Credit cards can be scary.
You have heard the horror stories of how an aunt or uncle got absolutely decimated by credit cards.
Maybe you have a cousin that works on Wall Street or is some manager and makes jaw-dropping money. Yet they got swallowed whole by credit cards.
Or maybe you were like me and you were just a kid during the Great Recession. And you felt the intense pressure in the atmosphere about the very mention of credit cards. You knew, somehow, that they were a bane of existence.
Maybe not yours.
But they don’t have to turn into your bane.
So let’s make it easy and take a look at the top 5 best beginner credit cards.
Slaying the Credit Dragon
Credit cards are a tool.
Just like any other tool, they can harm you or help you.
You don’t go running around with a steak knife in your hand, do you? No, you don’t, because you recognize that the tool can be dangerous if wielded the wrong way. But yet you keep the steak knife around anyway.
Why?
Because it is useful. That’s why we have tools.
And that’s how you need to view credit cards – as a tool, not a monster. Though, yes, they are a different kind of financial tool than an IRA, 401k, checking account, etc.
But that’s also why we have different tools. We have hammers, knives, spoons, forks, shoes, etc. Some tools are safer or scarier than others.
The truly scary part of credit cards is their interest rates, often 20, 22, 25, 27%, or more!
For reference, the average government-funded student loan is 5%, and an auto loan is around 8%. That’s a monstrous interest rate.
But honestly, I have no idea what the interest rates are on any of my credit cards.
Do you know why?
Because I do the one simple trick to avoid the Monster Interest Rate – I pay my entire bill before it’s due.
But even that gets confusing because you can use it to pay for something, pay that off, then have that credit amount back and re-swipe again for even the same previous amount.
So it can be confusing but simply put – use it like a debit card.
Pay for something with credit, get some points and purchase protection, then boom pay it off from your bank account before it has a chance to accrue interest.
Quick Qualities of the Best Beginner Credit Cards
Just so you know going into the review, here are the qualities I am considering that make a credit card great for beginners:
- No Annual Fee
- No Credit Checks
- No Need for Previous Credit
- Secured Option
- Cashback
- Perks
These are the qualities you should consider yourself if you would like to research other credit cards as a beginner.
5. Chase Sapphire Preferred Card
Okay, honestly, this card is great, super valuable.
It can be even greater if you are ready to go all out on your first credit card – get something with a ton of value and have a great financial backing to hit the opening bonus and take advantage of it.
But there’s a reason it’s 5 on this list.
The biggest reason is that it has an annual fee of $95, which can be hard to justify if you don’t really know what you are paying for with a credit card.
You might need a bit of experience with other cards before you can recognize the value it holds and that $95 is a great deal.
But if you are a total beginner, that might not be the best idea.
You will also need good or great credit to get this card, where, if you’re in a credit hole or truly have no credit history, might be a bit hard to nigh impossible.
It also does not have a secured option, in case you or your family has been burned by credit cards before and want to learn how to use the fire of credit cards a little more slowly.
However, its perks are so outstanding that, again, if you are near the end stage of being a beginner or are financially ready or credit savvy enough to take on a great credit card, then this is an awesome beginner card.
For $95 you get 5x the amount of points on travel purchases through Chase’s special rewards portal, 2x points on all other travel, $50 on an annual hotel credit, 3x points on dining, 3x points on select streaming services and online grocery purchases, and 10% boosts every anniversary.
The sign-up bonus has recently been worth up to $750 in airfare or hotels for the past few years, and $600 if you want cash. That means by opening up this card and hitting their sign-up bonus alone, you get a couple of free plane rides or hotel nights that are basically only paid back in about 7 years (due to the annual fee).
Overall, great credit card for the experienced beginner or those prepared, but not for the absolute beginner.
4. OpenSky® Secured Visa® Credit Card
Which leads me to our next best beginner credit card.
This is a card that I had not heard of previously, but its uniqueness is great. This is probably the best card if you had horrible credit and needed to rebuild it. But this is still a good beginner credit card for those who have no credit history for a few reasons.
First of all, it has no credit check to apply. A lot of the time, simply checking for a credit card will pull a credit check and ding your credit for no reason. So it does kind of hurt a lot when you have no credit to speak of.
Second, as a secured card, it has a refundable deposit as low as $200. Which is plenty for you to get started and make it nearly impossible to overspend on your credit card.
A quick explanation of a secured credit card is that you supply a deposit, in this case, $200. Then that is your credit limit for your credit card. It gives the credit company some kind of collateral if you get faulty with your card and it makes it easier to access for beginners, those with no credit, and, as mentioned, those who need to rebuild their credit.
Third, they report to the three major credit bureaus – Equifax, Experian, and TransUnion – every month which helps you quickly create or rebuild your credit score.
My only real gripe with this card is that it has an annual fee of $35, which is something that is usually easily avoidable with other cards. But this is a great option if you have no other options or have had your credit decimated by yourself or other parties.
Additionally, it does not appear to have any cashback options available at all, which is a bummer.
3. Citi Double Cash® Card
Here at number three, we are getting into the more, dare I say, traditional beginner credit cards with the Citi Double Cash Card.
Simple step 1 – does this card have an annual fee?
No! It does not!
It also rarely is seen with some kind of sign-up bonus, so that’s a bit of a bummer.
However, its biggest perk and the entire basis of what it does is that you earn 2% cash back on purchases.
All purchases.
If that’s your only card, that’s a pretty fun thing to see. All you have to do is watch your cash back pile up and reduce your statement for free, which is what I usually do.
But not only that, you get 1% cash back when you buy something and 1% cash back when you pay for your purchases.
So, while it doesn’t have some bells and whistles that may appear for other credit cards, like a sign-up bonus, no credit check, no need for credit history, and a secured option – its value is being simple.
It does what it says it does, bring you double the cash back with no annual fee!
If you can get the card it’s a great almost standard beginner credit card to get a feel for what credit cards can be and what credit cards can do for you.
2. Chase Freedom Unlimited
This is another card I have considered getting myself, but I do have too many credit cards already.
Similar to the Citi Double Cash Card – it does a lot of things a standard, totally basic credit card should do. But compared to the Citi credit card, it does a couple of things just a bit better.
Like the best beginner credit cards, this card has no annual fee! That way you won’t have to worry about cost-analyzing if it’s worth it.
It does appear to do a credit check, like most cards do, and you more than likely need a credit history to obtain this credit card, but it’s worth it to give it a try if you are just starting out and want this card. You might even be able to check with an agent regarding pre-approval before you apply, if that worries you.
It also lacks a secure option for those who are worried about the power and leverage of a credit card and who might have a problem getting the card. But its perks really make up for everything.
Like most Chase cards seem to, this one usually has a sign-up bonus. The sign-up bonus right now is an extra 1.5% cash back, worth up to $300, and a 0% intro APR.
The general cash back rewards include 5% on travel if you book it through Chase Ultimate Rewards, which is the special portal I mentioned for the Chase Sapphire Preferred Card, 3% on dining at restaurants, takeout, and some delivery services, 3% on drugstore purchases, and 1.5% on everything else.
Extra perks include purchase protection (which is more or less available on most credit cards, this one just seems a bit advanced), extended warranty protection, fraud monitoring, free credit score services, identify restoration services, auto rental collision damage waiver, trip cancellation, and travel and emergency assistance services.
So yeah, it’s a lot of perks.
Besides the credit monitoring, probably the best is the access to Chase’s travel rewards portal. That portal provides a lot of future value once you have the ability to take advantage of all the point redemptions Chase offers for enjoying your life a bit and traveling around.
However, just because it holds a lot of future value, especially for traveling, doesn’t mean it’s not a great card right now.
All of the perks, the solid cash back, and no annual fee make it great for beginner credit cards, but the options and extra perks that can really expand your mind at what credit cards can do for you is super valuable to know, even if you don’t dip your feet into them.
1. Discover It® Secured Credit Card
Honestly, my bias with this card is simply that it’s my very first credit card ever and I still have it. I even recommend it to people I know in person if they need somewhere to start.
If you were like me and had no history of credit, and had parents with horrible credit, this is the card for you.
Secured credit cards are not that common, as they only make up 2/5 of this list. If you do find a secured card, they often are not that great.
But they are still the tool for someone with no credit to build some credit when there are not really other avenues. Credit is only really used for auto loans or mortgages and you’re not really going to get those when you’re 18 or in college.
Well, I hope you don’t.
Like the OpenSky® Secured Visa® Credit Card, this credit card is funded by a one-time payment and that is your credit limit. For this card, if you show you can handle the limit well for a few months, like up to a year, then you will even get that payment back. I started with $300, received it back after a few months, and now my credit limit is way more than that.
But here’s a quick review of the features of this card and why I’d pick it again:
- It’s a real credit card (it can be confusing, because you will probably be used to pre-funding debit cards, but those don’t help your credit, generally)
- Refundable deposit, which is your limit until you’ve shown good habits
- 2% cashback at gas stations and restaurants, 1% elsewhere which is decent, but not as extensive as the Chase Freedom Unlimited card
- Unlimited cash back match on the first year (Discover will pay you the cashback you got the first year)
- No credit score required to apply
- Free Fico Credit Score (which I still use, since it’s in a nice app)
- The app itself has a great user interface
- Good customer service experience
- And of course – No Annual Fee – the biggest mark of a great beginner credit card.
So That Was the Top 5 Best Beginner Credit Cards
So yes, credit cards can be scary, just as holding a knife can be scary.
You can use the knife to cut your bread or meat for you, or you could cut yourself with it. Whether for some purpose or by accident.
Credit cards are the same way, they are an exceptional tool to the point that, right now, I pay for just about everything on my credit cards.
That has problems of its own, which can be discussed at a later time, but there’s a value in using credit cards and keeping them in mind for your budget. Even if you come from a family that has been burned by them like I have.
There are probably a couple other great beginner credit cards out there, but these 5 are what I’d look into for the average person looking to start and not knowing anything or very little about how credit cards work.
So if it’s your first time getting a credit card, don’t be too scared of its reputation. In the right hands a tool can be used wisely and for good. But you won’t really know what that means without a bit of experience.
So if you’re ready, hop in.
Godspeed,
Dennis