Editorial Policy

No money, no credit history, no card?

Erica Sandberg

April 25, 2014

QHi Erica,

I don't make much money. Here's my question: How can I get a secured card with no money to my name? I borrow from my bank and I just want to be able to save. Even after I pay my bills, I still need cash for car repairs, and I don't have it. I just really need help managing my finances. Please help. –Monique

ADear Monique,

I feel your frustration. How can you get a credit card without an established credit history or money to offer as collateral? Most issuers will require one or the other.

Still, everyone has to start somewhere, and creditors want to put their products in responsible people's pockets. Therefore, many offer cards to consumers who have thin files — in other words, people like you.Ask Erica

You will be looking at three major card types: unsecured, secured and prepaid. Because you don't have enough spare cash for a secured account, concentrate on one that doesn't require a cash deposit. There are a few to choose from, so read the offers and apply for the one that makes the most sense for you.

The good news is that you do have an income. While it may be low (a subjective term), at least you're earning something. Any creditor will want to know that you have enough coming in to support the credit line they'll give you. Based on your income alone, you could be eligible for a credit card with a small charging limit.

Denied? Turn to the bank or credit union where you have your checking account. If you've been with them for a long time, they may trust you enough to give you one of their credit cards. Just don't apply for a large number of cards at once.

You bring up an important point, and that's how to effectively manage your finances. A credit card must never (ever!) be used to make up the difference between income and expenses. Doing so will only result in heaps of trouble.

Budgeting is a dreadful word to some, but I'd like you to redefine it into something powerful.

Consider a budget as a plan of action. With it, you're in control of every dollar that comes in and goes out of your life. That's exciting! Designing one needn't be complicated. Just list your bills for the month, project for periodic or annual bills, then subtract their total from your monthly paychecks. Eventually, you'll want to save for emergencies and enjoyment as well, but if there's really nothing left after taking care of the essentials, leave it off for now. That will take getting a larger paycheck, which you can work on later.

If you're in the red, make changes. Eliminate or reduce extraneous expenses until you at least come out even.

For the things you need to pay for every once in a while — such as car repairs — set up a separate savings account and add to it accordingly. If you can't do this, you should not get a credit card. You will be too tempted to charge the bill instead of paying cash.

And that leads me back to my initial warning: Do not use a credit card for things and services you cannot afford. You'll descend into debt, experience anxiety, ruin your credit rating, and possibly get into legal trouble. Charge only when you're sure you have the funds to send the entire balance by the due date. Follow this rule, and it won't be long before other card issuers will want your business.

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