Elevate Yourself to a Prime Credit Card

Simple Tips That Will Show You the Way to Better Credit Cards

By Stephen Mazeika

When trying to decide on what type of credit card to open up, a sub-prime card is not always the first that comes to mind for many consumers. Although these cards typically carry higher annual fees and rates with lower credit limits, they are still a great way for consumers to start improving their credit histories, whether that means repairing damaged credit scores or opening up a first account.

Millions of people in the U.S. qualify for these cards, and experts say it’s time that more folks took advantage of this opportunity when it comes to repairing credit and getting back on the road to prime credit card opportunities.

"Low-limit credit cards are a great way to get in the credit game,” says Steve Bucci, president of the Money Management International Financial Education Foundation and author of "Credit Repair Kit for Dummies." "If you're new to credit and have no history, you're going to build it very quickly -- if you take some precautions."

Sub-prime lenders can offer ticket to success

Most lenders typically will offer customers deemed ‘high-risk’ with cards whose limits are typically between $250-500 with an APR of 20%. Paying off the balances of these cards in full every month oftentimes is the path to building a healthier credit score, as 35% of low limit (sub-prime) card users improved their scores in just two years.

Even more encouraging, more than around 60% of this group earned a credit boost with scores that increased by over 40 points, according to a 2008 study done by the Citizens for Equal Access to Credit nonprofit group. Once credit history is repaired by sound credit decisions, the proverbial training wheels are ready to come off. At this point, people with bad credit histories may have the ability to apply and qualify for a prime credit card.

Prime credit cards from issuers such as Capital One, Discover, Chase, and Citi come with lower annual rates, little to no fees, and offer valuable rewards from airlines miles to cash in your pocket. Qualifying for these cards is half the battle- view ways that you can upgrade to a prime card below:

The 9 step path to a prime card

1. Pay the full balance every month

2. Use it...wisely

Even if it serves as the snack budget for the kids or your morning coffee here and there, as long as you use the card in some kind of capacity you’ll begin to establish better credit.

3. Before accepting the card, know the limits of how much you can charge

"Start with an understanding of how much discretionary income you have to spend," Steve Bucci says. "These cards don't give you more money to blow every month."

4. Try not to exceed 50% of your limit

This will help keep your rates and fees down, and keep your score rising.

5. Automatic bill payment can help

Setting up one or more fixed bill payments as the sole purpose of the card initially will greatly improve your credit score, especially if you can resist temptation to go out spending with it.

6. Keep the card out of your wallet

Nothing is more tempting than having that shiny plastic staring you in the face every time you open your wallet. This is the best way to keep your conscience happy…and your bills at bay.

7. Pay the card automatically online

This is an option with most cards. You can link it up to a bank account and pay it automatically before the due date; easy way to better credit and higher limits. Even better, paying bi-weekly when most people get their paychecks can be an easy way to break the overall monthly bill up into more manageable numbers.

8. Don’t ever trust others with your card

Best friends, family, and spouses are all people that should have their own cards, not yours. "You want to be in full control and never have any surprises. If you want someone else to have use of a credit card, have them get their own,” says Don Davis, branch manager for HighTechLending mortgage brokerage.

9. Avoid ‘high-risk’ spending

Gambling is the best example of this, as recent reports have revealed that credit card companies are taking notice of this spending activity, and may peg you as a ‘high-risk’ customer; a title that reflects negatively on your rates and fees.