Really just posting for a convenient source of information I know is directly applicable to me. I am about to get a secured credit card from Discover, as I turned 18 ~6 months ago and would like to start building credit for my future (dad has bad credit, which has really taught me how crucial it is). I’m going to be starting college in the spring and currently have a job working part-time at a restaurant making roughly $1000 a month. An initial question is should I deposit the minimum $200 or should I increase that? I have a little less than $1000 available to me right now, but obviously, I don’t want to spend it all on my deposit if it won’t gain me anything meaningful, though I know I will be getting it back. From what I have read online, I would be using it essentially as a debit card (I have good spending habits), not going over 30% of my total available credit and making absolute sure I pay off the balance in its entirety before each billing cycle which I presume is monthly.
First, read the automod response about utilization. It is a myth, overblown, and unimportant on non-application months—it doesn’t build credit.
Second, if you have no personal credit history, opt for unsecured cards first. Secured cards should be a last resort.
College student: Capital One Savor Students, Discover IT Students, or BofA CCR Students.
Non-college: Regular Discover IT, Chase Freedom Rise, or your debit card bank.
Secured cards should be your last resort: U.S. Bank or Discover IT.
For both Capital One and Discover, use the pre-approval tool on their respective website to gauge your approval odds.
Lastly, above all else, establish the habit of following the golden rule of any CC: always pay off your statement balance (monthly bill) in full before the due date, every month. Pay your CC once a month by paying off that bill in full before the due date. Toggle on autopay for statement balance, should you fail to manually pay (life happens).
@Wade
Great advice, I second this!!! Unsecured is definitely available and doable.
@Wade
Good advice, I didn’t get accepted for the unsecured Discover card which is why I was looking at the secured one (it was recommended through the pre-approval), but I will try the Chase options and look into what my bank might have to offer. And yes, now I am seeing the 30% rule is rather useless for my situation.
@Toryn
Indeed. If you end up with a secured card, put in whatever you’re comfortable with; that should be based on your monthly spending.
I don’t think the amount of your deposit has anything to do with how it affects your credit. How much you should put down depends on how you intend to use it. $200 isn’t going to be enough to buy books. But it should be fine if you just want to grab some Taco Bell every once in a while.
It’s not really worth trying to min-max utilization when you’re new. A single pizza would be like 12% of your credit line. Just use it and pay the statement balance off by the due date every month.
Do a Chase Freedom Rise instead. Then you won’t need the deposit.
Pay the bill on time each month and your credit will always be fine enough.
I detected that your post may be about utilization and its impact on credit score. Please read the info below:
Ignore the 10/20/30 utilization %. It’s only applicable when you need to apply for a new line of credit, 1-2 months out.
Utilization is supposed to fluctuate, can be easily manipulated, and holds no memory. It doesn’t build credit—think of it as a finishing touch when you need to optimize your score.
Feel free to safely and organically use 100% of your credit limit within a month and let whatever utilization report, provided you pay off your statement balance in full before the due date. Every month. Every time.
For more info, please read this post:
- Putting the “30% rule” myth regarding revolving utilization to rest
- Credit Card Basics - Utilization
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I started with the Capital One secured card; they upgraded me to platinum within a year, going from a $500 limit to $1500.
I also feel you can totally apply for a Discover IT Students card, make sure it’s the STUDENT and not the regular, and get approved (not secured). All my credit cards I was approved for at 18 were unsecured, and I was given $500-$1000 each. Also, whenever I was denied credit, I wrote to the underwriters asking for a reconsideration. I asked them to please give me credit as if companies like yours ‘add their name’ don’t give me a chance then how would I build credit? Ask them for even $500 to start your creditworthiness with their company. And you will see they WILL approve you; they may give you $250, but it’s unsecured and you start building credit. I did this and never was told NO.
That is a good attitude, young man! I’ve never had a secured CC but I would guess if you are as responsible as you say, I would recommend just putting the minimum. Always pay on time (minimum to full; I like full) and don’t buy what you can’t pay cash immediately. The CC is for convenience, protection, and rewards!! Good luck!!