What better time to make your credit card debut than during the holiday season, when you don’t want to carry cash around to shop? Plus, a credit card will give you a bit of time to pay back your purchases if needed.
If you’re new to credit or have struggled with it in the recent past, however, you might be concerned about getting approved for a new credit card. While it’s true that many of the most popular credit cards require a high credit score, there are some cards specifically for people with poor or no credit.
“A credit card is the easiest product to get, other than a payday loan,” says credit expert John Ulzheimer, formerly of Equifax and FICO. In fact, there are several types of credit cards that accept applicants with lower credit scores, including secured cards, student cards, retail credit cards and some alternative card products.
Of course, with a lower score, you will likely get a lower credit limit and a higher interest rate to start. And it is important that you use the card responsibly — and go easy on that holiday shopping — if your goal is to gradually build up your credit score.
[Read: Best Credit Cards.]
Choosing the Best Easy Approval Credit Card
There are several types of credit cards that accept applicants with no credit history or a low score: student cards, secured cards, store cards and alternative cards. Each comes with benefits and drawbacks.
When choosing a credit card known for easy approval, also consider terms including fees, whether your payments are reported to credit bureaus, the card’s interest rate and rewards it offers.
To Get Approved as a Student
Student credit cards can offer great rewards-earning potential, but they are only available to students. These cards typically also come with higher interest rates and relatively low credit limits.
Best Student Card: Capital One SavorOne Student Cash Rewards Credit Card
The Capital One SavorOne Student Cash Rewards Credit Card is an excellent choice if you’re looking for a card with a lower barrier to entry that also offers great rewards potential. You’ll need to be a student to qualify, but you’ll build your score while earning 3% cash back on dining, entertainment, select streaming services and at grocery stores. All other purchases earn 1% cash back. (See Rates & Fees)
While those bonus categories are not directly tied to holiday gifts, they can come in handy for holiday break get-togethers. There is no annual fee with this card.
The SavorOne Student Cash Rewards Credit Card is advertised for students at eligible institutions with fair credit. If you are worried about your approval odds, Capital One offers a preapproval tool that allows you to check your eligibility without a hard credit check.
Another great option for students is the Discover it® Student Cash Back card. A big draw of this card is the introductory bonus: Discover will match all the cash back you’ve earned at the end of the first year. You’ll earn cash back at 5% (up to a quarterly maximum) on quarterly bonus categories that you’ll need to activate and 1% on everything else.
Just in time for the holidays, the bonus category through Dec. 31, 2024, is Amazon.com and Target. The cash back is applicable up to $1,500 in purchases, but don’t forget to activate it. (See Rates & Fees)
The Discover it Student Cash Back card will take a bit more effort to maximize, but you’ll also get a cash back match on anything you earn in your first year as a cardholder.
[Read: Best Cash Back Credit Cards.]
To Get Approved With No Credit
Alternative credit cards are designed for building credit. These cards could offer you a better credit limit or educational tools to help you improve your score. However, you’re unlikely to earn rewards.
Best Alternative Card: OpenSky Secured Visa Credit Card
An alternative credit card is one that offers approval to applicants with no or low credit scores because approval is based on other factors. The OpenSky® Secured Visa® Credit Card is a great example, as the issuer does not perform a credit check to approve you for the card.
However, the OpenSky Secured Visa will still report your on-time payments to all three credit bureaus, allowing you to build your credit score.
On the downside, you’ll have to pay a $35 annual fee as well as a security deposit between $200 and $3,000, which matches your credit limit. With good payment behavior, you may be eligible for an upgrade to the unsecured version of the card and/or a credit limit increase after six months.
If you need an easy-approval card because you have a poor credit history or a habit of accruing debt, another alternative card to try is the Upgrade Cash Rewards Visa®. This card requires a credit check like other credit cards, but it is available to those with fair credit, and it has a unique payment structure that can help you manage debt repayments and avoid getting caught in a cycle of minimum payments.
Like with a personal loan, the Upgrade card will charge you an installment payment every month over a set term. You might also have the opportunity to earn 1.5% cash back on your purchases as you make payments.
To Get Approved With Bad Credit
Secured credit cards offer the lowest barrier to entry of cards for those with bad credit. This is because they require a security deposit to open, which serves as collateral and lowers the risk the issuer takes by offering you credit. The amount you put down is typically equal to your credit limit.
Best Secured Card: Capital One Quicksilver Secured Cash Rewards Credit Card
The Capital One Quicksilver Secured Cash Rewards Credit Card stands out among secured cards by offering users the opportunity to earn cash back. You can earn 1.5% cash back on all purchases — a competitive rate for any cash back card. The annual percentage rate is high, but that is not unusual for a secured card. (See Rates & Fees)
The drawback is that you’ll need to put down a minimum $200 security deposit, for which you’ll only receive a $200 initial credit limit, limiting your spending power. Still, Capital One will consider you for a higher credit limit after six months of on-time payments. So as long as you use your card responsibly, you can continue to improve your score.
An alternative choice is the Discover it® Secured Credit Card. It doesn’t require a credit history to qualify, and you’ll still get the opportunity to earn 2% cash back on up to $1,000 in purchases per quarter at gas stations and restaurants and 1% cash back on everything else. You’ll have to put down a minimum security deposit of $200 for a $200 credit line, but Discover will review your account after at least seven months of on-time payments for transition to an unsecured card. (See Rates & Fees)
[Read: Best Credit Cards for Bad Credit.]
To Get Approved With Good Credit
Store credit cards are more accessible to those with low credit scores, but they can still offer good rewards if you frequent the retailer. That said, they tend to have high interest rates, and their rewards potential is typically limited to purchases at the store. You may qualify for benefits like discounts or access to exclusive sales. But to get value out of the card, you’ll need to spend money at the store regularly.
Cards for big-box stores like Target and Walmart might be ideal for holiday shopping since they can provide discounts and help you earn rewards on future purchases.
Best Store Card for Building Credit: Amazon Secured Card
The Amazon Secured Card is ideal if you’re an Amazon Prime holiday shopper since it helps you build credit and earn rewards on Amazon purchases — 2% back. The security deposit requirement is unique in that it lets you put up cash in $50 increments, between $100 and your approval amount (which maxes out at $1,000). Also nice is that the standard purchase APR is 10%.
After 12 months, you may be able to upgrade to the unsecured Amazon Store Card and activate features including 5% rewards on Amazon purchases. The APR will shoot up once you do so, however.
If you’re in the good credit range, another store card to consider for your holiday shopping needs is the Kohl’s Credit Card. Earn 7.5% rewards with every purchase, and new cardholders will earn a 35% discount on a single transaction in store or online when using the card within 14 days of approval.
The card has no annual fee. Watch out for redemption periods for using the rewards you’ve earned. In general, once your points convert to Kohl’s Cash, you’ll have just 30 days to use it.
The information for the Kohl’s Credit Card has been collected independently by U.S. News and the card is not currently available on the site. The information has not been reviewed or provided by the card issuer and it is accurate as of the date posted.
Credit Card Approval Requirements
Credit card companies are required by the CARD Act of 2009 to use certain approval factors to make sure you can pay back what you charge. When you apply for a credit card, the issuer will consider:
— Your income. The issuer will look at your income to find out whether you can afford minimum monthly payments on your new card, along with payments on any debts you may have.
— Your credit score. Your credit score indicates your past performance with credit products. The higher your score, the better, but a bad or nonexistent score won’t necessarily exclude you from all credit cards.
A credit card issuer may also look at your job history, your housing status and other factors when making credit decisions.
“Excessive inquiries, late payments, high credit line utilization and increasing balances are all critical factors in preventing ‘easy approvals’ for consumers,” says Daniel Walsh, a banking executive formerly with Barclays, TD Bank and Bank of America. “Generally speaking, credit-hungry consumers are higher risk, so it is important you understand how you may appear to a lender by using free credit monitoring services before you apply.”
You probably won’t have great odds of approval with an issuer if you’ve discharged a debt with that issuer, Ulzheimer adds.
Using Credit Cards Responsibly for the Holidays
The best advice if you are looking to be responsible with credit cards this holiday season is to set a spending limit for an amount that you can easily pay in full when your statement arrives in January, says Ulzheimer. “That way these sky high-interest rates are irrelevant to your holiday shopping,” he adds.
Using a credit card is a big responsibility, so make sure you are ready to make your payments on time before you start swiping for holiday doorbusters.
More from U.S. News
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What Affects Your Credit Score?
Best Credit Cards for Easy Approval This Holiday Season originally appeared on usnews.com
Update 10/14/24: The story was previously published at an earlier date and has been updated with new information.
