A credit card can be a useful tool if you know how to use it responsibly. If you’re new to credit cards , though, you might be wondering which card is best for you. Here’s a breakdown of some of the best credit cards for beginners.
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Types of Credit Cards
Credit cards are a convenient way to make purchases and track expenses. There are different types of credit cards available, each with its own set of features and benefits. For example, some credit cards offer rewards programs that allow you to earn points or cash back on your purchases. Other credit cards come with low interest rates and no annual fees.
Secured Credit Cards
A secured credit card is a type of credit card that requires you to put down a deposit equal to your credit limit. In other words, if you want a $1,000 limit, you’ll need to make a $1,000 deposit. The deposit is there to “secure” the line of credit in case you default on your payments—it’s effectively collateral. Because of this, secured cards are much easier to get than unsecured cards for people with bad credit or no credit history.
Unsecured Credit Cards
Most unsecured credit cards require good to excellent credit for approval. Unsecured credit cards are not backed by a deposit like secured credit cards, so they’re a riskier bet for issuers. As a result, issuers often compensate by charging higher interest rates and fees.
If you have good to excellent credit, you may be able to qualify for an unsecured credit card with decent terms. These cards usually have annual fees and higher interest rates than secured cards, but they can help you build your credit history and improve your credit score.
Here are some of the best unsecured credit cards for people with good to excellent credit:
-Capital One® Platinum Credit Card: This card has no annual fee and a decent APR for people with good to excellent credit. You can also get access to a higher credit limit after making your first five monthly payments on time.
-Discover it® Secured Credit Card: This is a secured card that requires a deposit, but it has no annual fee and offers cash back rewards. You can also get your deposit back if you close your account and have paid your balance in full.
-Citi® Secured Mastercard®: This is another secured card that requires a deposit, but it comes with some great perks like 24/7 customer service and fraud protection.
Factors to Consider When Choosing a Credit Card
When you’re first starting out, it can be hard to know which credit card is best for you. There are so many different factors to consider, from annual fees to interest rates. It’s important to do your research and figure out what will work best for your individual needs. In this article, we’ll go over some of the things you should keep in mind when you’re choosing a credit card.
Annual Percentage Rate (APR)
APR is the annual percentage rate of interest that you’ll be charged on your credit card balance. If you carry a balance on your card from one month to the next, you’ll be charged interest on that amount. The APR is expressed as a percentage of the amount you owe, and it can be either fixed or variable.
A fixed APR means that the interest rate will remain the same for the life of the loan. A variable APR means that the interest rate can change over time. Most credit cards have variable APRs, so it’s important to read your cardholder agreement carefully to understand how your interest rate could change.
The APR is important to consider because it can have a big impact on the total cost of borrowing. For example, if you have a $1,000 balance on your credit card with a 20% APR, you’ll be charged $200 in interest each year. But if your APR is only 10%, you’ll pay $100 in interest each year. So, all other things being equal, a lower APR will save you money.
Before you can decide what the best credit card for beginners is, you need to know what a credit limit is and how it works. Your credit limit is the maximum amount of money that you can charge on your credit card in a given month. This limit is set by your credit card company and is based on your credit score and history. Most people have a credit limit of between $500 and $5,000.
Some people think that they should try to get a credit card with the highest limit possible. However, this is not always the best idea. If you have a high limit, you may be tempted to spend more money than you can afford to pay back. This can lead to debt and damaged credit. For this reason, it is often better to get a low-limit credit card with a lower interest rate. This way, you can use your card for emergencies without getting into debt.
Rewards are one of the most popular reasons to get a credit card. If used correctly, rewards can help offset the cost of your annual fee and can even put money back in your pocket. When deciding if a rewards credit card is right for you, consider how you spend money and what type of rewards you redeem most often.
Do you travel often? If so, you may want a credit card that offers rewards such as airline miles or hotel points. Do you dine out frequently? You may prefer a credit card that offers cash back on dining purchases. There are also general-purpose rewards cards that offer flexible redemption options, such as the ability to redeem points for cash back, gift cards, or merchandise.
Another factor to consider is the type of rewards program associated with the credit card. Some programs allow you to earn points or miles that can be redeemed for travel with any airline or hotel, while others are tied to a specific airline or hotel brand. There are also general-purpose rewards programs not tied to any particular brand that give you more flexibility in how you redeem your rewards.
The Best Credit Cards for Beginners
This is a difficult question to answer. It really depends on your individual financial situation and what you are looking for in a credit card. However, we will try to provide some general guidance. If you are new to credit cards, you may want to start with a secured credit card .
Capital One Platinum Credit Card
The Capital One Platinum Credit Card is a great choice for beginners because it offers a low APR and a higher than average credit limit. There is no annual fee and the late payment fee is waived for the first year. This card also offers a 0% intro APR on purchases and balance transfers for 15 months, which can help you save money on interest if you need to carry a balance.
Citi Secured Mastercard
The Citi® Secured Mastercard® is a great choice for beginners for several reasons. First, it requires a low minimum deposit of $49, $99, or $200, based on your creditworthiness. That means you can get started with as little as $49. Second, it offers a variable APR on purchases and cash advances of 23.24%. While that’s not the lowest APR available, it is pretty typical for secured cards.
Third, the Citi Secured Mastercard has no annual fee. That’s unusual for secured cards, which typically charge an annual fee to cover the costs of issuing and maintaining the card. And fourth, this card offers some basic benefits that can be helpful for beginners, including 24/7 online account management and fraud protection.
Discover it Secured Card
The Discover it Secured Card is the best credit card for beginners because it has no annual fee and gives you cash back on every purchase. You also get a free FICO score so you can track your progress.