fees. Fortunately, secured and student credit cards impose fewer fees. Here is a list of the charges you may encounter with your first credit card:

  • Annual fee: Cards for beginners frequently charge annual fees that may reach as much as $99. You pay this fee when you first open the account and then on every subsequent anniversary. Some cards raise or lower the annual fee after the first year. Student and secured cards are less likely to charge this fee.
  • Foreign transaction fee: This fee, typically 3%, is very common. You pay it when you make a purchase outside the United States
  • Signup fee: This is a one-time origination fee (or program fee) some subprime unsecured credit cards charge. You will hardly ever see this charge on better-quality credit cards. It can approach $100 and may reduce your initial credit limit until you pay it. 
  • Maintenance fee: This is a nuisance servicing fee that only bad-credit unsecured cards charge. The monthly payment amount, which is $6.25, is typically waived for the first year. If you can build a fair or better credit score during the first year, you may want to switch to a better credit card before this fee kicks in.
  • Cash advance fee: Virtually all credit cards impose a fee on cash advances, separate from the daily interest charge. The typical amount is the greater of $10 or 3% of the loan amount.
  • Late payment fee: To avoid this fee, which may range up to $40, you must pay at least the minimum amount by the payment due date. Some cards also impose a penalty APR, usually around 30%, when your payment is late. This enhanced annual percentage rate may be permanent. If you have a clean record of on-time payments, consider contacting your credit card company to see if it will waive the fee the first time it applies.
  • Returned payment fee: The issuer charges this fee, usually up to $40, when your payment bounces because of insufficient funds. Your foreign or U.S. bank may impose a charge as well.
  • Over limit fee: Some credit cards charge you when you spend more than your credit limit. The issuer has the option to accept or reject transactions that would put your balance above your credit limit.
  • Additional card fee: The issuer may charge as much as $29 when you request an additional card for an authorized user. The charge may recur annually for each extra card. While not refundable, the issuer may prorate the fee, depending on when you request the additional card.
  • Premium card design fee: Several reviewed cards allow you to choose what they call a “premium” design for your card. The charge usually doesn’t exceed $10.
  • Express delivery fee: Expect to pay about $35 if you want your card delivered quickly.
  • Credit limit increase fee: A card may charge this unusually galling fee when increasing a card member’s credit limit. The card may waive the charge for the first year. Typically, the cost is some percentage of the incremental amount.
  • Copying fee: You can order an official duplicate of a monthly billing statement or other documents. The typical cost is $3 per copy, but the card may waive the charge if your request stems from a billing dispute.
  • Processing fees: This charge pays for the processing of credit card transactions, including validation and payment. Merchants pay this fee to the payment network (i.e, Visa, Mastercard, American Express, or Discover) but build the cost into their prices for their goods and services.

Comparison shopping is the best defense against fee overload. Cards must, by law, disclose all fees before asking you to sign a credit agreement.

Compare Interest Rates on Credit Cards For Beginners

Our review of low interest credit cards for beginners illuminates the broad differences among  APRs for unsecured, secured, and student credit cards. 

Student cards are terrific values, but their audience is limited. If your choice is between a secured and unsecured card, balance the secured card’s deposit requirements against the unsecured card’s higher costs and miserly benefits.

You can research each reviewed card by clicking on the APPLY NOW links and checking a card’s terms and conditions. Take the time to read the fine print since it contains important information not provided in the standard Schumer Box. 

In particular, verify whether the card offers a grace period for purchases. If not, you’ll have to pay the card for your eligible purchases on their transaction date to avoid interest charges.

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