If you’re new here or have been reading for a bit, you’ve probably come across various credit card offers, news or at least heard about them.
With this article, we aim to educate those who are new to credit and have next to no credit history. Hence the title, starter cards.
So what are starter cards?
As the name indicates, these are cards that you establish your credit history with. These are going to be your first few credit cards that you build your score with. You keep your starter card for as long as you can because as time progresses, it ages and as your oldest account, it is a significant contributing factor to your credit score.
What is average age of credit?
It is the sum total of the age of all your credit cards (in months) divided by the number of cards you have.
For example, if you have three cards where the oldest is 1year, the second 6 months and the third 3 months, your average age of credit is 7 months.
Impact of closing my oldest account?
Now you have 6 months and 3 months worth of credit history which is 4.5 months.
Hence always keep your starter card(s) active as that is your building base.
So what cards should I consider?
Recommendation #5: Discover IT secured card
This is the BEST card to get if you don’t have a credit card or if you’re just starting out.
- 2% cash back at gas stations and restaurants.
- Unlimited 1% cash back on all other purchases.
- The dashboard also allows you to check your FICO for free.
- No annual fee.
- Credit limit as much as you deposit when opening the account.
- No sign-up bonus
Recommendation #4: Citi Double Cash Rewards Card
- 2% cash-back on everything (1% on purchase and 1% on paying the balance off).
- No annual fee.
- No sign-up bonus.
Recommendation #3: The Chase Freedom
- Sign-up bonus of $150 on spending $500 in the first three months.
- 5% cash back on revolving categories up to $1500.
- 1% cash back on everything else.
- Protection on purchases under $500 made within the past 120 days.
- No annual fee
- Not as good as the Citi Double Cash rewards card in the long term if you have a lot of spending.
Recommendation #2: Quick Silver Capital One
- $150 back after spending $500 in the first 5 months.
- 1.5% cash back on everything.
- No foreign transaction fees.
- None come to mind.
Recommendation #1: Bank of America Cash Rewards Card
- $200 back when you spend the first $500 on the card within the first 3 months.
- 3% back on gas stations.
- 2% back at grocery stores.
- 1% back on everything else.
- 10% bonus on these rewards when you redeem your cash back into a Bank of America checking or savings account.
Note: you need to keep a minimum of $1500 in a BoA checking account.
- Not that we can think of.
Reiterating, please do not spend outside of your everyday ordinary spends. As long as you keep spending as you ordinarily do, and pay off all dues on time, you can quickly build a good credit file.
These starter base cards will help you create good credit file so that you can apply for more premium cards with various travel benefits.
Closing those premium cards in the future wouldn’t affect your score as negatively as you’ve already built a strong credit base.