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: 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!


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.


a question from a reader…

Q: Is credit card interest tax deductible?

A: Let’s be honest – the U.S. tax code is a messy nightmare and it’s not always obvious what’s deductible and what’s not. We all know mortgage interest can be deductible, but is credit card interest tax deductible too? Well unfortunately, the answer is usually no, but sometimes yes (I’ll discuss in a moment). However what’s shocking is that credit card interest payments were tax deductible in the past… then on Oct. 22, 1986 Reagan signed a bill that eliminated interest deductions for consumer loans, which included cars, credit cards, etc.

However here’s a possible exception for claiming credit card interest on taxes:

Qualified business expenses?

Do you work for yourself? Do you own a small company? If you have made interest payments on qualified business purchases, then you might be able to deduct the interest for those – check with a tax professional or your small business tax software for the answer.

When credit card interest is tax deductible, one of the problems is that some people are known to mingle both business and personal expenses on the same card. So how do you figure out which percentage of the interest payments correspond to solely your business expenses? Unfortunately that might be impossible to and then you won’t be able to write off any of the interest. That’s why it’s so important to have a credit card solely dedicated to business. Need one? Then check out our credit card reviews!

Q: My wife and I plan on taking a trip in a few months. I think I remember getting a mailing in the past for an American Express airline companion ticket and am interested in getting that for this trip. Which of their credit cards offer this?

A: You’re probably thinking of the Platinum charge card, which used to offer free companion airfare as a perk. However they stopped offering that benefit a few years ago, if I recall correctly 2007 was when they ended it.

However, there is an American Express companion ticket offer still included on one card. The Delta Reserve card gives cardmembers one free domestic companion ticket. It does have quite a few other useful benefits, like first checked bag flies free, complimentary access to Delta Skyclub lounge, etc.

The one drawback is the annual fee is $450. Yes, it seems pretty high and isn’t appropriate for everyone. But once you add up the value of the companion ticket and bonus miles, trying out the card for at least a year actually makes sense. To find out more check out our Delta Reserve card review which includes a sponsored signup offer.

So that’s the only American Express companion ticket offer available when it comes to their cards.

Q: Why is my credit score so low? I have used my credit responsibly so why isn’t my FICO score higher?

Are you someone that always pays your bills on time? Do you have little to no debt? Are you responsible with your credit cards but still have a low to average credit score? Well, there are some common misconceptions about how to obtain a high score. Here are three possible answers to your question of why is my credit score low?

Charging more isn’t always better
Credit utilization is the percentage of your available credit that you use during a billing cycle. For example, if your credit card had a $5,000 credit limit and your billing cycle closed with a $1,000 balance, that would equal 20% credit utilization on that account.

One component of your FICO credit score is based on credit utilization. Because the FICO formula is proprietary and confidential, no one knows what the ideal credit utilization number or range is. But we do know is that using too much of the available limit on your credit cards is bad, but using too little won’t be helpful either.

The consensus among credit experts is that it’s best to use no more than 25 to 30% of your credit limit on a card at any given time. But if there are no charges (a 0% credit utilization) that could contribute to a low score because that would mean you’re not using the account.

Carrying a balance isn’t necessarily beneficial
Many people assume that in order to obtain a high credit score, they need to carry debt on their credit cards… nothing could be further from the truth.

Each month your credit card reports to the bureaus; the information reported includes things like your credit limit, your balance, if payments were made on time, etc. But your balance can change day by day, so which day do they base the information on? Well, it’s almost always based on the day your monthly statement closes.

So let’s say at the start of your monthly billing cycle the balance was $0. If you made a $1,000 in charges during that cycle, that $1,000 is almost always what’s being reported to the bureaus (assuming you didn’t make any payments before the cycle closed). Therefore you can go ahead and pay that balance in full after the billing statement is generated and that $1,000 should still show up on your credit report.

Having multiple lines of credit is important
Do you only have a couple credit cards and wonder “Why is my credit score so low?” Well part of the answer may be because you have enough lines of credit. It’s important to have revolving lines of credit (credit cards) as well as installment loans (such as a mortgage or car loan). If you only have one type and not the other, that will impact your credit score.

Additionally, credit experts recommend having a few different types for each. For example, that might consist of a mortgage, car loan, and student loan under the installment loan category, and several different credit cards from different issuers under the revolving credit category.

Need another card? (sponsored)
If you’re interested in getting another credit card, there’s one from Discover we strongly recommend. Check out our review of the no annual fee Discover More card

Q: What is the best credit card for first time users?

A: So you’re looking to get your first credit card? Well good for you, because that is one of the most important steps of building credit. There are a lot of great credit card deals out there for first-time users, but there are also a lot of unethical companies that may give you a bad deal. For your first credit card, here’s what you should look for:

No annual fee
Honestly the only cards that should be charging an annual fee are premium credit cards as well as some for travelers. Since you probably wouldn’t qualify for those right now anyway, there really is no reason you should have to pay an annual fee. Therefore, insist on a no annual fee credit card. Even as a first time user, there are plenty that you should qualify for.

Stay away from store cards
Many first timers apply for store cards because they’re so easy to get, but these won’t benefit you much. First of all, unless they are associated with Visa/MasterCard, then you will only be able to use them at the given store. You would be better off going with a traditional card that can be used everywhere instead – therefore the best credit card for first time users will be one associated with Visa or MasterCard (Discover and AmEx are harder to qualify for, otherwise we’d recommend those too).

Pay attention to the fine print
Fortunately since the credit card reform act has gone into effect, it’s much harder for creditors to screw their customers. No longer can they give you ridiculously short grace periods (that’s the amount of time to pay before interest starts). Now they all have to give you at least 21 days from the date the billing cycle closes (in the US). That being said, you should still be aware of APRs, late fees, etc. before you apply which currently are not capped.

After you fill out your first time credit card application, follow this important tip…
It’s best to make a habit of only charging what you can afford to pay in full each month. As a first time user, the last thing you want to do is pile up a balance from the start. Not to mention, your APR will probably be fairly high as a first timer anyway, so it would not be smart to pay in full!

If you’ve been a longtime reader of Credit Card Forum (thanks for that, by the way!) you will know that the site’s design and features haven’t changed for a very long time. Yes, I know it’s looking a little bit dated these days. The reason we’ve been holding off on an overhaul is because we were waiting for this forum’s software to be updated. You see, Credit Card Forum runs on vBulletin and the last major release (version 3.0) was all the way back in 2004! Finally in December 2009, they released version 4.0… so now it’s time to start thinking about giving CCF a facelift, along with a few new features.

What’s planned?
For starters, the update will allow for a more aesthetically pleasing design. We aren’t planning anything fancy, but rather a more simple, cleaner layout. The new version of software will also allow us to incorporate features which weren’t possible in the past; third party widgets, enhanced content options, forum guest commenting, and more. One of those features, which I would love to get your feedback on, is an interactive map of the USA for credit cards. Let me explain…

It’s called a clickable flash map…
Basically, I was trying to think of the most user friendly way to collect and present certain credit card information, such as state-by-state debt and interest rate statistics. Coincidentally, my friend Chris just came out with his own flash USA map. What is that you ask? Well, it’s a flash-powered United States interactive map. Here’s a screenshot to help give you a better idea what I’m talking about:

I have a kindergarten skill level when it comes to Macromedia Flash, so I wasn’t sure if I would be able to tackle this alone. When Chris told me “no flash knowledge” was required for it, I was skeptical to say the least.  But I gave it a test drive this weekend and sure enough, he was not pulling my leg… this flash map lets me fully customize the content through the XML file.

Great, I now have a flash map platform I can handle… I can cross that off my to-do list. Now, it’s just a matter of deciding exactly what type of content will be displayed. This is where we need your help.

My idea…
I was thinking of collecting credit card data for each state and displaying it in the flash US map. This data could be obtained from one of the following sources:

Public Data: The Federal Reserve Bank regularly publishes figures on revolving debt, such as credit cards. However I would be more excited to use data from the 2010 census. A small percentage of households are receiving extended forms, which include questions about credit and debt. This source would almost certainly be the most accurate, since the sample pool is far larger than any other non-government poll.

Our Own Polls: If I’m feeling really adventurous (and Nicole, our assistant programmer, is too) then we may be able to put together our own poll; visitors would select the state they live in from the flash map and be taken to a very brief multiple choice survey. Once there, they would select ranges for their current credit card debt and interest rates. This data would be presented collectively; averages would be displayed under each state on the clickable flash map.

Your idea…
Would this be a feature you would like to see on Credit Card Forum? We would love to hear your questions, comments, and suggestions.