Starter credit cards are designed for people with little or no credit history. If you’re new to using a credit card, you might be wondering whether it’s right for you. In this article, you will explore some of the pros and cons of starter cards which are credit cards for people with no credit.
Not suited for those not ready to use credit responsibly
Not every individual is an ideal candidate for a starter credit card. So, for example, if you’re not ready to use your credit responsibly, you might end up with more debt than you could handle. The best type of starter card is one that lets the user build their credit history while also building their financial responsibility and self-discipline.
If you really want to take the plunge into the world of credit cards, then it’s essential that you choose wisely so as not to create more problems than necessary.
Works only if you have no credit history
Like a debit or credit card, the starter credit card is a convenient way to make payments. Unlike your regular bank account debit card, however, this type of plastic is explicitly designed for those who do not yet have enough of a credit history to qualify for an unsecured line of credit.
If you’re beginning your journey in building and maintaining your own financial identity as an adult, then you must know how to use this plastic responsibly. In order to avoid any unnecessary fees and the potential damage done to your score—and ultimately making it rather difficult for you to obtain additional lines of credit—it’s best if you take some time now so that later down the road, there won’t be any surprises along the way!
You have to make all payments on time
With a starter credit card, you must make all your payments on time. If you don’t, the issuer will report a late payment to the credit bureaus, which could negatively impact your credit score. However, you should keep a watch on your total available credit value and how much it is being used at any given time — this could affect your ability to get approved for future purchases.
When using a starter credit card, you need to be able to afford the payments. If not, it’s possible that making minimum monthly payments won’t be enough for some people with limited income or high expenses due to other factors like rent or childcare costs.
As per financial advisors like SoFi, “Generally, starter credit cards don’t come with the best rates and terms, but when used to make purchases someone can afford to pay off each month, they can be a very helpful financial tool.”
Not everyone qualifies for a starter credit card
Not everyone can qualify for a starter credit card. In order to be eligible, you need to have no credit history and the ability to make payments on time, which many students don’t have. Additionally, suppose you do have any credit history that’s negative or late payments in the past few months. In that case, it’ll also disqualify you from being able to get approved for this type of account.
The starter credit card is a great way to help people build up their credit scores. But it isn’t right for everyone. If you don’t have any credit history or bad credit, this might be the option for you. Otherwise, there are other cards out there that could work better, depending on what your needs are.
