How to choose and use your first credit card

A first credit card is a major milestone, so you’ll want to do a little research to make sure you choose the right credit card for your financial goals and situation.

Figure out why you want a credit card and decide how you’re going to use it. Then, learn which credit cards you may be able to qualify for and the pros and cons of each one. Here’s how.

Decide if you’re ready for a credit card

Credit cards can be a helpful financial tool due to their convenience and the number of benefits and protections they provide to cardholders.

Credit cards typically have a spending limit, but there are few other guardrails in place to make sure you don’t take on a debt you can’t afford to pay off. If you can treat a credit card like a debit card, only using it for purchases you can pay off in full each month, then you may be able to benefit with little downside.

As you think about whether you should get a credit card, consider whether you’re looking for a way to increase your spending power, want a card for emergencies, or want a card for everyday purchases.

Check your credit report and score

When you’re ready to apply for your first credit card, a good first step is to check your credit reports and score. You can get a free copy of your credit report from a variety of online websites, including the three credit reporting agencies, Experian, Equifax, and TransUnion.

Credit card issuers will generally check your credit reports and a credit score to help determine if you can qualify for a credit card as well as what your interest rate and credit limit will be. The better your credit, the better the chances of getting approved for a card with a low rate.

If you’ve never had a loan or credit card before, you might not have a credit report or score. You may still be able to qualify for certain credit cards, but your options will be limited until you build up your credit history.

Research the different type of credit cards

You may get overwhelmed by the hundreds — even thousands — of options as you try to figure out which credit card should be your first. Narrowing in on the type of credit card you want and then deciding from within that category can help.

There are many types of credit cards, such as rewards cards or cards that offer promotional interest rates that make them a good option for making large purchases. Those cards tend to have stricter credit requirements, such as a high minimum credit score and responsible credit management over time, so they can be difficult to get as your first card.

Compare rates, fees and benefits

Once you narrow in on the type of card you want, you can compare the cards within that category to figure out which one is best for you. Generally, you’ll be comparing the fees, interest rates, and cardholder benefits:

  • Credit card fees: Some cards have an annual fee (a few even have monthly fees) you’ll need to pay to open and keep the card. Additionally, there may be fees for certain actions, such as a foreign transaction fee or a late fee that’s charged if you don’t make at least your minimum payment by the bill’s due date. Look for cards with few and low fees to save money and get the most benefit out of your card.
  • Interest rates: Credit cards display their interest rates as annual percentage rates (APRs). The higher the APR, the more interest you’ll have to pay when you carry a balance from one month to the next. With most cards, you can avoid paying any interest by paying your balance in full every month.
  • Rewards: Some cards offer an intro bonus to new cardholders who meet the requirements. You can also find cards with ongoing rewards, such as cash back on your purchases. Different cards may offer various intro bonus and ongoing rewards rates.

For more information about getting your first credit card and establishing credit, see the following articles: