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How to choose a credit card for no credit history

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Being new to credit is often seen as a struggle that only fresh college graduates face, but that is simply not the case. In fact, Federal Reserve Bank of Atlanta data released in May 2021 found that 21 percent of Americans have never had a credit card.

If you fall into this category, being approved for your first credit card may seem like an uphill battle. Many people applying for a first credit card can find themselves in a tricky situation where they are denied a specific card due to a lack of credit history, but they can only build that history if they are actually approved for a card.

If you are unsure about which credit card you should apply for, or your credit card application has been denied and you feel lost, know that you have options available.

What to consider before applying for your first credit card

Many entry-level cards will require a security deposit or may have additional restrictions that traditional rewards cards aren’t subject to. Before applying for your first credit card, here are a few important factors to consider.

Interest rate

APR (annual percentage rate) refers to the amount of interest you will be charged on your balance that remains unpaid at the end of the month and is typically between 12 percent and 24 percent. Those newer to credit cards may be charged a higher APR than veteran cardholders, but if you demonstrate good credit usage over time you will likely be eligible for a lower APR.

Annual fee

As the name suggests, an annual fee is the amount of money you pay each year to have a particular credit card. Generally speaking, the higher the fee, the bigger the perks. There are many great cards with no annual fee, or a low annual fee, which is likely your best bet if you are just starting out.

Security deposit

If you have never had a credit card, you may need to apply for a secured credit card to build your credit history. Secured credit cards require a security deposit, usually a few hundred dollars or less. This deposit will act as your line of credit with the card.

Best credit cards if you have no credit history

Capital One Platinum Credit Card

If you are looking for a credit card that can help you build your credit score without requiring a security deposit, the Capital One Platinum credit card could be a good option to consider. With no annual fee and the ability to get your credit line increased after six months of responsible usage, this card is a great way to build a credit history without having to worry about paying money out of pocket. Your initial credit line may be relatively low with this card—likely less than $500—but you can increase this as you build your credit profile.

Discover it® Secured Credit Card

The Discover it Secured credit card is unique in the category of credit building or “starter” credit cards—while it will require a deposit, it also offers cash back rewards. Most secured credit cards don’t offer rewards so this can be a particularly appealing offer for new cardholders. You can earn 2 percent back at gas stations and restaurants (up to $1,000 per quarter) and 1 percent back on all other purchases. Plus, Discover offers free FICO score monitoring and alerts on your Discover app, which makes managing and building your credit history less of a hassle.

Petal® 2 “Cash Back, No Fees” Visa® Credit Card

As the name suggests, the Petal® 2 “Cash Back, No Fees” credit card (issued by WebBank) is another entry-level card that offers rewards without requiring a deposit or high annual fee. Cardholders can earn 1 percent back on all purchases immediately, and up to 1.5 percent cash back on purchases after 12 months of consistent on-time payments. Depending on your credit profile, you may be eligible for a higher credit limit than offered on other entry-level cards with a limit ranging from $300 all the way up to $10,000.

Comparison chart

APR Security deposit Annual fee Rewards rate
Capital One Platinum Credit Card 26.99% variable APR N/A $0 No rewards but cardholders have access to a higher credit line after 6 months of on-time payments
Discover it Secured Credit Card 25.24% variable APR Up to $2,500 but can be lower if desired $0
  • 2% cash back at gas stations and restaurants (up to $1,000 in purchases per quarter)
  • 1% cash back on other purchases
  • Matches all your cash back in the first year
Petal 2 “Cash Back, No Fees” Visa Credit Card 15.24% – 29.24% variable APR N/A $0
  • 1% back on eligible purchases right away
  • Up to 1.5% back on purchases after 12 months of on-time payments
  • 2% – 10% back at select merchants

The bottom line

Picking your first credit card when you don’t have a credit history can feel like a daunting task. Fear of picking the wrong card or being denied a card can lead many people to decide not to apply for credit at all, but that only adds to a vicious cycle of needing access to credit but not having a sufficient credit history to be approved. If you choose carefully, there are many cards available that will help you build credit without falling into debt or being burdened with high fees.

Written by
Meredith Hoffman
Credit Cards Reporter
Meredith Hoffman is a personal finance writer covering credit card news and advice at Bankrate. She is originally from Columbia, S.C., and received her bachelor's degree from the Univ. of North Carolina at Wilmington. Before joining Bankrate in October 2019, Meredith worked as the news editor of Wilmington’s local newspaper, The Seahawk.
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