Starter credit cards are necessary because consumers need a way to prove that they’re responsible enough to handle more robust financial products, such as a substantial home loan or a high line of credit.
Starter credit cards offer the kind of low-risk environment in which unproven consumers can show what they’ve got without the potential losses being too high for banks. They tend to have modest credit limits, modest rewards, modest fees, and modest interest rates, but they do report usage information to the major credit bureaus on a monthly basis and therefore provide an exceptionally cost-effective means by which to build credit.
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