It used to be that the transition into adulthood meant a cross-country road trip, an epic adventure, or even that first “real” job. Today? Building credit is one of the essential activities of young adulthood, and some Millennials are looking for top credit cards to build credit. In truth, that’s probably a more sensible move.
If you delay or fall behind on building credit, it can be a pain when you’re looking to make a large purchase that you need credit for. In most cases, without appropriate credit (and sometimes even if you have credit), you need an authorized cosigner to join you on the debt.
Asking for someone to cosign on your debt is never a comfortable or encouraging conversation to start. The best way to avoid those conversations is to get a head start on building credit as soon as you can.
Still, acquiring credit young can be dangerous and create more significant problems in the future if you aren’t careful.
Understanding secured credit cards and student credit cards as the top credit cards to build credit
Banks and credit card companies often promote cards to kids entering college. College is the first time they will be living on their own, and they need some spending money. Many banks and credit card companies offer enticing deals for student credit cards.
Understand that they make these offers because students have a habit of spending. They go out and have fun with friends. They spend money on books. They want to go out to eat and have fun at parties. There is a lot for students to spend money on; thus, a good chance they will build some debt and pay back more than what they originally owed. Be careful not to get in over your head.
Secured cards are one of the safest ways to build your credit. A secured card works because you first give the bank or credit card company the amount of money that will be the balance for your card. Essentially, this works as collateral if you don’t pay your bills. You then have that balance to use as credit until you have a good enough record to acquire real credit.
A secured card is basically a way of loaning yourself money to prove to others that you are a reliable borrower.
Ways to use top credit cards to build credit
The best plan to build your credit reliably is to pay off your bill in full every single month. No matter how big or small your statement is, pay it off in full. Minimum payments are okay as long as you aren’t missing payments, but minimum payments can also get you into a lot of trouble because you end up carrying a balance that you’ll pay a lot of interest on. This is a fast way to get into more outstanding debt than you can manage.
The easiest way to make sure you can pay off your bills in full every month is never to use your card to buy something that you could not pay for immediately in cash. If you can’t buy it in cash, maybe you shouldn’t have it. Following this rule will give you the confidence to pay off your bill every month, keep your balance low, and build a strong credit history.
What is the main obstacle in building credit for you? Do you have any worries or concerns about how to use your credit? What have you found to be the top credit cards to build credit?