One of life’s rites of passage — whether right or wrong — is getting that first credit card. When used properly, a credit card can help you create a good credit history that will serve you well when it comes time to buy a car or a home. When used irresponsibly, though, credit cards can result in debt and despair. One of the things you can do to encourage good credit habits is to choose your first credit card wisely.
First of all, it is important to note that credit cards aren’t as easy to come by as they used to be. Not just any 18 year old can receive approval for a credit card. In fact, since the passage of the Credit CARD Act in 2009, you have to be 21 in order to get a credit card, unless you meet the following criteria:
While some credit card issuers may be flexible on the “proof” of ability to cover credit obligations, you are still likely to have a more difficult time getting your first credit card than young people did before the Credit CARD Act. But, even so, it still helps to be picky about your first credit card.
One good way to get your first credit card is to establish a banking relationship. Open an account at a bank or credit union, and start using it. A savings account is a good idea, but you want to make sure you have a checking account as well. Use the debit card with your checking account wisely, and you will show your level of responsibility.
After six months or so, if you have proven yourself, you can go in an ask about getting a credit card. A credit card issued by your local bank or credit union is likely to be of the no-frills variety, with a fairly low credit limit, but will probably have a decent enough interest rate. Once you show that you can manage your credit responsibly, paying off the card each month, you can get an increase in your credit limit, and you will see other credit card offers, with more attractive terms.
If you decide to branch out beyond your bank for your first credit card, you want to make sure you are getting the best possible deal. This means shopping around a little bit, and not making your decision based solely on what swag is being offered by representatives trying to sign you up. Here are some things to look for in your first credit card:
Another possibility is to start out with a secured credit card. However, you want to make sure that fees are limited, and that the issuer actually reports your payments to a credit bureau.