Q: I’m an adult but have never had a need to use credit. I paid for my car in full and use cash, checks and debit to pay for everything. Someday I would like to buy a place and know I need to build up my credit score to do that. What are the best unsecured credit cards for people with no credit history such as myself?

A: There are many Americans out there in the exact same situation as you. I would first like to say that you’re actually not in a bad position – having no credit history is like having a blank slate. That is far better than having a blemished credit history! Because you have an untarnished credit history, it usually is much faster to build up than someone that is trying to repair their credit.

So that brings us to the question, what is the best credit card for people with no credit history? Well, unfortunately your choices will be limited starting out. Here’s what you should expect:

Low starting credit limit: Since you are just starting out, naturally it shouldn’t be surprising that your credit limit will be on the low side – perhaps something around $500 to $700 to start out with if you’re approved for an unsecured card. However if you go with a secured card (that means putting up a security deposit) you can likely get a limit that’s higher – usually a credit line that matches the amount of your security deposit.

Possible annual fee: If you’re getting a secured credit card, some financial institutions may charge you an annual fee. However after you’ve had the card for 9 to 12 months and used it responsibly, then you will have a little bit of a history established and you can try to apply for an unsecured card with no annual fee from a different issuer. So although you might be paying an annual fee, you don’t have to stick with that card forever.

Here’s a couple different ways you can get started:

Getting a credit card through your bank or credit union
Do you have a longstanding relationship with a bank or credit union? For example, is there a bank that you’ve had a checking and/or savings account with for a while now? If so, this can be a great place to get your first credit card. It’s best to do this in person – walk in and meet with a banker there. Explain your situation and that you have no credit history and want your first credit card.

When going this route, many times your chances for approval of a card (albeit a basic one) will be better, because you have a relationship with that bank. Another benefit is that local banks seem to be less likely to charge an annual fee for a secured card.

Getting a credit card online geared towards those with no credit history
There are a number of financial institutions that specialize in credit cards for people with no credit history and those that need to repair their credit history. The best companies charge reasonable fees for these types of cards.

One issuer that we highly recommend is Orchard Bank. This site actually has an advertising relationship with their company because we like to recommend their cards so much. Their application process is pretty unique – basically you supply your information then they tell you the highest level card(s) you are approved for: secured, standard, gold, or platinum. So it’s a great way to make sure you are getting the best card possible.

Q: When checking out today at their store I was asked if I wanted to fill out a Pottery Barn credit card application. I don’t like feeling pressured, so I took the pamphlet home with me. It looks like it has good rewards! Would you recommend this credit card?

A: Pottery Barn is an excellent store to pick up home furnishings. While they make great stuff, unfortunately it’s rather pricey… so any sort of rewards program would definitely be nice!

In a nutshell here is the Pottery Barn credit card rewards program:

• For every $250 spent at their stores, you get a $25 rewards certificate that can be redeemed via store, catalog, or website purchase at Pottery Barn, Pottery Barn Kids, and PBteen.
• The reward certificates are issued with your monthly statement and expire 180 days from the date they were issued.
• Reward certificates cannot be sold or transferred. If they are lost or stolen they will not be replaced.

So by getting $25 in rewards for every $250 spent, you are basically getting 10% back on your purchases. This is definitely one of the better rewards programs I’ve seen for a store credit card! There’s no annual fee, which is also a major plus.

Are there any drawbacks?
Unfortunately this card is not associated with any major payment network (like Visa, MasterCard, AmEx, or Discover) and that means it can only be used for purchases at Pottery Barn stores. The APR on the Pottery Barn card is extremely high – 19.99% to 24.99% at the time of this review. Therefore this would definitely be a bad card to ever carry a balance on.

Verdict?
There are no negative Pottery Barn credit card reviews on our forum, nor have I seen any negative reviews elsewhere for this card. If you find yourself spending a lot on queen duvet covers, euro shams, or any of the thousands of other home furnishings they sell, then it may not be a bad idea to apply for a Pottery Barn credit card. However if you ever carry a balance, then it may be best to avoid this card.

Other great ways to get rewards?
While you’re at it, you should also take a look at your main credit card… how much in rewards does it give you? Check out our list of the best cash back credit cards so you can save the most amount of money everywhere you shop, because hopefully Pottery Barn isn’t the only place you spend your money :p

The Choice Privileges credit card used to be offered by Bank of America, but it was discontinued in 2009. A lot of people complained about the pitiful rewards on this hotel credit card, so I was not the least bit surprised to see it axed. However then in July 2010 – much to my surprise – they decided to come back out with the Choice Privilege Visa, but this time it’s issued by Barclays. Is it any better than the original? Let’s find out?

First, let’s take a look at which hotels are included in the Choice Privileges card reward program:

• Comfort Inn, Comfort Suites, Quality Inn, Sleep In, Clarion, Cambria Suites, MainStay Suites, Suburban, Roadway Inn, Ascend Collection

In a nutshell, it’s quite a wide selection of discount/lower end hotels. In my opinion, this is a plus. When I’m traveling and literally just want a cheap place to sleep, I often go for a lower end hotel myself. So in my opinion the brand offering on the Choice Privileges credit card is good.

Next, let’s take a look at the rewards program on the Chase Privileges Visa:

• On purchases they give 2 points per $1 spent
• On spending at Choice Privileges hotels, I found the adverting a bit misleading in my opinion. One of their bullet points was “Earn 15 points per eligible $1 spent at over 4,200 Choice Privileges locations” which sounded great, but then I read the fine print…  the Choice Privileges credit card only earns you 5 of those 15 points. The rest are given through the Choice Privileges membership program (a free membership program that is separate from the credit card). So in actuality, it appears the credit card in itself is only earning you 5 points per dollar spent at their hotels.

(on a related note, I think it would be more clear if they added the words “up to” in-front of that “15 points per eligible $1” bullet point, because after reading the fine print, Econo Lodge, Rodeway Inn, Suburban Extended Stay, and MainStay suites only earn 5 points in the Choice Privileges membership program, so that’s 10 points total if the credit card is also used, not 15).

Sounds good so far, but how much are the points actually worth?
After I read that the Chase Privileges credit cards give 2 points per dollar on normal spending and 5 points on their hotels, I was actually quite impressed. But did these points follow the standard formula where 1 point equals $0.01 in value?

Well I consulted several sources – both through them directly as well as reviews on FlyerTalk, etc – to see how much they are worth when you redeem them… or in other words, how many points do you need to get a free night (and how does that compare if you were just paying normally). As it turns out, reportedly these points are only worth about 0.6 cents to 1.0 cents a piece. This was a huge disappointment.

Verdict?
While conducting my Choice Privileges Visa credit card review, I was quite enthusiastic about it until I got to the end and discovered that reportedly these points only equal out to be a rebate of approximately 1% or less. If that’s the case, then in my opinion this credit card is not worthwhile at all.

Better Options
There are some great hotel cards on the market that not only give fantastic rewards, but also some pretty lucrative signup bonuses. Check out CreditCardForum’s sponsored listing of the top hotel rewards credit cards.

Ever since the credit crunch of ’08, the use of debit cards (over credit cards) has skyrocketed. Unfortunately most of them don’t give rewards, but the Bank of America US Airways debit card is one exception. But is it worth it? Let’s find out…

Here are the basics about the card:

• The card operates over the Visa payment network
• You receive 1 mile per $2 spent on the card
• On purchases from US Airways (i.e. airfare, etc) you get 1 mile per $1 spent
• There are no miles given on ATM transactions, cash-back at the register, or for tax payments made with the card
• You are charged a $30.00 annual fee
• I have seen a signup bonus advertised for the US Airways debit card for quite some time where they give 3,000. However if you value each mile at 1 cent that equals out to be a $30 value (the same as the annual fee). So basically I just look at it as a wash.

Verdict?
The idea of getting rewards on your debit card is a great concept, unfortunately there are none on the market that give decent rewards. If you review what the US Airways debit card actually gives you and compare that to credit cards, you will see that you would only be earning a fraction of that. Even the most basic credit cards these days seem to give you at least 1 mile per dollar spent. With this BOA debit card you are only getting 1/2 a Dividend mile per dollar on normal spending. Then when you take into account that there’s an annual fee, it’s really hard to find any logic in getting the Bank of America US Airways debit card.

A better option?
There are credit cards on the market which give up to 2 miles per dollar spent and those rewards can be applied towards the purchase of a ticket on any airline. Going this route (and paying your balance in full each month so there is no interest charged) is really the best way to rake up free travel. CreditCardForum maintains a sponsored listing of the best travel rewards credit cards which is constantly updated with the best signup offers. Check it out.

Q: I’ll be traveling to Beijing in a few weeks. Which credit cards will I be able to use there?

A: Over the past decade, the usage and acceptance of credit cards has surged, especially in major cities like Beijing, Shanghai, and Hong Kong. You shouldn’t run into any problems at major hotels, department stores, and upscale restaurants. However just like in America, there will be some mom and pop stores that don’t accept credit cards. In rural areas outside the major cities, credit card acceptance will be to a lesser degree.

When using credit cards in China, the most common are Visa and MasterCard. However American Express and Discover are also widely accepted in the larger cities, especially since Discover acquired Diners Club processing network a few years ago (which is widely used in the urban areas of China).

Of course it is important to also have the local currency, the Yuan, place places that don’t accept plastic. Also, keep in mind you will be charged a foreign transaction fee of 1 to 3% by your credit card company. However from my experience, that is a small price to pay for peace of mind. I’ve heard so many horror stories of overseas rental car companies and hotels charging for fictitious damage after leaving, so having the fraud protection by your credit card is a must. Check out our best travel rewards credit cards to learn more.

Get the most from Discover Cash Back Bonus rewards & partners. Here’s how the program works and what you need to know about recent changes to the Discover Cash Back Bonus program.

How does Discover Cash Back Bonus work?
Discover Cash Back Bonus is the popular credit card rewards program. With their most popular card, More, you get 5% cash back bonus in rotating categories and up to 1% cash back bonus on everything else. Furthermore, you can also get a 5% to 20% cash back bonus with online shopping done through the ShopDiscover portal for cardmembers (hundreds of stores are part of the network). This accumulated Cashback Bonus you earn on your spending can then be redeemed in a number of ways…

When it comes time to redeem your rewards, you have a few options

• Get a credit to your Discover credit card account (at face value, i.e. $50 statement credit will use up $50 in cash back bonus)
• Get a direct deposit to your bank account (also at face value)
• Donate your cash back balance to charity (at face value)
• Get a Discover gift card with free shipping and no fees (at face value)

So those options are all at face value (where $1 in cash back bonus equals $1 towards the reward) but there are a couple ways to increase what you get in return:

• In July 2010 the Discover Cash Back Bonus rewards program added merchandise as a redemption option. Upon viewing the selection in my account, it looks like they have several hundred products currently available – electronics, fashion, toys, kitchen… you name it, they have it. With some of these products, it looks like you can get more bang for your buck (amount of Cashback Bonus it costs is less than the price in the store).
• Last by certainly not least, the most popular option is to redeem your Cashback Bonus for partner gift cards. There are over 200 companies participating and the face value of the gift card is more than the amount of Cashback Bonus it will cost you. For example, you only need to use $20 of your rewards to get a $25 Staples gift card, $20 for $40 Mrs. Fields Cookies gift card, etc.

The Secret To Maximizing Your Cashback Bonus
For starters, take advantage of the 5% categories as much as possible. When it comes time to redeem your accumulated rewards, statement credits and direct deposits are only face value so skip those. The partner gift cards will almost always give you the most bang for your buck. At the very least, you’re almost always getting a 25% bump ($25 gift card for $20 in rewards) or an 11% bump ($45 gift card for $50). Especially being that there are a number of offers that give double value.

What’s The Best Card For Discover Cash Back Bonus?
The Discover More gives you up to 5% in various categories and 1% everywhere else. Check out our Discover More card review for a special signup offer!

Q: Is there an American Express for fair credit scores? I know Amex is a lot pickier than other credit cards and my credit is only fair because I have a couple past blemishes. Do you think there’s any chance of me getting approved for an American Express card?

A: Thanks for your email Julie. Indeed, American Express is known to arguably be the most stringent credit card issuer out there. This is even more true today, now that we are recovering from the credit crunch of ’08-’09. If you have fair credit, here are my tips for trying to get an American Express:

Be in good standing with American Express: What I mean by this is, if you’ve ever burned American Express in the past and defaulted on a debt with them, it will be extremely hard to get approved for card from them again. So if you’ve never been their customer, that’s totally fine. But if you’ve ever had a charge off with them in the past, it’s highly unlikely you would get a second chance with them.

Apply for a charge card, not a credit card: With a charge card, you have to pay your balance in full each month. With a credit card, you only have to make the minimum payment. For this reason, charge cards are generally considered to be less risky for the issuer, since the most the customer could ever default on would be about one month of charges. For this reason, often times charge cards seem to be easier to get approved for. So the best American Express for fair credit will most likely be a charge card.

Don’t go for the gold: If you’re trying to get an American Express with fair credit, you need to be realistic in your expectations. I already said go for a charge card, but which one? Well a Gold or Platinum won’t be your cup of tea right now.

Among the charge / credit card reviews on our site, it definitely sounds as if their new Zync card is the easiest to get approved for. We actually advertise the card on our site and have a detailed review you can read about the American Express Zync card. Good luck!


The Lexus credit card (officially called the Lexus Pursuits Visa) is a card geared towards those whom drive their vehicles.  It’s not a credit card you normally see advertised or hear much about, so I decided to do some research and do my own Lexus Pursuits Visa review.

What type of card is it?
The Lexus credit card is issued by Lexus Financial Savings Bank. It’s a Visa Signature card, which isn’t necessarily a good thing. Why? Because these types of cards have “no pre-set spending limit.” Instead, purchases are approved or disapproved on a case by case basis.

That may sound nice, but many claim this can cause problems since there isn’t a set credit limit being reported. Please note this problem is in no way specific to the Lexus credit card, but rather all Signature cards, regardless of issuer. Here’s the problem one forum poster reportedly claims to have with their Signature card from a different issuer:

“Here’s the problem: when I run my Equifax credit report, it lists my Visa Signature credit limit as $0. I am told this is because this is an “access line” account with a credit limit that can be exceeded without penalty. So, when Equifax calculates my debt to credit ratio, it’s extremely high since the credit limit on this card represents most of my credit. And, voila, my FICO score plummets.”

For this type of Visa from other issuers, forum posters have claimed to have no amount reported for the credit limit (so it’s blank) or their highest monthly balance shown for the credit limit. If that’s the case, the credit utilization number (the percentage of credit you use) could be affected.

What are the rewards?
The Lexus Pursuits Visa card does offer some respectable rewards:

• Regular spending earns 1.5 points per dollar spent.
• Spending at participating Lexus dealers earns 5 points per dollar spent.

The points can be redeemed for spending at participating Lexus dealers (parts, accessories, service, put towards buying a new Lexus, etc) and also for travel rewards.

What does it say in the fine print?

Participating Dealers: Lexus credit card rewards can only be redeemed at participating dealers in the continental U.S. and Alaska. This concerns me, because I would hate to have to drive hours away to find a “participating” dealer if there weren’t any nearby.

Reward Caps: The fine print says that for spending outside of participating Lexus dealers, you can only earn up to 7,500 points per billing cycle (that’s $5,000 in spending). So if you’re a big spender, keep this in mind.

Fee for Travel Rewards Program: If you want to redeem your points for travel rewards, you will have to pay an annual fee for enrolling in the “Travel Rewards Program.” I don’t know how much that costs, because I couldn’t find the fee listed anywhere.

Below-Average Travel Point Conversion: If you do use your Lexus credit card Visa points for travel, it doesn’t appear the conversion is favorable… every 1 cent in value requires 1.5 points (so a $250 plane ticket costs you 37,500 points).

High Interest Rate: At the time of my Lexus Pursuits Visa review, the APR on purchases was 15.99%. It’s tied to the prime rate, so when that goes up, so will your rate. This interest rate is definitely on the high side in my opinion.

Verdict?
I won’t be filling out a Lexus credit card application as long as it’s a Signature card. Hopefully some day they will change that. I also don’t like the fact that there are caps on the amount of points you can earn.  So for now I think I’ll be sticking with my 5% gas credit cards instead.

After weeks of partisan bickering, the Senate finally voted this afternoon 60 to 39 to pass Wall Street reform. Officially deemed the Restoring American Financial Stability Act of 2010, it is now headed to Obama’s desk, which he said will be signed next week. Despite the bloated size of 2,319 pages, some feel the bill leaves us with more questions than answers.

Almost everyone agrees that reform is needed, but many question whether this watered-down version addresses the problems… or just creates new ones. For example, the bill remains silent on Fannie Mae and Freddie Mac. Derivatives and hedge funds get to continue their wild West ways. Twelve new regulatory agencies will be created, but almost nothing will be done to fix the 115 current federal and state financial regulatory agencies (only one of them will be consolidated). In a nutshell, the bill leaves us with a regulatory bureaucracy that’s even more bloated than before – countless agencies with overlapping responsibility, all trying to tip toe around each other to enforce extremely vague laws. Meanwhile, the financial “nuclear weapons” like derivatives will remain unregulated.

So what does the Wall Street reform mean for credit cards? Well, it’s unclear since the new rules and regulations that stem from this bill are TBD, but here are a few things we do know…

• Consumer Financial Protection Bureau – This new agency will be part of the Federal Reserve. Its responsibilities set forth in the bill are vague, but it appears this new body will govern consumer financial products;  mortgages, brokers, credit cards, and everything in between.
• Credit scores – Currently, consumers can obtain their credit report for free once per year from each of the three major credit bureaus – Experian, Equifax, and TransUnion – through annualcreditreport.com. Eventually these companies will also have to provide free credit scores, too.
• Swipe Fees – Merchants pay a small fee for credit card and debit card transactions. It is expected that that these fees may be capped by the CFPB. While some people are quick to criticize these fees, it’s important to realize that they are what make reward and cash back credit cards possible. They also cover the cost of fraud and cardholder benefits. Lastly, study after study has shown that card payments help merchants because the customers buy more than they would if paying cash.

If the reform is implemented properly, it will benefit credit card holders. However, the vague wording of the bill leaves much open for interpretation. Just as under-regulation is bad, so is over-regulation. The last thing we want to see is responsible cardholders subsidizing the risky cardholders, paying for their mistakes. Only time will tell if this reform takes us in the right direction.

Q: What are the best credit cards for young adults?

A: Have you ever heard an older person rant that credit cards for young adults shouldn’t be aloud?  Of course you have… we all know at least one person who feels that way.

However often times the real reason they feel that way is because they used credit cards irresponsibly as a young adult, so they assume you will too. However the reality is that it’s completely unfair to stereotype all younger Americans the same way. In fact, there are tons of younger people that are more financially responsible than their parents!

The bottom line is that establishing and building credit is an important step. It needs to happen sooner or later, so if you have the self-restraint to control your spending, there’s nothing wrong with starting with a credit card as a young adult.

What to look for in a card:

Less-Strict Approval: Since you have a short credit history, you’ll be limited in the number of cards you will actually qualify for. Fortunately for you, banks are more inclined to take the risk of someone with little to no credit history, than they are with someone that has a blemished credit history.

When it comes to getting approved, the best credit cards for young adults are usually student cards (if you’re a student) or an entry-level “regular” credit card.

Rewards: Young or old, we all deserve rewards on our spending. While it’s true most student cards are cheap when it comes to rewards, there are a couple that offer generous programs. In fact, one of Discover’s student cards has the same cashback program that’s found on their standard card.

Benefits: Depending on your lifestyle, benefits are something else to consider.

Annual Fee: Generally a no annual fee card is best, unless you want the premium benefits offered on a fee-based card.
Interest Rate: It’s strongly suggested to not carry a balance, however if you do, make sure you pay attention to the interest rate.

The Best Credit Cards For Young Adults (sponsored)
Which ones does Credit Card Forum think are best? Here are the top two…

Discover Student Card
This card is ideal for college students because it has no annual fee and offers up to 5% cash back (the best rewards program out there). To learn more check out our Discover More card review

Zync by American Express
This happens to be a charge card – that means your bill has to be paid in full each month. As an American Express, it offers premium benefits and rewards you won’t find on any other card. For those who feel they may be tempted to get into debt, this is the perfect choice because you won’t be tempted to spend more than you can pay. According to user reviews, students and young adults seem to have great odds for getting approved. Check out our American Express Zync Card review to find out the details.