Credit Cards for People with No Credit History
Looking for credit cards for people with no credit history? You're in luck -- credit card companies are perfectly willing to take on customers with limited or no credit history. In fact, people with no credit history may be surprised to learn that they have an easier time of obtaining a credit card than people with poor credit. This has not always been the case. Until recently, credit cards for people with no credit history were almost always "secured cards" -- cards backed up by collateral, usually in the form of a savings account -- but with the dowturn in the economy, lenders are more likely to extend lines of credit to customers without credit history than to those with poor credit.
When looking for credit cards for people with no credit history, be sure to compare interest rates, annual fees, and any perks the card may offer. For instance, most credit cards aimed at customers without credit history have a very low annual fee -- somewhere between $20 and $30. Should you come across a card that charges a fee far outside this range, it is simply not worth it. One of the cards profiled below, the MTV Visa card from Capital One, offers a rewards program to its members -- not a common feature for credit cards for limited credit. If you're looking for perks like rewards and cashback, check out the MTV Visa card. In other words, the variety of credit cards for people with no credit history is so huge that you can tailor your credit card experience to your needs.
Capital One Classic Platinum for Young Adults
Most people who have no credit history are teenagers or young adults who simply haven't had the need to build credit. If you or your teenage child is headed off to college in the next few years, it would be a good idea to sign them up for this card from Capital One. Building a credit history will help them secure the private student loans they will no doubt need to cover the rising cost of education, and as an added bonus, teaching your kids the proper use of a credit card is the perfect way to teach them to be financially responsible. This card has everything you're looking for in a credit card for people with no credit history. The annual fee is a paltry $19, and there are no built-in "program fees" or "monthly fees" for use of the card. The fee to activate the card is another $19, meaning the card will cost less than $40 to set up. For the first six months, the cardholder will enjoy using their card interest fee -- but be careful, because after that initial period, the APR shoots up to 17.79% -- a relatively high number for a credit card, but much lower than other credit cards aimed at people with no credit history. Young adults will enjoy the "fun" aspect of designing their own card. They can upload their own personalized image onto the card -- a meaningless perk in terms of finances, but one that is attractive to the younger set. This card is a Platinum Mastercard, branded with the Mastercard logo, offering young adults the ability to shop anywhere Mastercard is accepted. Users of this card also enjoy Mastercard's Zero Liability program, meaning they aren't responsible for charges on a reported lost or stolen card. This is my "top pick" for credit cards for young adults looking to build a credit history.
Applied Bank Secured Visa
The benefit of opening a secured credit card is that you simply can't spend more than you can afford. A secured card is backed up by a "locked" savings account or other collateral account, meaning if the cardholder can't make a payment, the lender will simply draw the payment from the collateral account. With a super low 9.99% fixed APR, this secured Visa card from Applied Bank has one of the lowest interest rates I've seen in cards aimed at people with no credit history. Unlike prepaid debit cards, a secured credit card's activity can be reported to credit bureaus, and Applied Bank reports credit card activity on this secured Visa card to three major credit bureaus, making it easy to build a credit history fast. The annual fee on this card is a bit higher than other cards meant for credit history building, weighing in at $50 per year, but there are very few other fees associated with using this card. You will not be charged any monthly fees, as long as you make a minimum of 15 transactions per month, or sign up for free direct deposit of a paycheck or government benefit check. On the downside, the credit limit is tied directly to the amount the cardholder deposits in their "collateral account", with a minimum of $200 and a maximum of $5,000. If you're looking for a high limit credit card, this is not the card for you.
Capital One MTV Visa Card
Capital One seems to be the heavyweight in the world of credit cards for people with no credit history. This Visa card seems aimed at the young adult set -- between its MTV theme and the "rewards" program, older adults may not want to bother with this card. A standout feature of the Capital One MTV Visa card is that it comes with no annual fee. Cardholders will pay for this feature due to a very high 24.9% interest rate, but the lack of an annual fee is pretty much unique to this card. The rewards program that comes with the Capital One MTV Visa card is interesting -- cardholders earn "points" based on their spending, between 2 and 5 points per dollar spent depending on what it is spent on. These points can be turned in for rewards ranging from music and entertainment items, to charity donations and tickets to MTV sponsored events. As an incentive to keep your account in good standing, Visa will reward the cardholder with 25 free 'bonus points' for each month they make at least a minimum payment. Of course, if building credit is your goal, you should make a monthly payment above the minimum -- and the 25 point reward is as good incentive as any to stay in the black.
Hopefully, one of the above credit cards meets your needs. When you have limited or no credit history, it can be difficult or impossible to secure bank loans, purchase a car, or even rent an apartment. In order to build a credit history, you need to take on one of these credit cards for people with no credit history, make regular monthly payments (above the minimum), and only spend what you can afford. Regular monthly payments on a credit card, and a good amount of time with an open credit card account, will give you the credit history you're looking for.