When you’re applying for a credit card for the first time, it’s important to choose the right one. The right credit card can help you build credit and potentially earn rewards. The wrong card, on the other hand, could cost you a bunch of unnecessary money.
Fortunately, there are many different cards that cater to newbies. Some are focused on easy approval and low fees while others allow you to earn cash in rewards or save on purchases. The key is to consider each type of card, decide what’s most important to you, and pick the best first credit card for your financial situation.
This guide will help you explore different options for starter cards so you can find the perfect card for any situation.
- How to pick the best starter credit card
- Best cards if you have a short credit history
- Best cards if you’re a student
- Best cards if you have poor credit
- Best cards if you want to earn cash back
- Best cards if you want to earn travel rewards
- What about store-branded cards?
- How to use credit cards responsibly
- What to do if you’re denied
How to pick the best starter credit card
People have different priorities when it comes to credit cards, and picking the best first credit card will be different for everyone. If you don’t travel much, for example, prioritizing the travel rewards you could earn with a card likely makes little sense for your situation.
However, there are certain features that everyone shopping for a credit card should take into consideration.
Key factors to look for
- Annual fee: Some card issuers charge you just to be a cardholder. Annual fees can be worth paying when the card gives you generous perks you’ll actually use or allows you to earn enough rewards to make up for the fee. But there are also lots of free cards out there, and if you aren’t a huge spender in need of perks, they may be a better choice — especially for a first credit card.
- APR: If you think you will carry a balance on your credit card at any point, focusing on a low APR (annual percentage rate) is extremely important. The interest rate you’re charged when you carry a balance is likely to far exceed even the most generous rewards program, so looking for low interest options — or even a card with a temporary 0% promotional APR — could be your best choice.
- Rewards: Some cards allow cardholders to earn cash back, travel miles, or points that can be redeemed for gift cards or merchandise. Rewards programs vary from one card to the next, both in terms of what you can redeem points for and how points are earned.
- New cardmember bonuses: Many cards allow you to earn bonus miles or extra cash back if you spend a certain amount of money within the first few months of opening your account. If maximizing rewards is important to you, think about whether you can safely meet the spending minimums within your current budget.
- Cardholder perks: Many cards offer additional benefits besides the chance to earn rewards. This could include a free checked bag if you fly on a certain airline, concierge service, an extended warranty on products you buy with your card, or car rental or travel insurance.
- Fees: Some cards charge fees for different actions, such as a foreign transaction fee if you use your card outside of the U.S. Most cards also charge late fees or over-the-limit fees, but not all do.
- Your credit score: Some credit cards require you to have excellent credit while others are more forgiving of a short credit history or of past borrowing mistakes. Knowing your credit score can help you apply to cards you’re more likely to be approved for. You can check your credit score for free on sites like Credit Sesame or Credit Karma.
Best credit cards if you have a short credit history
Many credit card companies prefer to lend to borrowers with a long history of responsible borrowing behavior. Having a long borrowing history can help raise your credit score and show creditors a more complete picture of your payment history.
Many people getting their first credit card haven’t been able to establish a long, positive credit history yet. If your goal is building credit, you’ll need to look for a card you can qualify for despite being new to the world of credit. Obtaining your first credit card can be one of the best ways to improve your credit score since you can begin developing your history of on-time payments.
Here are some of the best cards to consider if you have a short credit history.
|Discover it Cash Back||Discover it Cash Back is a great first card because of the easy underwriting process and credit-building tools, such as free access to your FICO credit score. It also offers generous rewards and you aren’t charged to be a card member.
|Chase Freedom||The Chase Freedom requires some credit history, such as car payments or student loan payments, to qualify — but underwriting isn’t as difficult as some other cards. The card also offers a generous rewards program and sign-up bonus.
Best credit cards if you’re a student
Students often have limited incomes — or no incomes at all — and many haven’t yet had time to build credit. Since a lot of card issuers want a long credit history and proof you have enough income to pay off the card, qualifying for a card can be hard while you’re in school. However, this can be a critical time to build credit, and graduating from a debit card to a credit card can be a great way to start.
Fortunately, there are some cards specifically meant for college students trying to build credit. Here are the best cards for those still completing their studies.
|Discover it Student Cash Back||The Discover it Student Cash Back card offers generous rewards and even offers a statement credit for good grades, making it an ideal choice for students.
|Bank of America Cash Rewards Credit Card for Students
||This Bank of America student card provides access to your FICO score, is aimed at students so it’s easier to qualify for, and offers cash back rewards.
Best credit cards if you have poor credit
Creditors will check in with the major credit bureaus before issuing a card. If you’ve made borrowing mistakes in the past, creditors may be wary of lending to you out of fear you’ll have similar problems in the future. But there’s good news — there are cards out there that specifically cater to people with a low credit score. Often, these come in the form of secured credit cards.
A secured credit card differs from a standard, or unsecured, credit card because you have to put down a deposit to serve as collateral, and your credit limit is usually equal to the deposited amount.
Here are some of the best cards for people with bad credit, including options for secured cards.
|Discover it Secured||The Discover it Secured charges no annual fee and is one of the few secured cards to provide rewards for spending. With this secured credit card, you’ll also get free access to your FICO score so you can monitor credit improvements.
|Citi Secured Mastercard||Citi charges a minimum security deposit of just $200 and there’s no annual fee for the Citi Secured Mastercard.
|Capital One® Secured Mastercard®||The Capital One Secured Mastercard bases your security deposit amount on your credit — and you get a credit line increase after five on-time payments.
Best credit cards if you want to earn cash back
If you have at least fair credit, and ideally good or excellent credit, you may want to look beyond cards that are easy to qualify for and instead focus on cards that reward you for using them. Cash back cards will reward you for use — and they are a great option because you can earn money back on your purchases.
Cash back is usually given as a statement credit, although you may be able to have it deposited into a bank or investment account depending on the card you pick. Here are some top cards if you want to earn cashback on every purchase you make.
|Capital One® Savor® Cash Rewards Credit Card||The Capital One Savor rewards credit card offers a generous rewards program, including 8% cash back on tickets purchased through Vivid Seats (through May 2020), 4% unlimited cash back on dining and entertainment, 2% at grocery stores, and 1% cash back on all other purchases.
|Chase Freedom Unlimited||The Chase Freedom Unlimited offers a simple cash back rewards program, a 0% introductory APR to help you avoid interest costs, and no annual fees to be a cardmember.
|Blue Cash Preferred from American Express
||Although the Amex Blue Cash Preferred does charge an annual fee, it comes with a generous rewards program, especially if you’re a frequent grocery-store shopper.
Best credit cards if you want to earn travel rewards
If you’re a regular traveler, you may be looking for something more than cash back. Instead, consider a rewards card you can use to offset the cost of flights, hotel stays, or other travel expenditures. Travel credit cards can give you generous rewards that make traveling the world cheaper. Plus, they often come with other perks, such as free checked bags or travel insurance.
If you’re interested in a card that will help indulge your wanderlust, here are some of the best cards for earning travel rewards.
|Chase Sapphire Preferred||The Chase Sapphire Preferred rewards credit card offers 5X on Lyft rides, 2X points on eligible dining and travel, and 1X points per $1 on all other eligible purchases, plus bonus points to new cardmembers who meet the spending requirement. You'll also be covered with travel insurance to protect you if something goes wrong on your trip, along with a slew of other perks.
|Capital One® Venture® Rewards Credit Card||Capital One Venture Rewards cardmembers earn 2X miles on every purchase, every day.
What about store-branded credit cards?
Each of the cards listed above can be used with most stores and service providers both inside and outside of the U.S. But you don’t have to stick to these major credit cards — you could also apply for a store-branded credit card. Many of these store cards are issued by banks like Synchrony and Comenity.
Store-branded cards offer perks and discounts for shopping at a particular store. The specific benefits you receive depend on which store card you sign up for, but you can often get generous discounts on purchases, free shipping when shopping online, or cash back for purchases.
These cards may be easier to qualify for than regular credit cards, but the APR on store cards is often higher. Plus, some store credit cards only work at the store that issues them (and sometimes partner stores, such as a Gap card working at Banana Republic).
In most — but not all — cases, stores report your borrowing behavior to credit reporting agencies. That means these cards can help you build a positive payment history, but you could also hurt your credit score if you don’t use them responsibly.
It’s important to note that sometimes stores partner with major credit card issuers to offer a card, such as the Sam’s Club Mastercard. These are slightly different because you can use the card not just at the store the card is branded with but also anywhere the issuer’s cards are accepted. These tend to work more like other major credit cards but sometimes come with special perks at the store the card is branded for.
How to use credit cards responsibly
No matter what type of card you get, it’s imperative you use your card in a responsible way. This means that you’ll need to:
- Pay your bill on time. Late payments can be devastating to your credit score, as payment history is one of the most important components in determining your score. Commit to responsible card use and set up automatic monthly payments.
- Pay in full. Whenever possible, avoid carrying a balance on a card; interest charges are high and you could end up paying a lot more than you planned to — which can be devastating to your bank account. To avoid this, pay off your card in full each billing cycle.
- Avoid maxing out your credit cards by knowing your credit limit. Another important factor in determining your credit score is your credit utilization ratio. Your credit utilization ratio is calculated by dividing the amount of credit used by the amount of credit available to you.
For instance, if you have $100 in total available credit and have used $30, divide $30 by $100 to get a 30% utilization ratio. To maintain a good credit score, it’s usually advisable to keep your utilization below 30%.
- Don’t open too many cards at one time. Opening new cards requires a hard credit inquiry, which means the lender checks your credit and a notation is placed on your report. Too many inquiries in too short a time frame can hurt your score. Opening new credit also affects the average length of your credit history, which is another factor in calculating your credit score. A longer length of credit history will earn you a better score, while opening a new card reduces the average time your accounts have been opened and can lower your score.
It’s important you commit to practicing these responsible borrowing behaviors before opening your first credit card. Otherwise, you could find yourself deep in debt or be hit with a low credit score that affects future borrowing opportunities.
What to do if you’re denied for your first credit card
If you’re denied credit, try to determine why. If the card issuer made a decision based on your credit score, the card issuer should send you an adverse action notice. This will explain your rights, including the right to access your credit report for free.
You can check your credit report for any mistakes or inaccurate info that may have lowered your score. If you find errors, you can dispute your credit report to have the mistakes corrected.
If your score is low for a legitimate reason, work on improving your score. This may mean applying for a card with less strict qualifying standards, such as a secured credit card. Alternatively, you could potentially get a cosigner to apply for credit with you. A cosigner shares legal responsibility for the debt, so if you find a cosigner with higher credit, creditors may be more willing to lend to you.
If you do things to make yourself a more attractive borrower, such as paying down existing debt, boosting your credit score, or improving your income, reapply for the card you want after a bit of time has passed. Once you can show the lender you’re likely to pay back what you borrow, you should hopefully be able to get approved.
Make sure you pick the best first credit card
As you can see, you have many options when it comes to your first credit card. Take the time to research different types of cards to decide which one is right for you. And once you get your card, be sure to practice responsible borrowing behavior so you can earn a great credit score and have your choice of cards in the future.
#1 Travel Rewards Card
- 60,000 point sign-up bonus
- 2X points on eligible dining and travel purchases
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- Premium travel protection benefits
- No foreign transaction fees