Getting your first credit card is a big deal – it’s a step in the right direction toward establishing and growing your credit. It’s also a necessary step toward your financial future.
Without first creating your credit record, you can’t move forward with big-money moves. Taking out a loan, buying property, opening utilities in an apartment – you need credit to do all of those things.
Newcomers need credit to do these types of things. But more importantly, they need good credit.
In many cases, lack of credit is essentially the same as having “bad” credit or a low score. This could hurt you right in the wallet in many ways.
It can mean you’ll get higher interest charges, it can allow you to borrow less, and it could leave you unable to borrow at all.
Instead, getting a credit card can help combat this.
It can also help teach you how credit cards work, create healthy spending habits, and more.
Take a look at these go-to tips to getting your first credit card.
Make sure you know how credit cards work
Before you dive in deep, it’s important to know what you’re getting into.
Credit cards work differently than a traditional bank account. Understand the difference before you cost yourself with mistakes.
For instance, it’s generally best to pay up and on time. Failing to do so could add late fees and interest charges.
Most cards come with a high APR, which means hefty fees on your existing purchases. Either pay your fees in full or understand the late charges that may head your way.
It’s also worth noting that a first credit card can make or break your credit.
Card issuers report monthly about your financial activity. Be sure to make payments on time to help yourself in the future.
You’ll also have a limit as to how much you can spend. That limit is based on your income, status with the credit card company, and more.
It is usually wise to know how much you can spend, and not to go over that limit to help keep your spending in check.
There may be fees for international purchases, too. Consider this if you may be ordering items from out of the country.
How to get a credit card
Now it’s time to research and find what card is best for you.
It can often help to talk to others and ask what types of credit cards they like, spend some time Googling, and more.
It’s worth noting that newcomers don’t always get the best deals. You’re less likely to get perks like zero interest, rewards programs, and more without established credit.
However, there’s plenty of time for this in the future. And when you better know how to juggle finances and how to manage points.
Remember, you can look at the fine print before you apply. Check out APRs, late fees, transactional fees, and more. This can give you a better idea of what you’re getting into before you ever sign up.
Some things to consider are:
- Your credit score
- How much do you want to spend on a credit card
- Why you’re getting a credit card
- The overall benefits
- What types of rewards can you earn?
The best credit cards for first-timers
There are plenty of credit cards specifically designed for first-timers or those without credit.
Search around and find a card best suited for a small income or someone who isn’t used to using a credit card.
Additional perks for these accounts include free resources that allow you to learn. They are also apt to work with you and explain things as you go.
Meanwhile, look for a card that doesn’t charge an annual fee.
There are plenty of credit cards that cost you just to own them. (Usually, these are cards with an impressive reward system.)
Instead, opt for a card that’s free to use. This can help save you funds right from the get-go.
Student credit cards are available for college or high school students, often through their educational institution. This can be a great way to go while in school and can still allow for rewards that build your credit as you go.
You can use a partner account by linking to an existing cardholder. People often do this with a parent, family member, or older friend whom they trust.
Having a linked account can help you build your credit, one payment at a time.
For the credit card issuer, this also alleviates risk on their end, as it puts a more responsible, more seasoned credit holder on the hook if you default.
Therefore, they’ll only agree if they have full trust in your credit card intentions and spending habits.
How to apply for your first credit card
Once you’ve found your card of choice, it’s time to apply.
If you are worried about being accepted (common for first-timers), consider putting down a deposit or adding a co-applicant. Using a secured credit card reduces the risk for the issuer and leaves them more likely to issue the card.
Then there are cards like Vital, which allows you to earn by sharing the news. All while encouraging users and their friends to make smarter, more sound financial transactions.
By developing healthy habits with your very first credit card, you can grow on that financial education for the better.
Avoid negative habits from day one, and instead, grow your credit through a supportive credit card community.
If you are denied a credit card, you can learn why your application wasn’t approved. (Brush off the stress and choose to use it as a learning opportunity instead.)
Federal law requires credit card companies to inform applicants of denied applications.
If nothing else, you can use this information to make moves into the future, such as asking for a co-applicant or putting down a deposit.
There’s also the option to use a referral. Companies ask happy customers to refer those who may be interested in getting a credit card.
By referring their friends, it’s a safer, more respected transaction for all involved. It can also tip the odds in your favor.
How to use your first credit card in your favor
Once you receive your card, it’s time to start using it, but wisely.
Don’t overspend or plan to pay the minimum from day one. Doing so could lead to excessive fees that add up and end up costing you more.
Instead, stick to your budget and pay on time. This can eliminate any late fees.
If you pay in full, you can avoid APRs altogether. But many credit card users prefer to make payments to help build their credit.
This can be a great plan when done correctly. Just be sure to pay above minimums to keep interest rates from overtaking your spending limits.
Besides, even paying your card off each month can still help build your credit.
A good way to start is to determine which method is best for you and keep it in mind as you begin spending and scheduling your first credit card payments. This is a method that can make or break your entire credit card experience.
Remember that late fees, APRs, and more can slowly creep in and cost you greatly. These fees can take over your credit spend limit and tank your credit score in the process.
It’s often best to keep your charge limit as low as possible when trying to raise your credit limit.
Getting a credit card recap
Getting a credit card is a great way to establish and grow your credit in a way that’s both fast and effective. Remember these main points when considering applying for your first credit card:
- Before applying, try to make sure you fully understand the ropes and know what you are getting yourself into.
- After you get your card, you can avoid paying excess fees, APRs, and late charges by paying on time and paying in more than the minimum.
- You can work to get a credit card through lenders who deal directly with newcomers. From student credit cards to those that accept a downpayment, you can work your way up to established credit with this move.
- Don’t discount the power of a credit card, especially if you are a first-timer — they can be a great way to grow your credit, which allows you to make better, more sound financial decisions.
Visit Vital now to learn more about starting an account and how sharing the news with friends can help build your credit.
Sources
Is it Bad to Have No Credit Score? | Experian
Why Do You Want a Good Credit Score? | Experian
How To Pay Off Credit Card Debt | Experian
Vital Card blog posts are intended for informational purposes only and should not be considered financial or any other type of advice.