What's the best Credit Card for Building Credit?
Well, to be honest, I hate credit cards, and I'm not paid to endorse any of them!
So today, I'm going to help you protect your credit repair clients by sharing the Three Best Credit Cards for building credit!
There are about 550 million open credit card accounts in the U.S. The average American has 3.8 credit cards with a credit limit of about $30,000, a balance over $5,000, and an interest rate slightly over 19%.
Credit cards have a bad reputation because of high-interest rates, hidden fees, and often shady practices. And everyone who works in credit repair knows that they cause people a lot of trouble.
But because credit cards are one of the biggest factors affecting credit scores, that makes them a necessary evil in our culture that's so dependent on credit. See my Holiday Debt episode for more information about that.
Credit Heroes work hard every day, cleaning up credit reports, but being successful in credit repair is more than just deleting and disputing. It's also about coaching, encouraging, and teaching your clients better financial habits!
HERE'S THE THING TO REMEMBER…
The number one way that credit card companies make money is from interest on credit card accounts and fees from late payments. The number two way credit card companies make money is through fees collected from merchants, meaning your transactions.
So basically, they make money every time you spend, and they make EVEN MORE when you spend too much, and you get penalties and higher fees when you miss a payment, and that, in turn, lowers your credit score, and then other companies can raise your fees.
And the whole system is designed to encourage you to overspend and to push you over that edge.
But that shouldn't surprise you. The goal of a credit card company, like all For-Profit businesses, is to make money. And the best way for them to make money is to get people to overuse their product and charge a ton of fees. That's why so many credit repair companies report that their clients' BIGGEST problem is credit card debt.
Credit cards are easy to apply for, they're addictive, and they're technically more secure than using a Debit Card. But If you close an account, your credit score goes down, and the Bureaus even recommend if someone's goal is to get or maintain a good credit score, they should have 2 to 3 active credit cards!
And then, they do that trick where they send you those blank checks. I used to love when those would come. I'd be able to pay my rent. But then I learned those were the biggest trap of all because it's like a cash advance, which brings the highest fees!
All this is why it's so important to understand the credit card system.
If you know what to watch out for and a few safe options to recommend, you'll be able to guide your clients to build and repair their credit faster!
HERE'S WHY THIS IS IMPORTANT…
According to the analysis site Answer the Public, three of the most common searches people make about credit cards are
- Credit Card for Bad Credit
- Credit Card to Build Credit
- What Credit Card Should I Get
Now, it's perfectly fine to avoid credit cards. You may not need them. Roughly 20% of American adults don't own any credit cards.
If your clients struggle with debt management, you may want to press them to avoid credit cards altogether.
I don't use credit cards myself. Don't get me wrong, I do have credit card accounts that I opened many years ago, but I never use them because they got me into so much trouble in the past.
But for those who want credit cards, need them, or already have them, it's your job as a Credit Hero to guide them to the safest options available.
HERE'S WHAT YOU NEED TO KNOW…
There's always risk involved when people use credit. But, if credit is going to be used, it needs to be used the right way, and different types of credit fit different personalities.
I hate credit cards. But they can be a tool to build and repair credit when used responsibly…
HERE ARE THE THREE BEST CREDIT CARDS FOR BUILDING CREDIT...
THE PETAL 1 "NO ANNUAL FEE" VISA CREDIT CARD
According to Forbes, Petal 1 is one of the best card options for people building credit and the best overall card for people with BAD CREDIT.
It was chosen because there was no security deposit required, no credit score required, and no annual fee. It provides 2% to 10% cash back with certain merchants, it has a reasonable $300 to $5,000 starting point credit limit, and people can earn a credit limit increase in 6 months.
THE CAPITAL ONE PLATINUM CREDIT CARD
According to Wallethub, the Capital One Platinum card is the best STARTER CREDIT CARD of 2022.
The card is intended for people with "fair" to "limited" credit. There are no annual or hidden fees, it includes fraud liability protection so customers won't be responsible for unauthorized charges, and after six months, customers will automatically be considered for a credit limit increase.
THE OPENSKY SECURED VISA CREDIT CARD
According to LendingTree, Opensky is the best credit card to BUILD CREDIT with NO CREDIT.
There's a $200 minimum deposit and a $35 annual fee, but it doesn't require a credit check or bank account approval. It reports your credit usage to the bureaus allowing virtually anyone to build their credit. They also claim that nearly half of OpenSky cardholders who make on-time payments improve their credit score by 30+ points in the first three months.
So if you need to establish credit and to build credit, I recommend these three cards.
Now, none of the cards I mentioned today are affiliated with me or CRC in any way.
Most people on the internet who recommend a credit card are doing that because they are getting paid by that credit card.
They're gonna drive you to a link where you'll pay higher fees, and then they're going to gauge you and take a lot of your money, and that's how that person gets paid.
So know that this is not the case here. There's no affiliate link. I do not get paid for promoting them. I'm recommending them because the offers are good, and I truly want to help people. The terms are accurate as of December 2022, and they may change.
MY FINAL POINT…
As always, no matter the recommendation, it's still important for people to match the type of credit to their personality. As a Credit Hero, you need to figure out which option fits the person before you recommend anything.
I may not like credit cards, but with responsible usage, these three cards can help your clients build their credit and achieve their financial dreams.
I'll end by saying…
If you don't already have a Credit Repair Cloud account, check it out. It's the software that most Credit Repair businesses in America run on. Just sign up for a 30-Day Free Trial at CreditRepairCloud.com/freetrial
And if you'd like to change lives and grow your own credit repair business, check out our Credit Hero Challenge!
It's an amazing program, and we've got another challenge starting in a few days, so grab your spot right now at CreditHeroChallenge.com!
Until next time, remember…
If you know your rights, you can fight back, and you can WIN! Keep fighting!
Keep giving knowledge away and keep changing lives!