How can starter credit cards help build credit?

You're looking to build credit, but you've realized that most credit cards require that you already have a credit history — what to do? Well, you may be able to start building credit with a starter credit card. Starter credit cards are typically meant for people with little to no credit history looking to build a credit profile that may help secure future loans, such as an auto loan or mortgage.

Different types of starter credit cards

There are a few options for those looking to start building credit: secured credit cards, unsecured credit cards and student credit cards:

Secured credit cards

Although Chase does not offer secured credit cards, these cards typically require a security deposit that helps to inform your spending limit. The deposit serves as collateral for the lender. For example, if the required deposit is $100, your credit limit will usually be the same. Some lenders may convert the secured account into an unsecured account after you establish a reliable payment history.

Unsecured credit cards

An unsecured credit card is — as you may have guessed — the opposite of a secured credit card. An unsecured credit card isn't backed by collateral. Instead, you, as the cardmember, agree to pay back the amount that is charged to the card. Each month, you'll be issued a statement reflecting both the total balance and the minimum due. Paying your bills on time indicates you are responsible with credit and can help to build your credit score.

Student credit cards

Student credit cards are another type of starter card. They're meant for college students with little to no credit, and sometimes come with rewards or points programs. Similar to unsecured credit cards, student credit cards don't typically require a security deposit, although some may come with fees or require some level of credit history.

How to build credit with a starter credit card

Here are five things to keep in mind that could help you build credit with a starter credit card:

• Keep spending below your credit limit by maintaining a low credit utilization ratio.
• Pay your statement balance, or the minimum payment, on or before the due date.
• Set up automatic payments.
• Monitor your monthly statements to identify spending patterns.
• Access your free credit report to ensure there are no inaccuracies.

In summary

Starter credit cards can be a helpful option for those with little to no credit profile. There are typically three main types — secured, unsecured and student credit cards — available to help people start building a credit profile. If you manage your card responsibly, you may be able to build a credit profile that can help you secure future loans and lines of credit.