WalletHub’s Key Rating Components
Two-Year Cost: 35% – We assess the total cost associated with using each card for two years. This estimate takes into account annual fees along with the projected value of rewards. If the final calculation is negative, it means the rewards and benefits may outweigh the cost of keeping the card.
Fees: 17% – We evaluate all fees associated with each card, including annual fees, monthly fees, application processing fees, and any other charges that could affect affordability for someone starting to build credit.
Security Deposit and Credit Limit: 15% – We look at the upfront financial requirement needed to open each account and how the card’s credit limit is established. We consider the minimum security deposit required and whether the issuer provides opportunities for credit limit increases over time.
Rewards: 13% – We examine how useful and accessible the rewards program is for beginners. Preference is given to cards that offer straightforward rewards that are easy to earn and redeem without complicated requirements.
Editor’s Rating: 11% – Our editorial team rates each card based on how accessible it is for applicants with no credit history, its effectiveness in helping users build credit, and how it compares to other beginner-friendly credit cards.
User Reviews: 6% – We review feedback from cardholders to incorporate real-world experiences and overall satisfaction.
Credit Reporting: 3% – We give preference to cards that support credit building by reporting payment activity to all three major credit bureaus every month. Consistent reporting helps individuals with little or no credit history establish and improve their credit profile.
Some cards included here may follow a slightly modified scoring approach to account for differences in eligibility requirements, including those designed specifically for students or store cards.
How Two-Year Cost Is CalculatedTwo-year cost is used to approximate the monetary value of cards for better comparison and is calculated by combining annual and monthly membership fees over two years, adding any one-time fees or other fees (like balance transfer fees), adding any interest costs, and subtracting rewards. Negative amounts indicate savings. When fees or other terms are presented as a range, we use the midpoint for scoring purposes.
Rewards bonuses and credits have been taken into account for two-year cost calculations. However, bonuses applicable to only a very small portion of cardholders are not considered. For example, credits and bonuses awarded for spending or redeeming rewards through a company portal with non-co-branded cards have not been taken into account. Similarly, bonuses and credits related to spending with specific merchants using a non-co-branded card have not been taken into account (for example, if Card A offers credits with DoorDash, this feature would not be factored into calculations because it is hard to assess how many cardholders would use the benefit or exactly how much value they'd get from it).
Cardholder Spending Profiles
Given that different users have different goals and are likely to use their credit cards differently, we identified spending profiles that are representative of different users’ financial priorities and behaviors. For each cardholder type, we have assumed a specific amount of monthly spending by purchase type (e.g., groceries, gas, etc.), as well as an average balance, balance transfer amount, amount spent on large purchases and average monthly payment. Spending assumptions are based on Bureau of Labor Statistics data.
Sources
WalletHub actively maintains a database of 1,500+ credit card offers, from which we select the best starter credit cards for different applicants as well as derive market-wide takeaways and trends. The underlying data is compiled from credit card company websites or provided directly by the credit card issuers. We also leverage data from the Bureau of Labor Statistics to develop cardholder profiles, used to estimate cards’ potential savings.
