Your First Credit Card: What to Consider (Plus Recommendations)

Cash is cool, but there are times when you don’t want to carry around a wallet stuffed with bills. This means it’s time to get some plastic in there. Choosing the right first credit card can be challenging, especially when you have no credit history and no idea what you’re doing.

Fortunately, there are a lot of resources out there to help you pick the right first credit card. This will allow you to build credit, earn rewards, and order things online.

When you’re picking your first credit card you want to ensure you’re getting one that fits your needs. You also want one you can manage easily and build your credit score. There are a few factors to consider, and this means there isn’t one best answer for all people.

What to Consider in a First Credit Card

Avoid Fees

Some credit cards have an annual fee, theoretically because they’re offering you rewards. It’s like being a member of a club, but you generally want to avoid these cards at first. Your first credit card is unlikely to have great rewards, though you’ll might get something. Regardless, your rewards probably aren’t work the fee.

APR

The annual percentage rate, or APR, is the amount of interest you will be charged each year if your bills go unpaid. A high APR means you’re susceptible to paying more if your card isn’t paid in full.

Credit cards usually offer a minimum monthly payment, and if you pay that your credit score will not be negatively impacted. Still, that unpaid remainder will be collecting interest each day. With your first credit card, the goal should be to pay it in full each month.

Rewards

Now it’s time for the good stuff! When you’re using your credit card, you’re often able to earn rewards. There are often cash back, gift cards, or travel points. You can get a nice bonus if you play your credit cards right. With a new credit card, the rewards won’t be too great. Still, if you can get $1 back for each $100 spent, why shouldn’t you?

Hidden Fees

Many credit cards have terms that can result in additional fees on the account. Things such as: closure fees, late payment fees, foreign transaction fees, or over limit fees. You first credit card is going to have some restrictions, and unless you make a lot of foreign transactions, there’s usually simple ways to avoid these fees. Know your credit limit, stay in the limit, make your payments in full and pay on time.

First Credit Card Recommendations

There’s no single best card for someone who is looking to get their first credit card, but there are some bad options out there. Depending on your lifestyle and goals, you may need to look into different types of cards.

Knowing your credit history (or lack thereof) and the types of rewards you hope to receive can drive your selection. Remember, the rewards are nice, but they shouldn’t outweigh bad terms.

To Build Credit: Discover It Secured

If you have no credit history, or even worse, bad credit history, then you might look into a secured card. Essentially, these cards require you to make a security deposit before they issue a line of credit. This Discover It Secured card requires you to put down at least $200. In return, you’ll have a monthly spending limit equal to the deposit.

The Discover it Secured Credit Card is a really good option to build your score. There’s no annual fee, no APR penalty for a late payment, and some rewards. After consistently paying your balance for eight months, you will be considered for “graduation.” This is when your security deposit is returned and you’re considered for an unsecured line of credit.

Meanwhile there are some rewards. You’re eligible to receive unlimited 1% cast back and 2% cash back for qualified purchases. This includes purchases at restaurants and gas stations, places you’d likely visit anyway. Further, your monthly statement will let you know your FICO credit score. This will help you watch as your score builds and you’re ready to move onto better cards.

For Cash Back: Citi Double Cash

If your goal with your credit card is to get some money back, the Citi Double Cash card is a good place to start. You get 1% cash back on all purchases and 1% cash back when you make your payment. Of course, you need to make the payment on time, but once you complete a payment then you get the second percentage back.

Cash back is the biggest perk of this card, but there’s also no annual fee and a 0% APR for your first 18 months. This is not an excuse to miss payments or let your balance sit unpaid. If you’re new to the whole credit card world it’s nice to not be penalized for an early mistake.

After the initial 18-months, the APR ranges based on your creditworthiness. This can go as high as 23.99% and as low as 13.99%. For someone with a limited credit history, you can expect to see an APR closer to the higher end. Don’t let that scare you: make your payments and you’ll be fine. That’s how you get your cash back anyway.

The only things to be weary of: the high APR for lower creditworthiness and balance transfer fees. If this is your first credit card, you won’t have to worry about the second point. If you’re closing another card and need to transfer your debt to the Citi Double Cash card, the transfer could will cost 3% of the rollover amount ($5 minimum).

Best For Rewards: Amex EveryDay

If you know you’re going to be spending more money in a certain industry, points might have more value than cash. This is the allure of American Express, and the EveryDay card is your entry into their point-based system.

With no annual fee, the barrier to entry is simply getting approved. Similar to the Citi Double card, the APR varies depending on creditworthiness: 23.99% on the high end and 12.99% on the low end. Amex also incentivizes you to get more points. Grocery purchases up to $6,000 can give you double points, and you’ll get 20% more points if you make more the 20 transactions with your card in a month.

Then, redeem your points for rewards. If you like to travel, Amex has a special program to help you get more savings on airfare. You can also pay balances, purchase gift cards, or shop online with your points. If you’re in this for the long haul, you can rollover these points. This allows you to get a better Amex card, keep your points, and collect more.

For a new credit card, this can seem complicated. The rewards can be great, but keep in mind that some places don’t accept American Express.

Welcome to the World of Credit

There’s a lot involved with opening a credit card, but the rewards can easily outweigh the cost. Credit cards are convenient, collect rewards, and build your credit score. With time, you’ll find yourself able to get better cards.

With a new credit card, the rewards are lower because you’re a higher risk for companies. There’s no shame in starting small with a secured card. This can build your credit score so you’re able to get a better card in the near future. That score will be helpful if you ever need a loan or want to rent an apartment.

If you’re already making purchases and managing your finances, credit cards make this process more rewarding. Credit cards are not an excuse to go into debt or make purchases you can’t afford. Don’t bite off more than you can chew, stay aware of your spending, and you’ll end up just fine.