Consumer Reports’ money experts say that even if you are able to get a credit card when you have little or no credit history, the cards are often a bad deal. They can have huge start-up costs, big maintenance fees, and giant interest rates.
Take the Matrix Card by Discover from Continental Finance. It has a $75 annual fee, plus a $12 monthly fee that kicks in after the first year. And the First Premier Bank Card has a super-high APR—a whopping 36 percent!
Consumer Reports says one of the best options for a first-time cardholder is to get a secured card. It will require a security deposit that’s generally equal to your credit limit. The Capital One Secured MasterCard is better than many. It has an annual fee of $29, and its APR is currently 22.9 percent. And it has a low late fee of no more than $19.
If you get a card and establish a good payment history for a year to a year and a half, you can then ask for another one with better terms. Consumer Reports says developing good habits with your first credit card can spare you a lifetime of financial grief. Make a point of paying off the balance every month. That way you don’t spend more than you can afford, and you won’t end up paying oodles of money in interest charges. And pay your card off on time to build a good credit history and avoid hefty late fees.