Ask Money

Advice on getting a credit card

Chris Farrell Apr 24, 2012

Question: I enjoy your program and I’m writing on behalf of a friend for some advice. My friend is 24 and a young mother. She has never had a credit card and she wants to build her credit. Her income is somewhat limited at the moment because she has a new baby and only works part-time, but she wants to be able to pay for small daily expenses with a card that she can pay off in full every month. She is not seeking a large credit line. Even $100 would be sufficient. Can you provide some advice on what kind of card and where to start for someone looking to build good credit? Should she try prepaid credit cards? Any advice would be most sincerely appreciated. Thank you so much for the program and your time and consideration. Esmeralda, Marlborough, MA

Answer: Thanks for listening. I wouldn’t advise your friend to get a prepaid credit card. The most important reason is that the activity on the card isn’t reported to the credit reporting bureaus. It won’t help her build up a credit history and a credit score. The prepaid credit cards — even the better ones — come with a lot of fees that add up over time. Basically, I’m not a fan.  

The first place I would check is with her bank or credit union. Odds are, she’s already tried and gotten nowhere. In that case, she could apply for an alternative card, such as a gas or department store card. These cards are typically easier to get than traditional credit cards. They come with high rates, but she’ll be fine as long as she sticks to her goal of only putting a small sum on it regularly and paying off the bill in full and on time.  Another avenue is to apply for a secured credit card. It’s a well-proven way of building up a good credit history and credit score. About two-thirds of banks offer secured credit cards.  

She’ll open up a special savings account at a bank or credit union. Her credit limit is essentially equal to or a bit less than the amount in the savings account. She should shop around since the fees and terms vary on secured credit cards. She can familiarize herself with the fees at and I would definitely check out credit unions.  

As she’ll see, secured credit cards come with higher fees than regular credit cards. However, after paying off bills on time for about a year, she should be able to switch to a traditional lower-fee traditional (unsecured) credit card. She should check before taking out any alternative credit card that her card usage is relayed to the main credit reporting bureaus.  

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