If you’re ready to use your first credit card, it’s commendable to do your research before accepting the first offer you receive. Credit cards are different. Conditions and benefits also vary by entry credit card. Here’s everything you need to know to choose the right card for your situation.
How to do credit card for the first time
Before you start your application, make sure you have a solid understanding of the basics of the loan. You should know how credit card interest rates work (and how to avoid paying them), as well as how credit scores work and why they are so important.
Once you get used to your first card, it’s time to weigh your options. If you’re new to credit, you probably won’t be able to use most credit cards because the issuer doesn’t have the data to assess your credit risk. However, you can access your first credit card account in a number of ways.
Here’s what you need to know about getting a credit card for the first time:
Become an authorized user
A great way to get your feet wet is to become an authorized user of someone else’s credit card account. You have access to the account, but the primary cardholder is responsible for the payment. This is a good option if you are under 18. Credit card issuers cannot offer you their products until you are 18 years old, but many card issuers allow cardholders to add minors as authorized users.
If your parents add you to one of their credit cards, their credit history will appear on your credit report, helping you gain valuable credit quickly. One caveat though: By piggybacking on someone else’s account, you’re relying on their timely payments to boost your score. If your parents (or whoever you ask) aren’t always responsible for the credit card, your name on their account could do more harm than good to your score.
You don’t even have to hold the card or use anything in your name – as long as your name is on the account, you are an authorized user. However, it can also be a good opportunity to practice being a responsible cardholder. Talk to your parents about the money they plan to spend on you each month, then pay them each month and explain how much you spend. This can help you get used to paying by credit card every month.
Get a Starter Credit Card
If you are over 18, you do not need to ask your guardian for help if you do not want to. But as mentioned earlier, if you have limited or no credit history, credit card issuers cannot verify your level of responsibility for your debt. So they can only offer you their “safe” option, which may not be too exciting. But these cards are the gateway to better credit and better credit card products.
These options include business credit cards, student credit cards, secured credit cards, and credit cards designed for borrowers with little or no credit. Note, however, that some credit cards with bad credit do not offer favorable terms. For example, it doesn’t make sense to pay an annual fee for a card that doesn’t offer any rewards, especially if it’s a secured card (i.e. you paid a deposit to claim it).
Determining the cardholder’s primary interest
Even after you’ve determined the type of credit card you think is best for you, it’s a good idea to compare the different options in that category. All credit card companies offer different offers to their cardholders, so it’s worth shopping around until you find some options that work best for you.
For example, if you love to travel, you should find a credit card that offers great travel rewards and perks like lounge access and hotel upgrades. If you’re an avid traveler, you also don’t want to be stuck with a credit card that charges fees for foreign transactions. If you’re not a big traveler, the daily cardholder benefit may be more valuable.
When browsing for credit cards, consider which rewards are best for you. Do you want a credit card with cash back or do you want to collect points and miles? Would you like to save on interest with a 0% APR introductory period, or would you like to receive a generous welcome bonus? What about cell phone insurance, travel accident insurance, or primary insurance for a rental car? The right credit card can really help you make money when you spend. So think carefully about what is best for you.
How to use your credit card wisely
Once you have a credit card, you should start developing good credit habits. Here, you can learn how to use your credit card wisely.
Don’t charge for things you can’t afford
Using a credit card to make big purchases is a great way to earn a lot of rewards quickly, but if you know you can afford to pay your bills at the end to cover the month.
The balance on your credit card can result in very expensive interest payments, causing you to buy more than you’re willing to pay. If you need to borrow money for a large expense that you know you won’t be able to repay right now, it may be worth considering a set of personal loans, which may have a much lower interest rate amortization schedule.
Don’t balance without a plan
There are times when you may think it’s worth paying interest and fees to have a short-term balance on your card. If you must balance, it’s important that you only plan to pay off your debt before it increases and becomes unmanageable.
Track expenses throughout the month
It’s easy to swipe your credit card at a store or enter a number when you pay online, but it’s also easy to forget what you’ve bought with your credit card throughout the month.
Track your spending throughout the month so you don’t face unexpected bills. You can do this manually in a notebook or spreadsheet, or use an app designed to track expenses. Most credit card companies and banks have apps linked to your account so you can easily check your spending. But stepping old school with pen and paper works just as well.
Best Credit Cards for Beginners
There are many credit cards out there for people with no good results (or no results at all). Here are some notable options:
Platinum Secured Credit Card from Capital One
The Capital One Platinum Secured Credit Card is an excellent credit building option, whether you are new to lending or rebuilding after a credit error. It’s secured, so it’s easy to get regardless of your credit status. You pay the required deposit (up to $200) and get a line of credit ($200 or more). After six months of on-time payments, Capital One will automatically review and possibly increase your credit limit. It is good for your credit score if you keep your spending at the same level. Once you have established an on-time payment history, you can upgrade to one of the issuer’s rewards cards.
Reward rate: none
Welcome Offer: None
Annual fee: $0
Regular APR: 26.99% variable
Capital One Platinum Credit Card
Alternatively, you can apply for the Capital One Platinum Credit Card, which is similar to a secured card but does not require a deposit. This is designed for people with limited credit history, and if you are new to credit, there is a good chance that you will be approved.
Reward rate: none
Welcome Offer: None
Annual fee: $0
Regular APR: 26.99% variable
Discover it Secured Credit Card
Another great one to look at is the Discover it® Secured Credit Card. This is unicorn insurance earns rewards – 2% cash back at restaurants and gas stations (up to $1,000 in total spending per quarter, then 1%) and 1% on everything else – and no annual fee. Plus, thanks to Discover’s famous Cashback Match, the issuer doubles all the cash you earn in the first year as a cardholder.
Rewards rate: Earn 2% cash back on up to $1,000 in gas stations and restaurants every quarter, then 1% and unlimited 1% cash back on all other purchases.
Welcome Offer: Discover double all cashback earned at the end of your first year.
Annual fee: $0
Balance Transfer Introduction APR: 10.99% for six months
Regular APR: 25.24% variable
Discover it Student Cash Back
If you’re studying for a degree, you might get a better deal from Discover in the form of the Discover it® Student Cash Back. This card is available to students and when activated, earns 5% cash back on quarterly purchases of up to $1,500 in various rotating categories, followed by 1%. You get 1% on all other purchases. It’s basically a student version of the popular Discover it® Cash Back.
Reward Rate: Earn 5% cash back on rotating categories enabled each quarter (up to $1,500 on combined purchases, then 1%) and 1% on all other purchases.
Welcome Offer: Discover double all cashback earned at the end of your first year.
Annual fee: $0
Introductory APR: 0% for six months
Balance Transfer Introduction APR: 10.99% for six months
Conventional APR: 15.24% to 24.24% variable
Petal 2 “Cash Back, No Fees” Visa
The Petal® 2 Cash Back, No Fees Visa® Credit Card (issued by WebBank) is great for young people because it teaches you responsibility by rewarding timely payments. You get 1% cash back on your purchases, which increases to 1.5% after you make 12 monthly payments on time. Just make sure you pay off this card every month or your APR will be high.
Rewards rate: 1% cash back on eligible purchases or up to 1.5% cash back on eligible purchases, plus 2% to 10% cash back at select retailers when you pay 12 times on time
Welcome Offer: None
Annual fee: $0
Conventional APR: 15.24% to 29.24% variable
These aren’t the only good options to consider. You can go to CardMatch to view credit card offers tailored to your credit profile. This tool only shows offers that you have a good chance of getting approved, so it’s a good place to start.
Final result
Getting your first credit is exciting, but make sure you choose from the best starter cards. Find someone who offers great terms and lets you get the most out of your credit. Once the card is in your wallet, develop good credit habits. You will thank yourself for it in the years to come.
So learn more:
- American Express Centurion Black Card Review
- X1 Credit Card – Check how to apply.
- Destiny Credit Card – How to order online.
- Delta Skymiles® Reserve American Express Card Review – See more.
- AmEx focuses on customer experience with new checking account and redesigned application
- Discover it® Rewards card rewards see how it works
