Credit Builder Credit Cards
Our favourite for February
Great Credit Builder Credit Card
Barclaycard Initial Credit Card
- Helps build or establish a credit history
- Barclaycard Freedom Rewards
- Initially low, easy to handle credit limits
- Suggested minimum income only £10,000
- Rapid decision, real-time acceptance
Representative APR 29.9%
Also consider
Helps establish a credit rating
Capital One Classic Credit Card
- Helps build or establish a credit history
- Email alerts to help you stay in control
- Low, easy to handle credit limits
- Available even if you’ve had CCJ’s
- Rapid decision, real-time acceptance
Representative APR 34.9%
Credit Builder Credit Cards – a relatively new concept and a bit of an oxymoron! Credit cards for people looking to build a credit rating.
If you’ve never established a credit history for whatever reason, or have had minor issues with your credit payments in the past, credit builder cards used wisely can be your stepping stone back to the most competitive and market leading offers.
Credit builder cards work by giving you a small amount of credit to see how you handle it. If you manage it well, and keep within the Terms and Conditions, there’s every chance you’ll be offered a higher credit limit, maybe even a better interest rate, and also over time your credit rating will gradually improve.
Cards are listed with the lowest interest cards or best overall packages at the top. If you’re new to Credit Builder Credit Cards, read our Pro’s and Con’s Guide below the comparison table.
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Capital One Classic Credit Card | For those wanting to build or establish a credit rating | 3% | 34.9% APR |
Easy to manage credit limits Will help rebuild credit rating For people with poor credit history
High APR No promotional balance transfer rate No promotional purchases rate |
Aqua Credit Card | Credit builder card for people with zero or poor credit history | 3% | 35.9% APR |
For those refused credit elsewhere Up to £2,200 credit limit Flexible payment dates High APR No promotional balance transfer rate No promotional purchases rate |
Barclaycard Initial Credit Card | Barclaycard Freedom rewards 1% of value of purchases | 2.5% | 29.9% APR |
Will help build your credit profile For people with limited credit history Ideal for people new to credit Barclaycard Freedom Rewards Not for those with a bad credit history |
Barclaycard Gold Credit Card | 0% on balance transfers until September 2012 with low BT fee of 2.5% | 2.5% | 19.9% APR |
Available to people with average credit history Low 2.5% balance transfer fee Barclaycard Freedom Rewards Contactless Payment Above average APR |
Vanquis Visa Credit Card | Poor credit credit card, helps rebuild your credit history | N/A | 39.9% APR |
Dynamic card for those with bad credit Easy to manage initial credit limits Limit review every 4 months Choice of funky colours High interest rates |
CashPlus Gold Prepaid MasterCard Credit Card | Top prepaid card, cash-back & comes with Euro card | Prepaid | Prepaid |
CashBuilder feature to build credit rating Purchase Protection Cash back and rewards Shop onlineCredit Builder Credit Cards Guide
The recent credit crunch, high numbers of small business failures and ever more intricate credit card products have lead to a complex market for people applying for new credit cards.
The UK credit card industry doesn’t want to be seen to be offering a two tier credit card market. However the arrival of risk based pricing and the tightening of lending criteria for new credit card applications means some people who would have been accepted for the market leading deals 4 years ago now probably won’t be.
Credit builder credit cards are aimed at these people, and these cards if used correctly offer a springboard back into prime credit card products.
The main credit builder credit cards trade the offer of a much steeper interest rate (APR) in return for a low initial credit limit and a more relaxed lending criteria meaning its easier to get accepted if you don’t have positive credit track record.
Who are credit builder cards aimed at?
Really anybody with either a below average credit rating or no track record of credit. This could include:-
- Self-employed people without 3 years solid accounts
- People who’ve recently moved to the UK
- Those on a low, irregular or un-provable income
- People who’ve recently moved house and aren’t yet on the Electoral Roll
- People who’ve had 1 or 2 minor (now rectified) issues with other credit accounts
The credit builder cards market is divided into two distinct styles of offering:-
Credit builder cards that offer a line of credit
These cards do actually offer a line of credit but initial credit limits will be very low. Expect something in the region of £150 – £200, and very few other frills or benefits.
Expect also very close management of the facility from the card issuer, particularly in the first 6 months – things like regular phone calls to check you’re handling the credit OK and ensuring you have everything in hand to make the monthly payment on time.
Some consumers might find this a little intrusive but it’s all geared towards you building your credit rating and establishing a positive credit track record. Expect also higher monthly minimum payments as a percentage over the overall balance.
The good news is that if you manage this initial low credit limit well, make payments on the due dates and use the card within the Terms and Conditions its likely the card issuer will improve their deal to you, this can include:-
- Less regular phone calls, scrutiny will continue but will be less intrusive!
- Reviews of your credit limit and potential increases if required
- An improvement in the interest rate applied to your card account
Note that its unlikely you’ll be accepted for any credit card that offers a line of credit if:-
- You have 1 or more unsatisfied County Court Judgements (CCJ’s) registered against you
- You have 2 or more credit defaults in the last 3 years
- You’ve been declared bankrupt in the last 2 years even if you’re now discharged
- You have more than 1 satisfied Country Court Judgement in the last 6 years
If this is you, don’t worry you have another option…
Credit builder cards that don’t offer a line of credit
The most innovative idea of all in this sector is a type of hybrid prepaid credit card that offers to report continuous reliable payment of its monthly card fee as a positive payment record to the credit reference agencies.
The key advantages of prepaid cards is there’s no credit check – previous credit problems, CCJ’s or defaults, don’t stop you getting a card.
CashPlus Mastercard’s Credit Builder scheme. This starts off as a prepaid only credit card, if you use that within its terms and conditions, you can then apply for a CreditBuilder loan which effectively lends you the card maintenance fee for a year and then takes it back again.
Providing you then pay your card maintenance fee on time every month, this builds a trail of positive payment information for the credit reference agencies, the bed rock of a good credit rating.
The BlueSky Credit Card’s “Credit Booster” option is a similar kind of arrangement, but just reports your payment history if you keep paying the card monthly fee on time every month for a year. You have to select this option at outset although it can be added at any time in the future via their online account management facilty.
The only disadvantage of these schemes is they send you no reminders and because the money doesn’t automatically get debited from your bank account, if you forget to manually make a payment on time, this will count negatively against your credit history which obviously isn’t the intended outcome.
