Credit cards can be a great way to build credit, but they aren’t for everyone. If you struggle with impulsive behavior, credit cards may not be a good option for you, and that’s ok! Try other types of accounts for credit building.
If you don’t have a credit score, or if you have a low credit score, a secured credit card may be a good option for you. To open a secured credit card, you need a deposit. This is usually at least $250. That deposit acts as your credit limit. So, if your deposit is $250, you can spend up to $250 on your credit card.
Many banks and credit unions offer secured credit cards. Check your bank or credit union first.
The best way to use a credit card to build credit is to use no more than 10-30% of your available credit. If your credit limit is $250, try not to put more than $75 on your card. Pay it off in full every month; that way, you don’t have to pay interest.
We recommend choosing one or two small, recurring expenses and putting them on your credit card, and then setting up automatic payments to pay it off in full every month.
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To Do: Explore options for a secured credit card through your bank or credit union.
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If you struggle with impulsive spending and/or know that credit cards are not right for you, look into credit builder loans instead.
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