How to Choose the Best Credit Card to Build Credit
Need a credit card? Money Girl helps you choose the best one to build your credit.
Laura Adams, MBA
Q. I’ve never had a credit card because I don’t like the idea of spending money that I don’t have. But that choice is hurting me now because I don’t have any credit! I often receive card offers in the mail. How do I choose the best credit card to build credit?
Answer. Using a credit card is an easy way to build credit. Simply make a few charges and pay them in full and on time each month. That builds a history of positive transactions and demonstrates that you’re responsible with credit. Choosing the right card comes down to the way you plan to use it.
For instance, if you carry a balance from month to month, always pick a low interest card so you never pay more than you have to. But if you always pay off your balance, then the interest rate doesn’t really matter because you’ll never have to pay it.
So consider getting a rewards card to take advantage of everyday purchases that you’re already making—even if the interest rate isn’t rock bottom. Many retail, warehouse, or online stores have cards that give you nice discounts to reward your loyalty.
Like to travel? There are loads of rewards cards that accumulate points to redeem on airlines or hotels. Or you might prefer to keep it simple and get cash back rewards that are credited to your account.
If your credit isn’t good enough to qualify for a regular credit card, apply
for a secured card. They work the same, except that you have to pay an upfront deposit. Just make sure that a secured card you choose reports payment history to the credit bureaus, so using it builds credit.
Doing an online search for credit cards will show you the variety of cards available—but don’t agonize over the choices. Just pick one and get started building credit as quickly as possible. Having good credit improves your overall financial life by reducing insurance premiums, impressing a potential employer or landlord, and getting approved for financing if you need it.
Other Links You Might Like:
5 FAQs About Your Credit Score
How to Get a Credit Card With Bad Credit
25+ Best Tools for Money Management and Productivity
Credit Score Survival Kit – a free multimedia tutorial with strategies to raise your credit scores!
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3d Credit Cards from Shutterstock
About the Author
Laura Adams received an MBA from the University of Florida. She’s an award-winning personal finance author, speaker, and consumer advocate who is a frequent, trusted source for the national media. Money-Smart Solopreneur: A Personal Finance System for Freelancers, Entrepreneurs, and Side-Hustlers is her newest title. Laura’s previous book, Debt-Free Blueprint: How to Get Out of Debt and Build a Financial Life You Love, was an Amazon #1 New Release. Do you have a money question? Call the Money Girl listener line at 302-364-0308. Your question could be featured on the show.