Getting your first credit card is exciting but can easily become overwhelming if you are unsure what to do or how to decide on a card. That is where articles like ours are helpful! Here, we can help you understand the basics of getting your first credit card so you can be on your way!
Generally, you have to follow certain steps to find the right first credit card for you. You must assess any existing credit score, decide on secured or unsecured starter cards, find a card with low fees, and have sufficient income to pay back the credit used on time.
There are many other aspects of getting the first credit card that you should not overlook. Read on to get the whole scoop!
Getting Your First Credit Card
Before you can start looking for credit cards and comparing different credit card companies, you must meet certain criteria. You must be 18 years old or older and have enough monthly income to make your monthly credit card payments as well as other costs of living.
If you fulfill those requirements, you can start to explore the steps to getting a credit card for the first time!
To begin the process of getting your first credit card, you must check to see if you have a credit report or a credit score. You may automatically assume that you do not have any credit score or reports because you have never had a credit card, but there are ways to gain credit without your credit card.
If you were ever an authorized user on a parent or family member's credit card, you probably have some credit report or scores. Discovering what your credit is at the moment will help you decide what credit card you can try to get.
Next, you should compare unsecured and secured starter credit cards. Secured credit cards have high rates of approval for new credit card owners, but they also have a refundable security deposit. Secured cards also have a spending limit in the amount of the security deposit.
Unsecured credit cards do not have the deposit but can be a lot harder to get, especially when you are getting your first credit card.
Now that you have begun to figure out what kind of credit card you want, you can begin to sort through the available starter cards offered by different credit card companies. Try to focus your search on credit cards with low fees, no security deposit, and no annual fees.
The best type of credit card for a beginner is a card with no security deposit and no annual fees, but other cards with low fees and security deposits are often not bad at all!
Next, decide on the other terms. Some credit cards offer rewards for paying your bill in full each month. Others have lower interest rates. Do some exploring in extra terms of credit cards you are looking at to get an idea of what they offer and what would work best for you.
The last step before submitting your credit card application to the credit card company of your choice is to make sure you have enough income. If you are 18 to 20 years old, you can list assets and independent income on your application. If you are 21 and older, you can list assets and household income.
Submitting your credit card application is the final step. Usually, applying online is faster. Some online applications will approve you immediately if you match all the criteria set forth by the credit card company.
Within 7 to 10 days, your new credit card will arrive at your door!
Important Aspects of Picking a First Credit Card
Beyond what has already been said, there are some other key pieces of information to know when you begin to look for your first credit card. In the following sections, we will discuss several of these so you can make the most of your credit card.
When you apply for a credit card, especially your first credit card, you need to make sure you are applying to a credit card company that has high approval numbers. This is so that you get your credit card sooner, and then you can begin to build your credit status faster and improve your credit score.
If you are rejected from a credit card company, your credit (if you have any) can get damaged, and your credit score can go down. Plus, it means that you have to try again and that takes time and energy.
Fees are a huge part of getting your first credit card. You want to find a credit card with low fees for your first credit card. Starter credit cards usually do not have crazy good rewards if any, and they usually do not have interest rates that make paying an annual fee worth it.
Your best choice is to get a credit card with no annual fee. To avoid interest costs and other fees, make sure that you pay your monthly bill in full.
First Credit Card Tips
The following sections are tips to help you use your new credit card responsibly as well as help you build credit as you use it!
Additional reading: Credit Card Hacks: Great Tips to Use
Using Your Credit Card Smartly
Getting a credit card can feel like free reign to everything. However, that is not the case. You need to use your credit card smartly and with purpose. You should not just run around putting everything on your credit card.
Credit Card Debt
You should spend money carefully on your credit card. Make sure that you are spending within your budget and within your means. Spending outside of your means is a slippery slope that can quickly put you into credit card debt.
Missed payments can happen when you spend too much and then cannot afford to pay the bill for the month. The next month there are new costs, interest costs, and that same charge on the credit card.
You can also get hit with fees for missed payments, so make sure that you are avoiding falling into credit card debt.
Pay Your Monthly Bill On Time
Another aspect of using your credit card wisely is to make sure that you are paying your monthly bill on time each month. Not only does paying this bill each month prevent interest costs from racking up, but it helps to improve your credit score because it shows that you are reliable.
If you can avoid damaging your credit score by not paying your bill on time, you have a higher chance of boosting your credit score. Getting your credit score up with a starter credit card is the perfect way to apply for better credit cards in the future, more prestigious credit cards, have better Rewards, and need higher credit scores for qualification.
Some credit card companies allow you to set up auto-pay, where your monthly credit card bill is automatically paid on the due date. This is very helpful for people who struggle to remember to pay their monthly credit card bills.
Best First Credit Cards
When it comes to picking a first credit card, you want the best credit card you can get with your limited credit. There are plenty of companies that offer starter credit cards to help new credit card users build their credit and later on apply for better credit cards.
These starter credit cards are the best first credit card you can get. When you are looking for a starter credit card, make sure to look for a card that is either a secured card with low fees or an unsecured card, which does not have a deposit like the secured card does.
The best first credit cards will help you build your credit while giving you hands-on experience on how credit card ownership works. The best first credit cards also have low fees and no annual fees, which can just add to your payments each year without giving you any benefits.
Opening a Credit Card
Opening a credit card is not as hard as it seems. Once you are approved for a credit card with a credit card company, they will help you set up your credit card and walk you through the process of monthly payments, statements, and other financial aspects of their credit card company accounts.
Once your credit card is opened in set up with the company, make sure that you are keeping your credit card in a safe place that cannot be accessed by people you do not trust. Keep your credit card in a buttoned or zippered wallet inside of a bag when you are out and in a safe place at home.
When all is said and done, starting your first credit card is a very exciting new step towards the future. It can help you buy a car, buy a house, and get better credit cards in the future. Although it may seem like an overly complex system, the credit card industry is simple when you know what you're looking for. And now, you know what to look for!
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Shawn Manaher is a former financial advisor, has founded 5 online businesses, and is a coach, speaker, podcast host, and author. He's been featured on Forbes, The Consults Corner on TAE Radio, The Writing Biz, What's Your Story, and more.