Choosing your first credit card is a big step, and the right card can help you build credit responsibly and even give you some benefits. So, what should you look for? The answer depends on your unique personal finance goals and whether you have any existing credit history. The right card for you may not be the right one for someone else.
Fortunately, even without a one-size-fits-all card, we've compiled a list of considerations when choosing among the beginner credit card options. You may find them helpful in your money journey, so they can help you establish credit and raise your credit score over time.
What to consider when choosing your first credit card
Most people don't have a lengthy credit history when they apply for their first credit card. That's because laws limit consumers under 21 (18 in some instances) from getting a card on their own. Unless you've been added as an authorized user on a parent's or other adult's credit account, you may have no credit history at all.
Some cards are marketed specifically to those without a long credit history and even offer some additional perks. Think about how important each of these benefits is to you so you can narrow down your options.
- Low or no annual fee. Some cards may charge no annual fee in the first year to encourage you to apply but then charge it in the following years. Look at terms to see the cost over the long term.
- Low or no credit history requirement. Secured credit cards and student credit cards may not require you to have any previous credit. They approve based on other factors like income and ability to pay.
- Rewards and cashback. Cards with reward programs will offer you 1%-3% or more back on purchases at select businesses, like gas stations or grocery stores. These rewards can be used as a statement credit, cash in your bank account, gift cards, merchandise, or credit toward vacations or other items.
- Low interest rates. Be sure you understand how interest rates work, especially when it comes to promotional offers. Cards may offer a low initial rate of as low as 0% but then raise it to the standard rate of 25% or more after the promo period expires.
- Credit limit increases. First-time credit cards may start you out with a very low credit limit, but give you a chance to increase it after six months or more of responsible use.
- Protections and benefits. Cards may include additional perks like accident coverage for rental cars, travel protection, and extended product warranties when you use the card to pay for items. Read the card brochure to see what benefits apply.
Best credit cards for first-time applicants
Ready to get started with your first application? Whether you're looking for a secured or unsecured option, these credit cards are geared toward those with no previous credit history:
Discover it® Student Cash Back
With the benefits of 1%-5% cashback on purchases, this Discover card may be one of the more rewarding student credit cards available. It has no annual fee and often offers an introductory 0% APR for purchases for a limited time. It also shows you whether you're pre-approved before you apply, so your credit score won't go down just for checking it out. The card also gives you a free look at your FICO score each month, so you can watch your credit build over time.
Chase Freedom Rise
Another of the low-fee credit cards, this Chase card charges no security deposit or annual fee — and there's no credit history needed for approval. Earn 1.5% cash back on each purchase and get an account review after your first year to see if you qualify for more credit or a better card offer. Chase also gives cardholders added benefits such as purchase protection, extended warranty, and trip interruption and cancellation insurance to pay you back if your vacation plans get canceled.
Credit card fees and limitations to watch out for
One drawback to a true no-credit-history card is that it can come with higher fees than cards offered to seasoned credit holders. Check the terms and conditions of any card before you apply so you know about these added expenses:
- Annual fees. These may be waived for the first year and then applied every year after. With annual fees of $49-$299, it's worth looking for a card that doesn't charge them.
- Foreign transaction fees. These only apply if you make purchases while traveling outside your home country. If you do, expect to pay a small percentage of each purchase price in additional fees (plus any difference in the currency rate).
- High interest rates. Credit cards aimed at new cardholders typically have higher rates than cards for established cardholders. If you pay your balance in full each month, you won't have to pay the interest rate at all.
- Credit limit restrictions. Low credit limits are common for first-time credit cards and cards offered by retailers. If you continue responsibly paying down your card balance each month, the lender may eventually review your account and raise your available credit.
- Activation fees. Some cards, such as secured credit cards, come with an activation fee. Check the card conditions to see if it's part of a deposit you eventually get back, and compare the cost to other similar cards to be sure you're getting the best deal.
Most entry-level credit cards will have at least one or more of these limitations or fees, so expect to compromise at least a little bit. By prioritizing which features are most important to you, it will be easier to feel good about the card you pick and work toward a card with even fewer limitations.
What makes a credit card "easy" to get for first-time applicants?
While they may be limited on cashback perks, high credit limits, and very low interest rates, the credit cards designed for first-time credit holders typically offer these benefits:
- Lower credit score requirements, which are essential for those without any previous credit history
- Pre-approval options that help you see what you qualify for before you submit to a credit check
- Student and secured card alternatives that are more lenient with their credit and income rules
Lenders offering first-time credit cards have fewer hoops to jump through, but they are also assuming a great risk in giving credit to someone with no credit history. Expect to pay a bit more in fees or interest for the privilege.
Tips for getting approved for your first credit card
There's no guarantee that your credit card application will be successful, but these strategies can improve your chances.
- Check your credit report. You can get a free peek at your credit report from each of the credit bureaus once per year. Look for any errors and make sure it's accurate. If you see something you don't recognize or know is wrong, contact the credit bureau that provided the report. There's a link on each agency's site to start the resolution process.
- Get proof of income. Credit cards ask for your annual income as part of the application process. For cards that don't require a credit check, this information is even more important. Know how much you make and have pay stubs or other documentation to back the numbers up.
- Get pre-approved. Most credit cards let you know if you're likely to be approved even before you fill out the formal application. This pre-approval process uses a soft credit check, so it won't harm your credit score and can give you an idea of the rates and limits available to you.
- Apply just once. Since each credit application can temporarily lower your score, pick just one card you want and go for it. If you get denied, consider waiting a few months, becoming an authorized user on another cardholder's account, or trying a secured credit card instead.
Make your first credit card count
No matter which card you end up going with, the strategy for using it wisely will be the same. Don't spend more than you can pay off in full each month. This way, you won't pay interest and can keep out of long-term debt. Even a credit card with a very small limit can help you establish credit and build healthy money habits, so take this as an opportunity to learn and grow.
