Q: I am an 18-year-old with no credit history. I have read Curtis Arnold's book and am successfully paying my community college tuition on my own. Which card is best suited for me when I only plan on using my future card for gas purchases?
Congratulations on bootstrapping your education so far. Building solid financial habits at this stage of your life -- especially when you're facing pressure to go deep into debt -- can help you achieve far more in the long run. Focus your energy on finding tools that will help you manage your cash more conveniently, while reporting those positive habits to the major credit bureaus.
Since you're 18, you've got three years left before you can qualify for a student credit card in your own name. You can get a jump start on building a solid credit history by opening up a secured credit card with a trusted co-signer. This way, you'll enjoy the benefit of a credit line that shows up on your personal credit report each month without the danger that a co-signer might need to tap that credit. In the worst-case scenario, you can just cash out your security deposit and close the account.
In addition, check out one of the nearly-free prepaid debit cards from American Express. If you live or study near a Walmart location, the Bluebird card will let you use that big-box retailer like a bank branch. If you want a convenient way to zap money between friends and family using your smartphone, the Serve card can handle that. Although they resemble free checking accounts more than traditional debit cards, you'll only pay fees for repeated ATM transactions, especially outside their network. Meanwhile, an AmEx debit card gives you access to many of the company's strongest member benefits, like purchase protection and roadside assistance.
Prepaid debit cards don't report transaction histories to credit bureaus, even though they often bear the same logos as regular credit cards. However, AmEx officials have told shareholders and journalists that the company reviews usage patterns among debit-card holders to determine future eligibility for charge cards. American Express remains one of the strictest issuers on the market, but their program can give you a leg up on securing one of their credit cards for excellent credit when you're eligible.
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