Choosing Your First Credit Card

One of life’s rites of passage — whether right or wrong — is getting that first credit card. When used properly, a credit card can help you create a good credit history that will serve you well when it comes time to buy a car or a home. When used irresponsibly, though, credit cards can result in debt and despair. One of the things you can do to encourage good credit habits is to choose your first credit card wisely.

Who Can Get a Credit Card?

First of all, it is important to note that credit cards aren’t as easy to come by as they used to be. In certain states, you have to be 21 in order to get a credit card, unless you meet the following criteria:

• Parents or guardian to co-sign the card with you
• A spouse who is eligible to co-sign with you
• You have proof that you can cover your credit obligations - (this normally means job)

Develop a Banking Relationship

One good way to get your first credit card is to establish a banking relationship. Open an account at a bank , and start using it. A savings account is a good idea, but you want to make sure you have a checking account as well. Use the debit card with your checking account wisely, and you will show your level of responsibility.

After six months or so, if you have proven yourself, you can go in an ask about getting a credit card. A credit card issued by your local bank or credit union. Once you show that you can manage your credit responsibly, paying off the card each month, you can get an increase in your credit limit, and you will see other credit card offers, with more attractive terms.

What to Look for in Your First Credit Card

If you decide to branch out beyond your bank for your first credit card, you want to make sure you are getting the best possible deal. This means shopping around a little bit, and not making your decision based solely on what swag is being offered by representatives trying to sign you up. Here are some things to look for in your first credit card:

1. Reasonable interest rate: As someone without a credit history, you will have to pay a little bit higher interest rate. That is to be expected. If you are a student you might compare student credit cards, since they offer rates that are comparable for credit history. If you have some history, such as a car loan, or a student loan, than you have been making payments on, you might be able to qualify for a slightly lower rate.
2. No annual fees: Make sure your first credit card does not come with annual fees, or with application fees.
3. Consider rewards: Many credit cards come with rewards programs. Before you choose a card, make sure the program is something you will use. Don’t choose a travel rewards card if you are unlikely to use your airline miles. If possible, choose a flexible rewards program that allows you to use your points on a variety of options. Some student cards also offer rewards points for engaging in responsible behaviors, such as making your payments on time.
4. Penalties: Some credit card issuers are starting to mull the idea of charging inactivity fees and similar penalties. Look for a credit card that will not charge you just because you haven’t been using the card. Also, compare fees like late payment, over the limit and cash advance fees.
5. Introductory rates: Many cards offer introductory rates. Make sure that you understand when that plum rate ends, and be prepared to have purchases paid off by then. Another possibility is to start out with a secured credit card. However, you want to make sure that fees are limited, and that the issuer actually reports your payments to a credit bureau.

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