A credit card with a low limit is a good place to start building credit while also minimizing the risk of overspending. Many banks offer cards designed specifically for students or young adults looking to establish credit. You can check with your preferred bank or look over the credit card products available on its website. An alternative is to get a store credit card through a favorite retailer.
Retail and Gas Cards
Many retailers and gas stations offer their own credit cards with low limits of around $300. These cards let you make modest purchases on credit, but prevent excessive impulse buys and keep you from building large balances. Some gas cards require you to pay the balance in full each month or you could have your borrowing privileges suspended until you do. By at least making the minimum monthly payments, you can build a history of on-time payments. The impact of gas charge cards on someone's credit rating isn't as strong as a revolving credit card, but they help.
Low-Limit Credit Card
The better option to quickly build credit is a low-limit credit card, according to the Experian website. These cards let you carry a balance from one month to the next instead of requiring monthly balance payoffs. The typical limits offered by card providers to a first-time user range from $300 to $3,000, according to a March 2011 Forbes article. A card with a $300 or $400 limit would allow you to make credit purchases while maintaining practical monthly payments.
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