Guide To Picking The Best First Credit Card For You
Selecting your first credit card is an important step towards establishing great credit. The first thing to keep in mind is that this should be a card that you will keep forever. The length of your credit history is a substantial factor when your credit score is calculated. For this reason, it is important that your first card is one that you will be continually happy with.
If you are new to credit cards there are a number of factors to consider before opening your first card:
- What cards will you qualify for?
- Which type of rewards do you want to earn?
- What card features are important to you?
First, let’s take a look at these questions and then we will review good spending habits and provide several examples of great first cards. Read more to learn more about what you can do to improve your approval odds for a new credit card.
What Cards Will You Qualify For
Your credit card options will vary depending on your credit score. You may qualify for a premium card if you have established credit through loans, mortgages, or other lines. However, for many first time credit card applicants their options will likely be much more limited.
Credit cards can be obtained in the US once you have reached the age of 18. If you are a young adult with no prior credit you will need to look for cards tailored for your demographic. There are a number of great cards available from major credit card issuers specifically designed for consumers with no prior credit.
There are a number of actions consumers can take to ensure the card they select will likely be available for approval. For instance, many of the major credit card issuers allow consumers to view their pre-approved offers. These offers are not guaranteed approvals but will greatly increase your chance of approval.
Additionally, consumers can view their credit score at no cost with many free services such as Credit Sesame and Credit Karma. These are both highly reputable companies that offer credit scores with no payment necessary. Once you have access to you score you can review cards based on your individual score.
Which Type of Rewards Do You Want To Earn
Selecting your first card should be done with your rewards in mind. Nearly all credit cards offer some type of rewards. Even most “entry level” credit cards will provide cash back or reward points.
The two primary categories to choose from are cash back rewards and travel rewards. For first time applicants, cash back cards are going to provide more options. Many travel reward cards are designed as more premium reward options and may not be available for consumers new to credit.
If you are deciding between credit cards with particularly spending categories it is important to select categories that will benefit you for the long term. Daily spending options like groceries, gas, and dining are great options for flexible reward options.
What Card Features Are Important To You
The best credit card features will depend on the individual. For instance, many banks and credit unions offer low interest credit card options. If you are concerned about high interest then a low interest card may be a good choice. However, it is worth pointing out that consumers should never get a new card with the intention of carrying a balance.
Another great feature for new individuals new to credit is credit and credit score monitoring. Discover, for instance, provides your free FICO Credit Score with each statement balance and is updated every month. Chase provides their customers with the Credit Credit Journey service which provides a modified score and tools to track your credit.
Other features to consider are travel insurance, foreign transaction fees, and late payment fees. Determining what features are most important to you will ensure your card has a valuable place in your wallet for years to come.
Your First Card – Credit Card Spending Habits
Understanding the best practices for using a credit card is extremely important for new cardholders. The primary guideline to follow is to never carry a balance on your card. Credit card users are not subject to interest when you pay your balance in full each month. A single month of carrying a balance can quickly wipe out any rewards you earn on your new card.
Another great strategy is treating your credit card as if it directly linked to your checking account. This strategy ensures you never exceed a balance you are capable of paying off in full at the end of the month. If you credit limit allows you to exceed what you are able to pay off you may consider setting a limit that will force you to use your card responsibly.
Finally, if you find you are routinely carrying a balance on your card it is important to know when to set the card aside and address your balance. If your balance gets out of control it is extremely important to know when to quit spending on your card. Cardholders can stop using their card until their balance is paid off and then set up a budget once you begin using your card again.
Top Picks For First Time Credit Cards
These cards were selected as they do not require excellent credit for approval. Secured cards will be the best choice for consumers who are not qualified for other cards. Unfortunately, secured cards rarely offer rewards. If possible, you should apply for a card which provides rewards for every purchase you make.
The Chase Freedom is a top pick for two reasons. First, the card requires “good” credit. Good credit is typically considered any score above 670. This card will be widely available for many new credit applicants. Additionally, the card provides a huge sign up bonus. The current offer provides $200 after spending $500 in the first three months of opening your new account. Additional features include:
- 1% cash back on all purchases
- No interest for the first 15 months
- No annual fee
Discover IT/Discover IT Secured
Discover provides two options for the IT card. A secured card and a non-secured option. The secured option will be tailored for individuals with poor or fair credit (below 670 credit score). Ideally, you should shoot for the Discover IT Card instead of the Discover IT Secured.
Secured cards require a deposit which will reflect your total credit limit. This deposit is completely refundable if you choose to close your account. You may also have the option of upgrading your card after responsible use.
Discover IT provides the following features:
- Monthly FICO Credit Score
- 1% cash back on all purchases
- Rotating 5% cash back for select categories
- No annual fee (for either card)
Capital One Quicksilver Card
The Quicksilver Card offers one of the best cash back rates for an easily accessible card. Customers will need to have “fair” credit which typically means a score of at least 600. All purchases will receive 1.5% cash back. This is the best overall rate of the cards highlighted here. There is no new customers bonus offer unlike the Chase Freedom. Card features include:
- 1.5% cash back on all purchases
- No foreign transaction fee
- No annual fee
Final Thoughts – Your First Credit Card
When you pick your first card you should think for the future. Establishing your credit with a credit card is one of the fastest and most effective ways to improve your credit score. Find a card that matches your spending needs and plan to keep the card open for as long as it is useful. Even if you upgrade to a better card, you may still want to consider keeping the account active as old accounts in good standing will benefit your credit score.
What was your first credit card and why did you select it? Let us know in the comments below!