GETTING STARTED

How to Pick Your First Credit Card

No matter where you are in life, choosing your first credit card can be tough. Searching through offers can seem overwhelming, but with enough knowledge, you’ll be able to choose the card that's right for you and begin building your credit.

Here are several things to consider when choosing your first credit card.

1. Do your research

Be aware of what getting a credit card really means, especially because credit mistakes can negatively affect your life and financial standing for a long time.

Whether you’re searching the internet, getting offers in the mail, or talking to friends and family, it’s important to learn as much as you can before applying for your first card.

Being well-versed in the process of applying for and using credit cards will benefit you in the long run. Don’t skimp on research.

2. Make sure you have steady income

Credit card issuers typically require a verifiable income when someone is looking to apply for their first credit card. After all, being able to repay your balance is the key to getting approved for a credit card.

Lenders need to know that you’ll pay them back and that they can trust you. 

3. Choose wisely

There are plenty of credit cards to choose from. When you're looking for that right card, focus on your main concerns and struggles.

Are you worried about paying bills on time? Consider a card with a low annual percentage rate.

Aren’t sure you’ll have enough self-control for a credit card? A secured credit card could be a great option.

There’s a credit card that works for everyone. Don’t choose a credit card because of a cool design or dreamy rewards without checking all of the details.

4. Read the fine print

Before you choose your first credit card, make sure you’ve read the terms and checked the fees, rewards, and interest rates. A bad combination of card features could come back to bite you if you aren’t careful when signing up for a card. 

5. Consider a secured credit card

Secured cards could be a great option for your first card for several reasons.  As long as you pay responsibly, your credit score goes up, and eventually you might be able to switch to an unsecured card.

Some secured cards give you cash back, or offer no annual fees. Your deposit acts as your credit limit, so if you can only pay a security deposit of $500, you’ll have a $500 limit.

6. Avoid cards that require excellent credit

Being denied credit doesn’t affect your credit score, but your score is still affected by lenders looking into your credit history.

If you apply for your first credit card and it’s out of reach, you’ll end up stuck in a loop of hard inquiries and rejections. 

7. Use loans to your advantage

Essentially, a positive loan history can show card issuers that you’re low risk and are capable of paying them back on time. Loans count as credit, so if you pay them back responsibly that positive information will remain on your credit report for 10 years.

However, keep in mind that a negative loan history will stay on your report for seven years. So only take out a loan if you can afford to make on-time payments.

A loan that’s closed won’t help generate a credit score, but it still looks good to lenders on your report. 

8. Become an authorized user 

A great way to get your first credit card while limiting the responsibility and pressure is by becoming an authorized user. This way, you can have a credit score without actually having your own credit card.

If you eventually want your own card, being an authorized user makes your score and report look significantly better to lenders.

But remember: if you become an authorized user on a card and the card owner falls behind on payments, your credit will be affected as well. Choose someone you trust with a good credit history.

Make sure you're ready

Getting your first credit card can be an exciting moment, and potentially a step in the right direction for your financial future. 

While establishing and building credit is important, it's equally important to make sure you understand the risks involved with credit, have a strong monthly budget in place, and can resist the temptation to use your credit card for purchases you can't afford. 

Remember to take the time to research and find which option is best for you when opening your first credit card and every card that follows.