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Bottom Line Up Front
- Choosing your first credit card with your goals in mind, from building healthy credit to having a card available for emergencies.
- Look for a card that offers low costs, fair terms and useful rewards to get the most bang for your buck with your first card.
- Explore the different types of credit cards to help find the one that meets your situation.
Time to Read
April 29, 2022
Applying for your first credit card is a major financial milestone. So what should you do to make sure you’re building good credit with it? Your best bet is to start by selecting the right card. The credit card you choose and your ability to use it wisely may impact your credit history for years to come. With multiple options available, take the time to research your options before taking the plunge.
How do you plan to use your first credit card?
Knowing which best first-time credit card is for you starts with considering how you plan to use it. Here are some reasons you might decide to get your first credit card:
- Building credit for a healthy financial future. Building good credit, or a credit history, is an important step to meeting some financial goals, like buying a house or starting a business. Opening a credit card account and paying off the balance each month is a great way to build your credit. If this is your plan, you can use a credit card to make everyday purchases like gas and groceries. As long as you stay within your normal monthly budget, repayment shouldn’t be an issue.
- Keeping credit cards for emergencies. Many people like to have a credit card for emergency use only, like a car repair or other unexpected expense. A solid emergency savings fund is the best way to pay for these expenses. However, having access to a credit card can provide the peace of mind that you can get out of a bind should you need more money than you’ve saved. If you do have to use a credit card for an emergency, make sure to pay off the balance, to avoid paying interest.
- Taking advantage of credit card rewards. One of the great benefits of some credit cards are the rewards programs. These may include cash back, special offers and airline miles. Each rewards card has its own benefit structure, and you can choose one that works well with your spending habits or lifestyle.
- Making large purchases that fall outside your budget. If you’re planning to get a credit card to buy items you can’t afford with your current income, you might want to reconsider. Credit cards aren’t “free money”, and buying more than you can pay back within a month will mean paying interest on your purchases. Look for a card with a low or 0% introductory offer if you plan to spend outside your budget.
What makes a good first credit card?
Now that you’ve thought about how you plan to use your first credit card, you can start to research a credit card that’s right for you. No matter how you plan to use your card, here are a few features you should look for and compare.
- Low or no annual fees. Check the annual fees on credit cards. Be especially sure to check the fees on cards that offer rewards. There are many cards available with low or no annual fees—as a first-time credit card user, these are best for you.
- Credit builder features. Look for cards that have higher approval chances for applicants with limited or no credit history—like you.
- Monthly reporting to all three major credit bureaus. It’s especially important when establishing and building credit that the card you choose reports to all three major credit bureaus—Experian®, Equifax® and TransUnion®—at least once per month. These three organizations track your payment history, which is part of your credit report. However, let’s say the credit card company only reports to two of the organizations, Equifax and TransUnion. Someday, when you apply for a mortgage, if that lender pulls your credit score from Experian, you won’t get the full benefit of the credit you’ve built.
- Rewards of at least 1% back on purchases in many cases. Even if rewards aren’t your top priority, it pays to look for cards that offer some kind of rewards structure—even if it’s a secured card. For example, Navy Federal Credit Union’s nRewards® Secured card offers point rewards while you build your credit, with the option to upgrade to cash rewards after six months of good credit history.
- Competitive annual percentage rate (APR). As you shop for cards, pay attention to the APR, which is the cost of using the card’s credit line. The higher the APR, the more interest you'll pay if you carry a balance from one month to the next. With most credit cards, to avoid paying interest, you can pay your balance in full every month. Often, low or 0% interest rates are introductory offers that depend on making on-time payments. Read the small print on interest rates to make sure you understand what you’re agreeing to.
Understanding different types of credit cards
For a first-time credit card applicant, there are several types of cards well suited to your credit history and financial needs.
- Credit-building cards are a great choice if you have no credit history and are also perfect for people rebuilding their credit. These cards usually require a minimum deposit that serves as your credit limit. However, unlike a debit card, you make monthly payments as you would a credit card. Often, these first-time credit cards are intended to be a stepping stone to a traditional credit card.
- Student credit cards. Some credit card issuers offer special cards for enrolled college students. They may have low income eligibility, lower interest rates and student-friendly rewards. These cards are intended to help build healthy credit habits, but usually require some credit history to qualify.
- Rewards cards. Most credit cards offer rewards, including cash, airline miles or points toward bonus items. If you plan to use your card in place of your debit card, and pay off the balance each month, a card like Navy Federal’s More Rewards American Express® Credit Card that offers extra rewards for cash spent on items like groceries or gas can provide great cash-back potential. If you prefer cash over rewards points, a card like cashRewards offers cash back on all purchases you make, so you can earn on what you spend.
- Zero interest cards. You may get offers for 0% interest cards in the mail or online. Typically, these are introductory rates, and once the introductory period is up, the APR is higher than average. A 0% interest rate card can be useful to make a large purchase, like a new appliance or couch, as long as you can budget your payments to pay down the total in full by the end of the introductory period.
Applying for your first credit card
Now that you know what a good first-time credit card should offer, you can research and compare rates, fees, credit limits and rewards to find the card that works for you. Still have questions? Read up on How Credit Cards Work so you can make the best choice on your first credit card.
- Narrowed down what you're looking for in a first credit card?Find the card that matches your needs and apply.
- Once you have your card in hand, take advantage of ourCardholder Resources to get even more out of it.
Credit & Debit Card Resources
Credit & Debit Card Basics
Avoid Rookie Credit Mistakes
Credit & Debit Card Basics
What’s a Credit Utilization Ratio and Why Is It Important?
Credit & Debit Card Basics
How Much Could You Earn With a Rewards Credit Card?
This content is intended to provide general information and shouldn't be considered legal, tax or financial advice. It's always a good idea to consult a tax or financial advisor for specific information on how certain laws apply to your situation and about your individual financial situation.
The most important principle for using credit cards is to always pay your bill on time and in full. Following this simple rule can help you avoid interest charges, late fees and poor credit scores. By paying your bill in full, you'll avoid interest and build toward a high credit score.How do I know which credit card to get for the first time? ›
- Decide if you need a credit card. ...
- Determine how the card will be used. ...
- Check your credit score and take a look at your finances. ...
- Consider a secured credit card. ...
- Consider a student credit card, if eligible.
- Annual Percentage Rate (APR). This is the cost of borrowing on the card, if you don't pay the whole balance off each month. ...
- minimum repayment. ...
- annual fee. ...
- charges. ...
- introductory interest rates. ...
- loyalty points or rewards. ...
- cash back.
The most important principle for using credit cards is to always pay your bill on time and in full. Following this simple rule can help you avoid interest charges, late fees and poor credit scores. By paying your bill in full, you'll avoid interest and build toward a high credit score.Can you get your first credit card at 18 but it's maybe not quite that simple what other qualifications do you have to meet to? ›
18 years old
Consumers can apply for credit cards starting at age 18, but the law requires them to have an independent income or a co-signer. However, most major issuers don't allow co-signers anymore. So, a person aged 18, 19 or 20 usually has to earn and prove their own income before being approved for a credit card.
The main difference between debit cards and credit cards is that a debit card is linked to a checking account, while a credit card is linked to a line of credit. When a purchase is made with a debit card, the funds immediately come out of the bank account.What are two things beginners should look for when getting their first credit card? ›
First-time cardholders should shop around before they apply and look out for what interest rates and fees (such as annual fees and foreign transaction fees) that banks and credit card issuers charge.Why did I get denied for my first credit card? ›
Factors like limited income, debt from loans, unpaid bills, or limited credit history could also prevent you from qualifying for certain cards. Not being at least 18 years old will keep you from getting your own credit card account, too.What are the 3 C's that determine if you qualify for a credit card? ›
Students classify those characteristics based on the three C's of credit (capacity, character, and collateral), assess the riskiness of lending to that individual based on these characteristics, and then decide whether or not to approve or deny the loan request.What are 3 pieces of advice when using a credit card? ›
- Pay off your balance every month. ...
- Use the card for needs, not wants. ...
- Never skip a payment. ...
- Use the credit card as a budgeting tool. ...
- Use a rewards card. ...
- Stay under 30% of your total credit limit.
The factors that determine your credit score are called The Three C's of Credit - Character, Capital and Capacity. These are areas a creditor looks at prior to making a decision about whether to take you on as a borrower.What is the golden rule of credit cards *? ›
Pay your credit card bill in full
It's just like paying cash; you only spend as much as you have. If you only pay part of the balance, though, the remaining balance accrues interest.
Here's how the rule works: You can be approved for up to two new credit cards every rolling two-month period. You can be approved for up to three new credit cards every rolling 12-month period. You can be approved for up to four new credit cards every rolling 24-month period.
To maintain a healthy credit score, it's important to keep your credit utilization rate (CUR) low. The general rule of thumb has been that you don't want your CUR to exceed 30%, but increasingly financial experts are recommending that you don't want to go above 10% if you really want an excellent credit score.What is a good credit age? ›
|Credit Score Tier||Average Age|
It usually takes a minimum of six months to generate your first credit score. Establishing good or excellent credit takes longer. If you follow the tips above for building good credit and avoid the potential pitfalls, your score should continue to improve.What builds your credit score? ›
Factors that contribute to a higher credit score include a history of on-time payments, low balances on your credit cards, a mix of different credit card and loan accounts, older credit accounts, and minimal inquiries for new credit.What is one thing that credit and debit cards have in common? ›
Share: Debit and credit cards are both used to pay for goods or services without paying in cash or writing a check. The difference between the two is where the money to pay for the purchase comes from.What card is better credit or debit? ›
Credit cards offer the most benefits and protection against fraud, making them the overall best payment option. However, credit isn't for everyone. If you have a track record of overspending, it may be better to stick with a debit card until you can responsibly manage credit.What are the 5 C's of credit? ›
Each lender has its own method for analyzing a borrower's creditworthiness. Most lenders use the five Cs—character, capacity, capital, collateral, and conditions—when analyzing individual or business credit applications.
Instead, depending on how well you manage your credit, your first credit score might be around the 500 mark. The age of your oldest form of credit plays a role in your credit score. However, working on other aspects can even get your initial credit score to be around 700.How do I build my first credit? ›
- Apply for a credit card. Lack of credit history could make it difficult to get a traditional unsecured credit card. ...
- Become an authorized user. ...
- Set up a joint account or get a loan with a co-signer. ...
- Take out a credit-builder loan.
You need to have had credit to be approved for a credit card, but you can't get credit because you can't get approved. The first credit card is often the most difficult to get because you have to find a credit card issuer and a credit card that's suited for people without a credit history.Does it hurt to apply for a first credit card? ›
When you apply for a new card, the credit company may perform a hard pull of your credit report for review as part of the approval process. The inquiry on your credit history may lower your score but generally the impact is low on your FICO score (for most, this means fewer than 5 points).Is it bad if a credit card rejects you? ›
Being denied for a credit card doesn't hurt your credit score. But the hard inquiry from submitting an application can cause your score to decrease. Submitting a credit card application and receiving notice that you're denied is a disappointment, especially if your credit score drops after applying.What is a good credit score? ›
Although ranges vary depending on the credit scoring model, generally credit scores from 580 to 669 are considered fair; 670 to 739 are considered good; 740 to 799 are considered very good; and 800 and up are considered excellent.What do credit lenders look for? ›
Your income and employment history are good indicators of your ability to repay outstanding debt. Income amount, stability, and type of income may all be considered. The ratio of your current and any new debt as compared to your before-tax income, known as debt-to-income ratio (DTI), may be evaluated.What kind of credit card can you get with bad credit or no credit score? ›
We believe the best credit cards for bad credit are secured cards. With these cards, you provide a security deposit, which protects the issuer in case you don't pay. (When you close or upgrade the account, you can get your deposit back.)What are 3 credit card mistakes to avoid? ›
- Carrying a balance month-to-month. ...
- Only making minimum payments. ...
- Missing a payment. ...
- Neglecting to review your billing statement. ...
- Not knowing your APR and applicable fees. ...
- Taking out a cash advance. ...
- Not understanding introductory 0% APR offers.
line of credit. so what this means. is that you are going to wait 91 days and. three full statement cycles before you decide. to ask either for a credit limit increase. or for a new line of credit all together. to maximize the amount of funding that you get.
- #1: You're the boss. ...
- #2: You can lower your current interest rate. ...
- #3: You can play hard to get before you apply for a new card. ...
- #4: You don't actually get 45 days' notice when your bank decides to raise your interest rate. ...
- #5: You can get a late fee removed.
Not paying your bills on time or using most of your available credit are things that can lower your credit score. Keeping your debt low and making all your minimum payments on time helps raise credit scores. Information can remain on your credit report for seven to 10 years.What are at least 3 ways you should use a credit card to maximize your credit score? ›
- Pay on time, every time (35% of your FICO score) ...
- Keep your utilization low (30% of your FICO score) ...
- Limit new credit applications (15% of your FICO score) ...
- Use your card regularly. ...
- Increase your credit limit.
Total of payments, Payment schedule, Prepayment/late payment penalties, If applicable to the transaction: (1) Total sales cost, (2) Demand feature, (3) Security interest, (4) Insurance, (5) Required deposit, and (6) Reference to contract.What is the #1 rule of credit cards? ›
Rule #1: Always pay your bill on time (and in full) The most important principle for using credit cards is to always pay your bill on time and in full. Following this simple rule can help you avoid interest charges, late fees and poor credit scores.What is a 5 24 rule? ›
If you've been approved for five cards in the past 24 months, you will not be approved for another Chase card thanks to the 5/24 rule.What is the 3 15 rule paying credit cards? ›
With the 15/3 credit card payment method, you make two payments each statement period. You pay half of your credit card statement balance 15 days before the due date, and then make another payment three days before the due date on your statement.What is the 15 and 3 credit card hack? ›
The 15/3 credit card hack is a payment plan that involves making two payments during each billing cycle instead of only one. Anyone can follow the 15/3 plan but it takes some personal management and discipline. The goal is to reduce your credit utilization rate and increase your credit score.What is the 1 90 rule for credit cards? ›
You're limited to 1 approved credit card every 5-day rolling period and 2 approved credit cards every 90 day rolling period. This rule only applies to credit cards and not their charge cards.
According to the Consumer Financial Protection Bureau, experts recommend keeping your credit utilization below 30% of your available credit. So if your only line of credit is a credit card with a $2,000 limit, that would mean keeping your balance below $600.
The 50/30/20 rule is a budgeting technique that involves dividing your money into three primary categories based on your after-tax income (i.e., your take-home pay): 50% to needs, 30% to wants and 20% to savings and debt payments.How much of a $10,000 credit limit should I use? ›
A good rule of thumb is to keep your credit utilization under 30 percent. This means that if you have $10,000 in available credit, you don't ever want your balances to go over $3,000. If your balance exceeds the 30 percent ratio, try to pay it off as soon as possible; otherwise, your credit score may suffer.What is the credit card rule of 75? ›
If you used a credit card or point of sale loan to buy goods or services, then the transaction could be covered by Section 75 of the Consumer Credit Act. This allows you to raise a claim against your credit provider if: you paid some (or all) of the cost by credit card or with a point of sale loan.What is the average 30 year old credit? ›
Average credit score for people in their 30s
The average credit score for those in their 30s is 672. By now, you may have a 10-year credit history, more lines of credit and more types of credit, like a car loan.
Credit scores are three-digit numbers that show an important piece of your financial history. Credit scores help lenders decide whether to grant you credit. The average credit score in the United States is 698, based on VantageScore® data from February 2021. It's a myth that you only have one credit score.How much credit should a 25 year old have? ›
While credit scores can differ, the average score for 25 year old's is around 660. According to the FICO scoring model, a 660 is considered "fair." So what does that mean? While you can still qualify for loans & lines of credit, a fair credit score might leave you with fewer options.How long does it take to get a 700 credit score from 500? ›
The time it takes to increase a credit score from 500 to 700 might range from a few months to a few years. Your credit score will increase based on your spending pattern and repayment history. If you do not have a credit card yet, you have a chance to build your credit score.Can I buy a house with a 556 credit score? ›
A conventional mortgage requires a credit score of at least 620 to buy a house. Since many buyers choose a conventional loan, a 620 credit score might be considered normal. However, you can have a credit score below 620 and still buy a house. With the help of an FHA loan, you can have a credit score as low as 500.Will paying bills early increase credit score? ›
The bottom line
If you can afford to do it, paying your credit card bills early helps establish good financial habits and may even improve your credit score.
- Review your credit reports. ...
- Pay on time. ...
- Keep your credit utilization rate low. ...
- Limit applying for new accounts. ...
- Keep old accounts open.
- Pay Your Bills on Time. Payment history is an important factor in calculating your credit scores. ...
- Maintain a Low Credit Utilization Ratio. ...
- Consider a Secured Credit Card. ...
- Look Into Credit Counseling.
- Pay down your revolving credit balances. If you have the funds to pay more than your minimum payment each month, you should do so. ...
- Increase your credit limit. ...
- Check your credit report for errors. ...
- Ask to have negative entries that are paid off removed from your credit report.
- Pay your credit card bill on time. ...
- Pay your credit card bill in full. ...
- Keep your credit utilization ratio low. ...
- Only charge what you can afford. ...
- Read your statement each month. ...
- Choose cards that suit your needs. ...
- Avoid cards with annual fees, in most cases.
Examining the C's of Credit
For example, when it comes to actually applying for credit, the “three C's” of credit – capital, capacity, and character – are crucial. 1 Specifically: Capital is savings and assets that can be used as collateral for loans.
These 3 C's of Credit are Character, Capital and Capacity based on which the lender decides on lending you. The score ranges from 300-900, and the ideal score to borrow an instant loan is 750.What type of credit card is most common? ›
Of the four main types of credit cards—Visa, Mastercard, American Express and Discover—Visa is by far the most common, making up 52.8% of cards in circulation.Does debit card hurt credit? ›
Debit cards do not appear on your credit history or affect your credit score. When you use a debit card, the money is immediately taken out of your banking account. You are not borrowing money like you would with a credit card. Unlike with a credit card, you don't get a bill at the end of the month for your debit card.Do debit cards build credit? ›
Although you can't build your credit with a debit card, there are many other ways to get your credit profile started. This can include becoming an authorized user on someone else's credit account, getting your on-time rent or other bill payments reported to the credit bureaus, or opening a credit card account.What is considered a good credit limit? ›
As such, if you have one of these cards, you might consider a $5,000 credit limit to be bad and a limit of $10,000 or more to be good. Overall, any credit limit of five figures or more is broadly accepted as a high credit limit. The main exception to the usual credit limit rules are secured credit cards.Does it matter what type of credit card you have? ›
While some credit cards are generally better than others, there's no single best credit card out there for everyone. Each card has its own set of features, fees and other terms, some of which can be a better fit for you than others based on your preferences, spending habits and credit.
Generally, first-time credit card applicants receive small credit limits. A credit limit of $500 to $1,000 is average for a first credit card, but it may be higher if you have, say, a history of on-time car payments on your credit file.What credit score does an 18 year old start with? ›
The credit history you start with at 18 is a blank slate. Your credit score doesn't exist until you start building credit. To begin your credit-building journey, consider opening a secured credit card or ask a family member to add you as an authorized user on their account.How much of my $500 credit limit should I use? ›
Lenders generally prefer that you use less than 30 percent of your credit limit. It's always a good idea to keep your credit card balance as low as possible in relation to your credit limit.How much of my $300 credit limit should I use? ›
A good guideline is the 30% rule: Use no more than 30% of your credit limit to keep your debt-to-credit ratio strong. Staying under 10% is even better.What credit limit can I get with a 700 credit score? ›
|VantageScore 3.0 credit score range||Average credit card limit|
The cons of credit cards include the potential to overspend easily, which leads to expensive debt if you don't pay in full, as well as credit score damage if you miss payments.What type of credit card is most widely accepted? ›
Visa and Mastercard are by far the most widely accepted cards, with Discover slightly behind those brands and American Express in a distant fourth place. Any retailer that accepts card payments likely takes Visa and Mastercard.What are the 4 major credit cards? ›
The four major credit card networks are American Express, Discover, Mastercard and Visa. American Express and Discover also issue their own credit cards which differentiates them from Mastercard and Visa who are solely card networks.