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Credit Cards

How to Get Your First Credit Card

Should You Ever Use a Credit Card for Emergencies?

When you get your first credit card, one of two things can happen:

  1. You could keep your new credit card’s balance paid down and make on-time payments month after month to build credit.
  2. Or you can spend up to the credit limit and then face expensive finance charges that weigh down your credit utilization ratio and make building credit difficult.

Option 1 can launch your journey to financial independence.

With good credit, you’ll be able to access low annual percentage rates on mortgages, auto loans, and better credit cards with perks or no annual fees.

Option 2 could wreck your credit score because you’re more likely to make late payments and carry large balances.

You could pay higher fees and higher interest rates or get loans declined.

How to Get Your First Credit Card

Getting your first credit card may be as simple as submitting the credit card application online and waiting a few seconds for a decision.

But for most first-time cardholders, applying isn’t this simple because most cards require you to have an established credit history before you can qualify for the credit card.

That’s quite the Catch-22, right? You need credit history to get a card, but you can’t build credit history without a credit card or a loan.

How do you crack this riddle? You may need a credit card designed for first-time cardholders.

  • Student Credit Cards: These cards have low credit lines but may offer small cashback rewards on some purchases. When you turn 18 or enroll in college you can expect to see credit card offers aimed at college students.
  • Secured Credit Cards: Unless you’re a college student, I recommend a secured credit card as your first credit card. You have to make a security deposit to fund your credit line. The point is for your credit card issuer to report your positive payment history to the credit bureaus, increasing your credit score.
  • Unsecured, Starter Credit Cards: Expect high annual fees, and even some credit cards with monthly fees, if you get one of these cards. You’ll also have a limited credit limit and a high-interest rate.
  • Credit Card with Co-Signer: If you know someone with excellent credit, he or she could co-sign on your credit card application. Your co-signer would become responsible if you defaulted on the card.
  • Gas Station or Store Credit Card: Some gas station chains and retailers, like Target, offer store credit cards that don’t require an established credit history.

How to Apply for a First Credit Card

Whether you’ve chosen a Discover, Capital One, or a secured credit card from Sky Blue, you can apply for your card online.

If you’ve chosen a bank-issued Visa, you could apply in-person at a local branch if you’d prefer.

Either way, you’ll need to share your Social Security number, your annual income, and your personal contact information.

The credit card issuer will run your credit score. The resulting hard inquiry could hurt your credit score if you apply for several cards within a few months.

Check Your Own Credit Score

Before you apply for a credit card, check your credit score yourself. Make sure your score meets the credit card account’s minimum requirement.

When you check your own score, the resulting soft inquiry cannot hurt your credit. You can check your score:

  • At This site, run by the three major credit bureaus, lets you download a copy of each of your credit reports once a year. (Through April 2021 you can get a free credit score every week.)
  • With a free app: Credit Karma and Credit Sesame show you a free credit score — your VantageScore — without showing your actual credit reports. These apps provide free credit monitoring. You’ll see lots of ads for credit cards which you should ignore unless a card provides just what you need.
  • With a paid service: TransUnion and Experian offer paid credit monitoring services which also provide identity theft protection.

If your credit score meets the minimum requirements of the credit card account, filling out and submitting the online application will be quick and easy.

If your credit score needs some work, look for another credit card, choose a secured credit card which I recommend, or consider asking someone with excellent credit to co-sign with you.

Get a Free Copy of Your Credit Report

Credit Cards and Building Credit

I can’t really over-emphasize the importance of a good credit score.

Your credit score helps determine your eligibility for loans, and it helps set your interest rates on loans.

Landlords may also check your credit score when you apply for an apartment lease. In most states, car insurance companies can charge higher premiums if you have poor credit.

Your first credit card can set the tone for your credit history and your personal finances going forward, especially if you’re a young adult or someone making a fresh start.

So make sure you know how credit cards work before submitting that credit card application.

Tips for Building Credit with Any Card

No matter what type of first-time credit card you choose, your spending habits will determine whether your credit score climbs, stagnates, or spirals in the wrong direction.

Paying your bill on time every month — and keeping the balance paid down to 25% of your credit limit — should grow your credit score.

Try not to leave a balance at all, if possible, each month. This way you never pay finance charges no matter your interest rate.

The key to paying off the entire balance is spending only what you can afford to pay off each month. This establishes good spending habits, and it protects your credit score.

Here are some ways to make this happen:

  • Use the app: Credit card issuers offer mobile apps that make managing your account a lot easier. You can connect your bank account to make payments anytime and set reminders about payments.
  • Make automatic payments: With your credit card connected to your bank account, you can also set up automatic payments. I’d schedule at least the minimum payment to happen, automatically, on your due date. This would help ensure on-time payments at least. Then you can make additional payments throughout the month to pay down your balance.
  • Weigh spending habits: If you couldn’t afford an item without your credit card, consider whether you need the item at all. Of course, emergencies could arise and you’d have to use your card.

Always remember: your credit card issuer will report your payment history to the three credit bureaus — TransUnion, Experian, and Equifax — every month.

If you’re just starting out in life, your first credit card may be the only data going onto your credit report. This means your card offers a great opportunity to build credit history.

Choosing the Best Credit Card

Should you get a secured credit card or a starter credit card? How about co-signing or becoming an authorized user on someone else’s card?

The answer depends on your personal needs.

Student Credit Cards

Obviously, if you’re a college student, a student credit card has some advantages over a secured credit card.

With a student card you don’t have to make a security deposit. And, you can even find cash back rewards offers, though they’re typically not super impressive compared to the best rewards credit cards out there.

Your spending limit will be low, but you have to start somewhere.

Secured Credit Cards

Unless you’re a college student, I suggest getting a secured credit card, especially when you have bad credit or no credit.

With a secured card you’re the borrower and the lender. Your security deposit funds your credit line, taking away the risk to your lender.

A secured card resembles a debit card, except the lender will report your payment history to the major credit bureaus.

So secured cards have a specific purpose: To give you a chance to build credit history by making on-time monthly payments and keeping your balance low.

The security deposit allows the credit card issuer to extend credit to applicants with no credit history or bad credit. So just about anyone 18 or older can qualify.

This is How Credit Cards Will Work in the Future

Starter Credit Cards

These unsecured cards for people with no credit or bad credit have such limited credit limits — often only $100 — and high-interest rates that I suggest skipping them altogether.

The problem with such a low credit limit is that you risk always having 100% of your available credit in use. A 100% credit utilization rate is terrible for your FICO score — whether your credit limit is $100 or $10,000.

If you get a card like this, make sure you keep it paid off all the time.

Co-Signer / Authorized User

I no longer recommend becoming an authorized user on someone else’s credit card — at least not if your aim is to build credit.

Very few credit card issuers report credit data for authorized users because authorized users are not responsible for paying the bill. Only the primary cardholder gets credit for the responsible use of the card.

Finding a co-signer with excellent credit can help your own credit, but it could also ruin a friendship if you leave your co-signer with your huge credit card debt to deal with.

Nobody I know ever plans to default on their new credit card, but it happens despite our intentions sometimes. Life is unpredictable.

Where to Find the Best Credit Cards

Credit card offers may come in the mail every week, especially if you have good credit or have just enrolled in college.

Everyone else may have to look a little harder to find credit card offers.

You should start with your bank or credit union.

  • Big banks like Chase and Bank of America have lots of Visa and Mastercard options for account holders. Plus, it’s easy to connect these cards to your existing bank accounts.
  • Local credit unions often have credit cards with competitive interest rates and low fees.
  • Capital One is an excellent online bank for credit cards.

No matter where you find your credit card account, don’t submit the application until you’ve read all the disclaimers and fees.

For example, find out:

  • Ongoing Annual Percentage Rate: Many cards offer lower interest rates for the first year or on specific types of transactions like balance transfers. But then the APR increases. Find out your ongoing APR before signing up.
  • Annual Fees: An annual fee isn’t the worst thing, especially if your card offers nice rewards that more than pay for the fee. But you’ll still want to know about annual fees before opening a credit card account. On some starter cards, the annual fee can take a huge chunk out of your spending limit on Day 1.
  • Other Fees: You can expect foreign transaction fees and late payment fees, but look out for cash advance fees, balance transfer fees, and paper statement fees. You don’t want to be surprised by these extra charges which will add to your credit limit and accrue interest just like any other charge.

In short: compare fees, potential rewards, APRs, and credit limits as you shop around for your best credit card for a first-time cardholder.

How to Improve Your Credit Score

Don’t feel bad if your credit score won’t qualify you for your first credit card. A lot of people have been in your situation.

I recommend a secured credit card which will give you a chance to build credit. After six months to a year, you’ll likely qualify for a regular, unsecured credit card.

You should also consider credit builder loans which a lot of banks and credit unions offer. The loan’s proceeds will go into a savings account, and the bank will set up automatic payments from the savings account.

This way you’ll never miss a payment, and the loan will be paid off as scheduled.

Regular Payments: The Key to Building Credit

Of all the financial data that comprises your FICO credit score, your payment history matters most. That’s why credit builder loans and secured credit cards can be so helpful. They help you make continuing, regular payments.

When you’re a young adult or when you’re making a fresh start financially, your credit report has very little data. A single late payment can pull down your score a lot.

The other big piece of the puzzle is your credit utilization rate. How much of your credit limits are you using? If you’re using more than 30%, your credit use rate could be pulling down your score.

I recommend staying under 25% of your credit limits. And, if you do pay down an account all the way, consider keeping it open. A $0 balance helps lower your overall credit utilization ratio.

Getting your first credit card gives you a chance to make regular payments and keep your balance paid down — which comprises about 2/3 of your FICO score.

The remaining 1/3 of your score improves as the average age of your credit increases, as you limit hard inquiries, and as you gain a more diverse mix of credit accounts.

Your First Credit Card: A Chance to Develop New Habits

Good habits can take a lifetime to develop. But if you establish good credit card habits early, your entire financial life will offer more opportunities.

When you get a new credit card, I recommend using it only for emergencies at first. Don’t use the card for everyday purchases like fast food, groceries, and gas.

You should also save up some money for emergencies. Most personal finance experts suggest keeping enough money in a savings account to pay three months of living expenses.

When you have an emergency fund, a car repair, illness, or another unexpected expense won’t require you to use your credit card.

When your credit is strong enough to apply for a rewards credit card, you can then start making regular purchases with your credit card. You could put recurring expenses on your card such as your cell phone, Netflix, utilities, or some other monthly payment.

Since you already pay these expenses every month, you know you can afford them with or without the credit card.

Just be sure to pay them off at the end of the month.

Paying Off Your Card Every Month: The Best Habit

Paying your credit card bill in full each month — and on time — will mean you won’t pay interest charges or late fees. Those two steps are the best things you can do to raise your credit score.

If you can’t pay your bill in full each month, at least make the minimum payment and don’t charge anything more until you’ve paid off the balance.

Having a credit card balance is OK, as far as a credit score goes, as long as it’s less than 30% of your total credit card limit. With a credit utilization rate above 30%, lenders start to see you as more of a risk and charge higher interest rates.

Ideally, don’t exceed the 25% threshold for credit utilization.

Avoid Cash Advances to Keep Balances & APRs Low

From time to time you may get blank checks from your credit card company. Don’t use them. They’re cash advances on your credit and carry higher interest rates than regular charges do.

After getting your first credit card, you’ll likely get more credit card offers in the mail from other credit issuers. They may offer all types of rewards and better rates than your current card.

Don’t go for them until you’ve established a good credit report for at least a year. Having too many credit cards can only complicate your finances and make it easier to overspend.

Review Your Credit Card Statement Every Month

Lastly, read your credit card statement carefully each month. Look for fraudulent charges and other errors, and report them to your credit card company immediately.

And get in the habit of checking your credit report for free at least once a year from the three main credit reporting agencies to check for errors on your report. Visit

Following these habits can help you establish good credit and keep it for the rest of your life, providing cheaper financial products as you tackle other “firsts” — like your first home, first new car, or first small business loan.

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