5 Tips for Choosing Your First Credit Card
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.
Who Can Get a Credit Card?
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:
- Parent or guardian co-signs.
- Eligible spouse co-signs.
- You have proof that you can cover your credit obligations. (This usually means a job.)
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.
Develop a Banking Relationship
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.
What to Look for in Your First Credit Card
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:
- Reasonable interest rate: As someone without a credit history, you will have to pay a little bit higher interest rate. That is to be expected. You might compare student credit cards, since they offer rates that are comparable for credit history. If you have some history, such as a car loan, or a student loan, than you have been making payments on, you might be able to qualify for a slightly lower rate.
- No annual fees: Make sure your first credit card does not come with annual fees, or with application fees.
- Consider rewards: Many credit cards come with rewards programs. Before you choose a card, make sure the program is something you will use. Don’t choose a travel rewards card if you are unlikely to use your airline miles. If possible, choose a flexible rewards program that allows you to use your points on a variety of options. Some student cards also offer rewards points for engaging in responsible behaviors, such as making your payments on time.
- Penalties: Some credit card issuers are starting to mull the idea of charging inactivity fees and similar penalties. Look for a credit card that will not charge you just because you haven’t been using the card. Also, compare fees like late payment, over the limit and cash advance fees.
- Introductory rates: Many cards offer introductory rates. Make sure that you understand when that plum rate ends, and be prepared to have purchases paid off by then.
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.
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About the AuthorMiranda
is a professional personal finance journalist. She is a contributor for several personal finance web sites. Her work has been mentioned in and linked to from, USA Today, The Huffington Post, The San Francisco Chronicle, The New York Times, The Wall Street Journal, and other publications. She also has her own personal finance blog: Planting Money Seeds
The information on this site is strictly the author's opinion. It does NOT constitute financial, legal, or other advice of any kind. You should consult with a certified adviser for advice to your specific circumstances.
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