Ready to apply for your first credit card but don't know where to start? Well, you're not alone.
With so many options, choosing the best first credit card can seem overwhelming.
With the dozens of different cards offered by the major banks, smaller banks and credit unions, it's easy to get overwhelmed when trying to select the best first credit card for you.
The incredibly large selection of credit cards available to you is a sign of a healthy, competitive market. But that may not seem like such a good thing when you have no experience shopping for the right card.
Here’s what you need to know when selecting the best first time credit card:
Experienced credit card users may select the best card to earn rewards, enjoy valuable benefits, or to help pay off their existing debts. But in order to find the best first credit card for you, your goals should be a bit different.
The point of your first credit card should be to help you learn how to manage your own account, while giving you the opportunity to build your credit history and your credit score.
This means paying your bills on-time, and carrying very little, if any debt.
Having a credit card will also offer you one of the most secure methods of payment possible. Unlike other forms of payment, including debit cards, your credit card account is protected by the Fair Credit Billing Act.
This powerful Federal law says that you will never be responsible for more than $50 in case of a fraudulent charge, or a merchant failing to deliver what it promised.
In practice, every credit card has a zero liability guarantee that means that you won’t ever lose a penny.
You’ll also want to take advantage of a credit card’s unique benefits. For example, most credit cards come with rental car insurance, so you don’t have to pay for the expensive coverage offered by the rental car companies.
Many credit cards also come with shopping protections such as damage and theft protection, price protection, and extended warranty coverage.
Finally, many credit cards also offer purchase rewards. However, when you are looking for your first credit card, earning rewards should be the lowest priority, far behind learning to handle your account responsibly and building your credit.
First, you’ll want to apply for a credit card that you can be approved for. These are credit cards designed for applicants with a limited credit history.
If you’re a student, there are some credit cards that are specifically marketed towards full-time students with a modest income and a limited credit history.
Next, you’ll want to look for a credit card with low rates and fees.
When you have a limited credit history, you can’t expect to be approved for a credit card with the most competitive interest rates, but you can still avoid paying an annual fee.
You’ll also want to look for a credit card that’s easy to use. First time credit card users should avoid cards with complicated reward schemes and try to find a card issued by a company with a reputation for good customer service.
Now that you know what you’re looking for, where should you begin? One place to start is with the bank or credit union where you currently have a checking or savings account.
Opening a credit card account where you already bank has the advantage of building on your existing banking relationship while keeping all of your accounts in one place.
Also, you’ll only have to remember one login, and learn how to use a single bank’s website.
And when you have to make a payment from your checking or savings account to your credit card, it’s simply a matter of transferring funds between accounts, not between separate institutions.
Another good place to start is with some of the major credit card issuers. For example, Capital One, Discover, Bank of America, and US Bank all offer credit cards for students as well as anyone with a limited credit history
Even if you’ve never had a credit card before, you may have had credit problems in the past.
For example, if you’ve had trouble repaying a student loan or a vehicle loan in the recent past, then you’ve might have fair or poor credit.
But if you can’t qualify for a standard credit card, don't lose hope yet.
Secured cards work much like standard, unsecured cards, except that you must submit a refundable security deposit before you can open an account.
The size of your deposit becomes the amount of your card’s credit limit. But once your account is opened, a secured card is treated just like any other credit card.
You’ll get a monthly statement, and will have to make a minimum payment each month. However, any store where you use your card will not know that it’s a secured card.
Some secured cards come with the same benefits of any other card, such as rental car insurance, extended warranty coverage, and damage and theft protection.
With at least a year of on-time payments, your credit score should rise enough to allow you to be approved for a standard, unsecured card.
Once you open your unsecured card account, you can close your secured card account and receive a refund of your security deposit.
Applying for a credit card is an important financial decision, especially when it’s your first time. You should take the time to research all of your best options before choosing the right card for your needs.
Just remember that using your first card responsibly will be more important than which card you choose.
Did we miss anything? Let us know in the comment section below. We would love to hear from you!
Editorial Note: This content is not provided or commissioned by the credit card issuer. Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by the credit card issuer. This site may be compensated through a credit card issuer partnership.
This article was last updated July 10, 2018 but some terms and conditions may have changed or are no longer available. For the most accurate and up to date information please consult the terms and conditions found on the issuer website.
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