Comparing the Best Starter Credit Cards
Credit cards can be a great way to build credit history, earn rewards and learn financial independence. Even if you’re just getting started, you should be able to find a card that fits your needs. The key is to know what to look for in a starter credit card and how to use your first card responsibly. Here we cover:
Best Starter Credit Cards of 2020
Discover it® Student Cash Back
Why it’s the best starter credit card for new users
It offers a very forgiving fee and penalty policy. You won’t be charged a late fee the first time you miss a payment due date, and Discover will never jack up your APR if you struggle to pay on time.
You’ll earn 5% cash back in an array of rotating cash back categories each quarter (upon enrollment, on up to $1,500 in spending per quarter, then 1%). This includes spending at places like gas stations, restaurants, grocery stores and on online shopping.
The card comes with a 0% introductory APR on new purchases for the first 6 months (12.99% – 21.99% variable thereafter), which could spell trouble for a starter still learning to use credit cards responsibly.
Capital One® Platinum Credit Card
Why it’s the best starter credit card for no credit history
Beef up your credit history without drowning in fees: It charges no annual fee, foreign transaction fee or penalty APR and includes free credit monitoring.
You won’t have to tie up any money in a security deposit, and your account will be reviewed for a credit limit increase if you make your first 6 monthly payments on time.
If you have a fair or limited credit history, your credit limit may be fairly low to start. This could make it difficult to keep your credit utilization (a key credit scoring factor) in check. The card also carries a very high variable APR of 26.99%.
Capital One® VentureOne® Rewards Credit Card
Why it’s the best starter credit card for travel
It’s a great place to start your travel rewards journey, offering unlimited 1.25X miles on all purchases without charging an annual fee. You can also score a sign-up bonus of 20,000 miles if you spend $1,000 in the first 3 months.
Your miles never expire and you have a ton of flexibility in how you redeem them: You can book travel through the Capital One Travel Center, cover travel booked via an outside site or redeem miles for gift cards or cash back.
Your miles are worth much less if you opt for a gift card, statement credit or check instead of redeeming for travel. If you aren’t sure whether you want to use your credit card rewards for travel or cash back, you may be better off sticking with a more general rewards card.
Deserve® EDU Mastercard for Students
Why it’s the best starter credit card for students
You don’t need a traditional credit history to be approved. International students don’t even need a Social Security number. The card also charges a lower late fee than most and no penalty APR, making it a safer starter option.
It includes one year of Amazon Prime Student (after spending $500 in the first three billing cycles), with perks like free shipping and Prime Video streaming. It also charges no foreign transaction fee – perfect if you plan to travel or study abroad.
You’ll earn just 1% cash back on all purchases, which is low compared to the rate offered by many cash back cards – even those designed for students. You’ll also be charged a relatively high variable APR of 18.74%.
Discover it® Cash Back
Why it’s the best starter credit card for cash back
Few cards let you earn cash back at such a high rate on such a wide variety of purchases. You’ll earn 5% back in rotating categories each quarter upon enrollment (on your first $1,500 in combined quarterly purchases, then 1%). Bonus categories for the third quarter of 2020 include restaurants and PayPal.
With Cashback Match, Discover automatically matches all the cash back you’ve earned at the end of your first year. The card also offers a 0% introductory APR on new purchases for the first 14 months (11.99%-22.99% variable after that).
You’ll only earn 5% cash back on the first $1,500 you spend in a bonus category each quarter, then 1%, following activation. If you spend heavily in a particular category, like dining or travel, you might earn more in the long run with another card that offers bonuses in those categories, even if its rewards rate is lower.
Capital One® SavorOne® Cash Rewards Credit Card
Why it’s the best starter credit card for dining
It’s a great starter cash back card for foodies, offering 3% cash back on dining and entertainment, 2% back at grocery stores, 1% back on all other purchases and no foreign transaction fee.
You can set up automatic cash back redemptions or redeem manually as a statement credit, check or gift card in any amount, at any time. You’ll also get a $200 bonus if you spend just $500 in the first three months.
It’s not the most versatile cash back card. Unless you spend heavily in the SavorOne’s bonus categories, you’ll likely earn more with a card that offers cash back at a flat rate on all purchases.
Credit One Bank® Visa® Credit Card
Why it’s the best starter credit card for bad credit
You can rebuild your credit without putting down a deposit. It also comes with free access to your Experian credit score and you can check if you prequalify online.
One of the few cards for bad credit with a cash back rewards program, it offers 1% cash back rewards on eligible purchases, including gas, groceries and services such as mobile phone, internet, cable and satellite TV. Terms apply.
You may have to pay an annual fee of $0-$99, which will immediately reduce your credit limit and will be difficult to offset with cash back rewards. The card also carries a standard 3% foreign transaction fee ($1 minimum).
Capital One® QuicksilverOne® Cash Rewards Credit Card
Why it’s the best starter credit card for everyday spending
You’ll earn consistent cash back on every purchase, no matter where, when or what you buy. You’ll earn unlimited 1.5% cash back on all purchases, and your cash back never expires.
You can qualify even if your credit is just average. You’ll also enjoy a number of great perks like extended warranty on purchases, price protection, car rental insurance and roadside assistance.
It charges an annual fee of $39, and unlike many rewards cards, it offers no sign-up bonus and charges all cardholders the same very high variable APR of 26.99%, regardless of credit history.
Discover it® chrome
Why it’s the best starter credit card for gas
When you factor in Discover’s first-year Cashback Match, it offers one of the top cash back rates on gas station purchases available at no annual fee. You’ll earn 2% cash back on gas station purchases and 2% back at restaurants on up to $1,000 in combined spending per quarter, plus unlimited 1% back on all other purchases.
It offers consumer-friendly terms, charging no foreign transaction fee, no penalty APR and no late fee for the first late payment. It also comes with a free FICO credit score on every statement.
You’ll only earn 2% back on your first $1,000 in combined quarterly spending at restaurants and gas stations, so you may find greater long-term value in a flat-rate cash back card.
Comparing the best starter credit cards
|Credit Card||Best for||Annual Fee||Review score|
|Discover it® Student Cash Back||New users||$0||4.2 / 5|
|Capital One® Platinum Credit Card||No credit history||$0||3.7 / 5|
|Capital One® VentureOne® Rewards Credit Card||Travel||$0||3 / 5|
|Deserve® EDU Mastercard for Students||Students||$0||2.6 / 5|
|Discover it® Cash Back||Cash back||$0||4.3 / 5|
|Capital One® SavorOne® Cash Rewards Credit Card||Dining||$0||3.7 / 5|
|Credit One Bank® Visa® Credit Card||Bad credit||$0-$99||2.2 / 5|
|Capital One® QuicksilverOne® Cash Rewards Credit Card||Everyday spending||$39||4.1 / 5|
|Discover it® chrome||Gas||$0||4.1 / 5|
How do credit cards work?
Put simply, credit cards allow you to borrow money from a bank to make purchases. When you get a credit card, you’re offered a line of credit (also called a credit limit) and can borrow up to that amount for your purchases or a balance transfer – just be sure to pay back when the time comes. Understanding the intricacies can take some extra homework, so let’s go through some of the fundamentals:
What is acceptable credit?
When searching through credit cards, you’ll see there is a predetermined range you may need to qualify. The credit ranges are sorted into 5 categories and give a good idea of the cards available to you:
No matter where you stand, proper credit card habits will boost your score. Improving your score will help you when upgrading cards, applying for loans, entering a lease and more.
How do I get started?
After getting approved and receiving a credit card, it’s as simple as swiping the card. Don’t overspend beyond your means, but making a few purchases that you can comfortably pay off is a great way to get started.
Every 30 days or so, you’ll get a bill detailing what you’ve purchased. Your card will come with a minimum payment amount you must meet for each of these billing cycles, so make sure you eclipse that number without overspending. Making timely, sufficient payments is a surefire way to quickly grow your credit score.
How do I avoid paying interest?
Creating a budget and spending within your means will help you avoid interest payments. The best way to steer clear is by paying off your amount in full each month. When paying off just a portion, you’ll be charged interest on the amount that remains. Limit your purchases to what you know you can pay off and you’ll avoid interest entirely.
Some cards increase interest rates for paying late and other mishaps, once again stressing the importance of making on-time payments and practicing financial discipline.
What are rewards?
Not all starter cards feature rewards, but many options give cardholders the ability to earn cash back along with their other benefits. With cash back rewards, you’ll earn exactly that — money back on the eligible purchases you make. A flat-rate cash back card will give you the same percentage across all categories, often allowing cardholders to earn $2 back for every $100 they spend, all year long. Other cash back cards are a little more complex, rewarding at a higher rate for purchases in specialized categories like dining, groceries or gas stations to name a few. Some cards even rotate these boosted categories every quarter.
Rewards cards in the good to excellent range often give points or miles on purchases, allowing cardholders to earn extra when they spend. These points or miles can accumulate over time and be redeemed for larger prizes, such as flights, hotel stays, cruises, gift cards and retail shopping options.
Credit card terms explained for beginners
- Current/statement balance – Your current balance is the total amount of money you currently owe on your credit card. Your balance increases when you make purchases and decreases when you make payments. Your statement balance only shows what you owed as of your last billing cycle. As long as you pay off your statement balance by the due date, you should avoid interest charges.
- APR – Short for annual percentage rate, this tells you how much you would owe in interest over the course of a year for a set balance, although that figure obviously changes as your balance changes. Interest is essentially a fee you pay for borrowing money.
- Introductory APR – A promotional APR offered for a limited time on some cards. For example, if your card comes with a 0% introductory APR for 15 months, that means you can carry a balance for the first 15 months you hold the card without being charged interest.
- Minimum payment – The minimum amount you must pay each month to keep your account in good standing. If you don’t pay at least the minimum, you’ll face fees, a higher APR and could damage your credit score.
- Fees – Some credit cards charge you an annual fee just for holding the card. Other fees include late payment fees, returned payment fees (when your credit card bill payment doesn’t go through), foreign transaction fees (when you use your card outside the U.S.) and more.
- Sign-up bonus – Some cards offer a sign-up bonus (sometimes called a welcome offer) of cash back, points or miles bonus when you’re first approved. Usually, you’ll have to spend a certain amount of money with your new card within a set time period (often 3 months) to earn the bonus.
- Ongoing Rewards – Some cards let you earn cash back, points or miles on every purchase, while others are geared toward a certain type of spending (like grocery store or gas station purchases) and offer bigger rewards in that category.
- Perks – Some credit cards come with additional perks and benefits you can use as a cardholder, like car rental insurance, roadside assistance or free access to your credit score.
Credit card tips for your first credit card
If you don’t use your card responsibly, you could end up buried in debt or do long-term damage to your credit score.
Don’t charge what you can’t pay back
Avoid a “buy now, pay when I have the money” approach. Stick to small, manageable expenses while you get used to using your card and only charge what you’re positive you can pay off.
Pay more than the minimum
If you carry a balance and only make the minimum payment due on your credit card, interest charges will quickly start to pile up, growing your balance each month until you end up buried in debt.
Pay on time
Payment history is the biggest factor in credit scoring, and even one late payment can do major damage. To avoid this (and the fees that come with paying late), set up text or email alerts to remind you when your bill is due or set up an automatic payment with your bank.
Don’t max out your card
Credit utilization – the amount you owe compared to your available credit – is one of the biggest factors in credit scoring. If you consistently “max out” your card, you seem like more of a risk to lenders.
What kind of credit card should I start with?
Depending on your credit history (and whether you even have one), your spending habits and your personal life and financial goals, you may consider yourself a certain type of consumer:
Consumers looking for no annual fees and potentially more forgiving terms on common penalties may want to look to a student card. With benefits tailored to college and graduate students, such as dining rewards and rewards for keeping a GPA of 3.0 or higher, these cards can carry “A+” value.
An option like the Discover it® Student chrome, for example, allows you to earn 2% cash back at gas stations and restaurants on up to $1,000 each quarter, plus unlimited 1% cash back across your other purchases. On top of that, Discover will match the amount of cash back you earn in your first year. Additionally, this card features no annual fee and no APR change for paying late – a couple of common features of student cards.
Travel cards typically require you to have a good to excellent credit history to qualify, so if you’re totally new to credit, you should probably avoid applying. If you do try for a travel card, it’s best to stick to one that charges no annual fee and offers a straightforward rewards program.
Those with established credit have plenty to choose from when sifting through travel cards, but it’s difficult to get rewarded for your travel purchases right out of the gate. The Deserve® EDU Mastercard for Students, however, offers some benefits for wanderlusting new cardholders: no foreign transaction fees, unlimited 1% cash back on all purchases and nearly worldwide acceptance thanks to Mastercard.
The cash back chaser
Cash back cards give you back a percentage of what you spend each time you make a purchase, allowing for consistent and immediate earning. When you don’t have to change the way you naturally spend, earning comes easy with a cash back card. Look for an option offering bonuses that match your spending habits or stick with one that gives cash back at a flat rate on all purchases.
In addition to the options above, the Credit One Bank® Visa® Credit Card features widespread cash back earning. Those with no credit history can earn 1% cash back on eligible purchases such as gas, groceries, cell service, internet and cable.
The consumer just starting out
Secured cards require you to put down a deposit to become a cardholder, making them much easier to qualify for than traditional, unsecured cards. The deposit is refundable and usually equal to your credit limit, so getting into a proper payment routine will make the upfront cost negligible. Many secured cards offer a chance to upgrade to an unsecured version once you’ve shown responsible use.
Secured cards can set you up for success with credit-building benefits. With the Self – Credit Builder Account + Visa® Credit Card, hopeful cardholders with no credit history can combine a credit building account with a secured card. This specialized account will report to all 3 credit bureaus, flexing your on-time payments for you and building your credit score. Plus, they reward good habits: After 3 months of on-time payments and savings over $100 in the account, cardholders in good standing are eligible to upgrade to the Self Visa Credit Card.
Many stores offer their own rewards cards to encourage shopper loyalty. These cards generally carry no annual fee and can offer good approval odds, but often come with gigantic APRs, making them risky for credit card beginners. Even so, these cards give consistent customers a great opportunity for heightened earnings at their favorite stores.
For those keen to online shopping, the Amazon Prime Rewards Visa Signature Card allows for fair credit and gives new cardholders a $70 Amazon.com gift card as a sign-up bonus. It comes with no annual fee, but you do need an eligible Amazon Prime membership ($119 annually for most consumers) to qualify. That can be worth it when you earn 5% back on Amazon.com and Whole Foods purchases, 2% back on dining, drug store and gas purchases, and 1% back on all others.
How to get a credit card for the first time
Now that you know a bit about how credit cards work, how to use them responsibly and the types of credit cards available to beginners, you should be ready to apply for your first card.
When should I get my first credit card?
There’s no perfect time to get your first credit card. During college or shortly after graduation is a popular time, but as long as you feel ready and have enough income to cover your purchases, you can get started.
That said, there are a few basic requirements for getting a credit card. If you are under 21 years old, you’ll need your own source of income or a co-signer to qualify. You’ll also generally need a Social Security number, and if you’re not a U.S. citizen, you’ll have a hard time getting a credit card. Finally, you need a source of income.
Where can I get my first credit card?
You can apply online, in person, or via mail with a bank, credit union or store that offers its own credit card. You’ll need information like your legal name, birth date, address, Social Security number, annual income, how long you’ve lived at your current address, whether you own or rent, your monthly housing payment and what type of bank account you have.
What does annual income mean on a credit card application?
Your annual income is the total amount of money you earn in a year. If you have a salary, simply list the amount you receive annually. If you’re an hourly employee, you can multiply your hourly rate by the number of hours you work per week, then multiply that number by 52 weeks.
If you are over 21 years old, annual income can also include money you make outside of a job, such as through a spouse or partner’s income, a trust fund, retirement fund, or allowances and gifts.
If you are under 21, only personal income, scholarships and grants and allowances verified by tax returns or other documents can count as annual income. Neither a parent’s income nor student loans count as income on a credit card application.