Saturday, April 1, 2023

How To Pick Your First Credit Card

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Why Do You Want The Card

How to pick your first travel credit card in one minute

Your first step in choosing your card is knowing why you want the card in the first place. Here are some of the most common reasons.

Building Credit Credit cards can be fantastic tools in building credit. If this is the reason youre wanting the card look for something with no annual fee. If youll be paying the balance in full each month the interest rate wont matter.

Making a Large Purchase If youre looking for a card to make a large purchase one thing thats going to be important to you is the credit limit. As a first time card owner it can be hard to find a card with a credit limit over a few hundred dollars. The other extremely important factor you should be looking at is the interest rate. While credit cards in general come with extremely high interest rates its going to be very important for you to find as low of an interest rate as possible. If you dont have a plan for paying back your large purchase it will cost you greatly just in interest charges.

Earning Rewards Different credit cards come with different rewards while some come with no rewards at all. You can earn cash back, free trips, airline points, hotel stays, and gift cards.

Heres a deeper explanation of all the various elements you need to look at when choosing your first credit card.

Further Help And Information

For more information about how to deal with credit cards, see .

The Money Advice Service website has lots of useful information about borrowing and managing your money.

You can use a comparison website to see what different credit card providers are offering. Here are some examples of comparison websites:

Dont Forget About Fees With Starter Credit Cards

Please do remember that credit card companies do charge different fees like annual fee, balance transfer fee, late fee payment, over limit fees, foreign transaction fees or cash advance fees. The more benefits the card offers or the higher your credit limit, the more you can expect to shell out in fees.

Note that many rewards cards charge an annual fees, so if youre looking into this type of card you need to weigh the cost against any potential savings or benefits youd get from using it.

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Another Option: Becoming An Authorized User

If youre looking for a way to build credit but cannot apply for your own credit card, becoming an authorized user on someone elses card is another option.

As an authorized user, youre added to a primary credit cardholders account. Youll receive a card with your name on it linked to the main account holders card. You can then use this card like they would their own and some of the best cards for authorized users even offer perks.

When you are an authorized user, it helps you build up your credit history before applying for your own credit card. Just keep in mind that any charges you make are the primary account holders legal responsibility. So youll need to make arrangements for how youll pay off your account, how much you can spend each month and more.

If You Want To Save On Interest: Low

How to choose your first credit card

A card with an introductory 0% APR and ongoing low interest could be a good match for you if you plan to use your credit card in case of emergencies, or if you have an irregular income and carry a balance from time to time. A balance transfer offer could help you pay off a high-interest debt interest-free. Keep in mind that these offers may be harder to find if you have average or poor credit.

» MORE: Find the best low-interest or 0% APR credit card with this flowchart

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Charge Cards Vs Credit Cards

Charge cards offer another alternative where credit is extended but the balance must be paid in full each month. Charge cards do not typically have interest rates in the same way a normal line of revolving credit on a credit card does and do not necessarily come with a preset spending limit. This makes them an adaptable, efficient type of credit card useful for a variety of purchases. Charge cards also come with a lot of risk: if you cannot pay off your balance at the end of the month, you can quickly get into some serious trouble with your issuer.

Due to this risk, charge cards are rarely offered by banks and always require a good to excellent credit score in order to be approved. These cards are also usually subject to high annual fees.

When Do You Qualify For A Credit Card

In order to qualify for your first credit card, you must have met the legal age requirement. Typical of Canada, this depends on the province or territory in which you live, either 18 or 19.

  • 18 years old: Alberta, Ontario, Quebec, Prince Edwards Island, and Saskatchewan
  • 19 years old: British Columbia, Newfoundland and Labrador, Northwest Territories, Nova Scotia, Nunavut, and Yukon

In addition, youll need your social insurance number and, depending on the credit card, you may need a certain credit score, too.

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Requirements To Get Your First Credit Card Account

You have to be at least 18 years old to apply for a credit card, and you have to show proof that you can make payments.

In most cases, youll need to have an established credit history, but some student cards and secured cards are designed for individuals who are new to credit. And if youre interested in a secured credit card to build credit history, you will have to put down a security deposit.

Comparing The Interest Rate

Credit Card: How To Choose Your First One

The is a credit cardâs yearly interest rate plus any other fees associated with the card. It’s the law for lenders to show an APR when they advertise a credit product – and since it’s calculated in the same way by every company, it makes it easier to compare credit cards across the board.

Here’s how APR is charged. An APR of 15% means that if you carry a debt of £1000, over one year you will pay back approximately £150 more than the amount you borrowed*.

Generally, the lower the APR, the better. However, if youâre planning on paying your balance in full every month, you donât need to be too concerned with the APR as you wonât be charged any interest.

If you don’t think you’ll be able pay off to your full balance off every month, the Money Advice Service has a that you can use to calculate how much interest you will have to pay depending on your monthly repayments. It also shows you how long it will take to pay off the balance.

Generally speaking, the better your credit score, the cheaper the APR you’ll be offered.

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Keep An Eye On Credit Card Activity

With so many ways to view your account details, take the time to review your credit card statements and/or your charges online. Not only are you verifying that each purchase is valid, but it also helps you see exactly where and how you are managing your card. If something doesnt appear accurate, contact your lender immediately to resolve it as soon as possible.

Fortunately, theres an easy-to-use convenient tool that first-time credit card users can use to monitor their activity, the Mint app. With the Mint app, you can see all of your transactions and keep a close eye on credit card activity right from your phone.

Activate The Credit Card And Sign Up For Auto

The last step is to activate the card when it comes in the mail and set up your online account. You will need to create a specific username and password for that credit card website and then link your bank account to the credit card.

Heres an example of what it looks like to link a Bank Account using Discover:

Log in and go to the main page, then click on make a payment.

Choose manage bank accounts.

Fill in the bank information which you can get from your bank or your checkbook.

Then just click continue and youre good to go.

Once youve done that, you will want to set up auto pay with your bank. Be sure to set the credit card to pay in full every single month on a certain day. By doing this, you will never miss a payment and youll never pay any interest.

Just always make sure that you never purchase anything you dont already have the money for.

Hopefully, this helped you understand what you need for your first credit card. Let me know in the comments below what credit card you think is best and why!

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Look For Cards That Target Moderate Or Limited Credit

You may have a relativea parent, for examplewhos willing to help you get your first credit card by cosigning with you. Cosigning is riskyany mistakes you make will affect yours and the cosigner’s creditbut it can be a good way to jumpstart your credit. Agree upfront that youll be responsible for making the payments on time each month and that you’ll abide by all the credit card terms. Then, consider closing the joint account once you can qualify for a credit card on your own.

Petal 2 Cash Back No Fees Visa Credit Card

What really matters with your first credit card

The last card Id recommend is the Petal® 2 Cash Back, No Fees Visa® Credit Card . I like this card for young people starting their credit journey because it trains you to be responsible by incentivizing on-time payments. Youll get 1 percent cash back on purchases, which will increase to 1.5 percent after you make 12 on-time monthly payments. Just make sure to pay off the card in full every month, or youll have to face a high APR.

  • Rewards rate: 1 percent on eligible purchases or up to 1.5 percent cash back on eligible purchases when you make 12 on-time payments, plus 2 percent to 10 percent cash back at select merchants
  • Welcome offer: None

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You Have Great Credit And Want Premium Travel Benefits

Premium rewards credit cards may require a very good to excellent credit score , with annual fees as high as $200 to $550. Cardholders who frequently use their credit cards may benefit from higher rewards rates on purchases, which may offset the relatively high annual fee.

Premium cards may also offer valuable and fun perks, such as status in an airline or hotel loyalty program, access to airport lounges, statement credits to offset select types of purchases, and higher limits and coverage on complimentary insurance and protections.

If you have a favorite hotel chain or airline, you may want to look for a co-branded premium travel card from that company. Otherwise, a more general premium travel card may be a good fit.

Best First Credit Cards To Build Credit In August 2021

4 days ago Looking for your first credit card but overwhelmed by the number of options? Choose the right starter credit card to build up your credit What is the best first credit card?What do you need to qualify for a starter credit card?

How To Pick Your First Credit Card 6 Tips. Check your credit score. If you have no prior credit experience, you wont have a credit score. So you can focus on How do I get a credit card for the first time?What do I look for in a first credit card?

Dec 22, 2020 Qualifying for your first credit card · Be at least 18 or older · Be a U.S. citizen or a resident with a Social Security Number · Have your own

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Ways To Get Your First Credit Card

Eighteen can be a liberating age. You’re legally an adult. You can vote. You may be going to college soon if you’re not already there. And, you can get a credit card.

As eager as you may be to get your first credit card, many credit card companies aren’t so eager to give you one. Rather than putting in several credit card applications to see who’s going to approve you, target just a few companies that are known for giving .

Credit Card Fees Are Avoidable

What Credit Card to Get First

It’s possible to avoid credit card fees altogether, even if you’re new to credit:

  • Plenty of excellent starter cards, including many secured cards, dont charge annual fees.

  • Late fees aren’t an issue if you pay on time.

  • Foreign transaction fees are irrelevant if you dont plan on using the card to make charges outside the U.S. and several issuers don’t charge foreign transaction fees anyway.

  • The charges associated with balance transfers and cash advances are a moot point if you never make these types of transactions.

  • Over-limit fees, imposed when you exceed your credit limit, are all but extinct. Issuers can’t charge them unless you opt into over-limit protection and even then, you can avoid them simply by staying within your limit.

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Capital One Ventureone Rewards Credit Card

The Capital One VentureOne Rewards Credit Card is typically only available to consumers with “good” credit or better, but it’s important to note that a good FICO score typically starts in the 670+ range. If you are able to qualify, this card can serve as a starter travel credit card that can help you get accustomed to earning this type of rewards.

Once you sign up, you’ll earn a flat 1.25 miles for each dollar you spend. You can also earn 20,000 miles after spending $500 on purchases within 3 months from account opening. On the redemption side of the equation, you can cash in your Capital One miles for any type of travel at a rate of 1 cent apiece, or for transfers to 18 airline and hotel partners. This card also comes with no annual fee and no foreign transaction fees.

Capital One recently unveiled the new Capital One Dining program which is available to all rewards card members. It also announced the addition of a new transfer partner, Virgin Red.

Read more about the Capital One VentureOne:

How To Pick Your First Credit Card

No matter where you are in life, choosing your first can be tough. Searching through offers can seem overwhelming, but with enough knowledge, youll be able to choose the card that’s right for you and begin building your credit.

Here are several things to consider when choosing your first credit card.

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Tips On Using Your First Credit Card

How you use your first credit card can either help or hurt your credit. Here are some things to keep in mind to stay on top of your finances.

1. Make Your Payments on Time

No matter which card youâre approved for, your payment history is an important part of your credit scores. In fact, the FICO credit-scoring model calculates your payment history as 35% of your credit score.

And missed or late credit card paymentsdonât just affect your credit. They can also lead to late fees or an increase in interest rates.

Making at least your cardâs minimum payment on time can help you avoid penalties and keep your account in good standing. Just remember that if you only pay the minimum, youâll likely be charged interest on the balance youâre carrying.

Some credit card companies like Capital One also allow you to set up automatic payments. This way, a payment of your choice is automatically made on your accountâs due date each month. It can be a helpful way of making sure you donât accidentally miss a due date.

2. Keep Your Account Balance Low

In addition to paying your bills on time, staying below your credit limit could also help you improve your credit scores.

Thatâs because your scores are affected by your , or how much of your available credit youâre using. In fact, the Consumer Financial Protection Bureau says experts recommend using no more than 30% of your total limit to help maintain good credit.

3. Stick to a Budget

4. Check Your Monthly Statements

Earning Rewards With A Credit Card

How to Choose Your First Credit Card

If this is going to be your go-to card for most of what you buy, look for a card with a generous credit limit and a solid rewards program. You can earn points, miles or cash back with rewards credit cards and make a little bit of cash while you spend or put points and miles toward your next vacation.

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Consider A Secured Credit Card

Speaking of secured cards, theyre a great option for your first card for several reasons. As long as you pay responsibly, your score goes up, and you can switch to an unsecured, card. Some secured cards give you cash back, or offer no annual fees. Your deposit acts as your credit limit, so if you can only pay a security deposit of $200, youll have a $200 limit. Having a lower limit shouldnt be an issue, though, because youre just starting out with credit.

Barry Paperno, a credit expert who writes for Speaking of Credit, says a secured card is the way to go for first-time credit card owners. You can build a really good credit score with just a secured card, Paperno said. Plus, because of the security deposit, you wont have an unpaid charge-off at the end.

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