first credit cardIf you don’t have a credit card, it’s probably something you’re thinking of adding to your wallet. That’s because when used responsibly, a credit card can help you build your credit history, earn you rewards and even arm you with more fraud protection than debit cards. While you may be tempted to apply for the first credit card you think you’ll qualify for, there are some things you’ll want to keep in mind before you get your first credit card.

Understand how credit works

Before getting your first credit card, it’s helpful to know how a credit card works. So, here’s the lowdown: credit card issuers grant you credit, which you can think of as borrowed money from a card issuer that you’re agreeing to pay back in full. When you apply for a card, the issuer will approve or deny you and provide you with a credit limit, or the maximum amount of money you can spend on the card. Your credit history, income and other factors determine your credit limit, which means those who are new to credit often have lower credit limits.

It may be tempting to apply for multiple cards at once, but that’s something that should be avoided, as doing so will not only make you look desperate, but also result in many hard credit inquiries, otherwise known as hard pulls, that hurt your credit scores. As such, we encourage you to find a card with the right rewards and perks for your needs and spending habits, which brings us to our next point.

Which credit cards are best for first-time cardholders?

There are a lot of credit cards on the market, but are they all within your reach? Unfortunately, those with no credit history don’t qualify for all cards, but that doesn’t mean there isn’t a card for you. These are some of the types of cards those with no credit will want to consider:

  • A secured credit card is a great option if you don’t have a credit history. As a holder of a secured credit card, you can use it to build your credit history because these cards are designed to report to all three credit bureaus. Three-bureau credit reporting is essential for first-time cardholders because it means their payments and other account activity will be reported to all three bureaus, allowing them to build all three credit scores at once. While secured cards act and feel like regular credit cards, they do require a cash collateral deposit that the issuer will use if you default on the card. Oftentimes, your deposit will determine your credit limit (e.g., if you deposit $200 to open the account, your credit limit will be $200). Eventually, if you demonstrate that you can use your secured credit card responsibly, you’ll be able to transition into using an unsecured credit card, which doesn’t require a deposit.
  • A student credit card may also be a viable choice. These types of credit cards cater to those in school, and as such, they’re available to those without credit histories. Student credit cards not only help students learn about credit and personal finance, but they also offer other desirable features, such as more manageable credit limits, 0% intro APRs and even rewards on purchases made with the card. That said, not all student credit cards are created equal, and some of them may have undesirable features, such as higher interest rates.
  • There are a number of credit cards you can check out if you happen to have a credit history. As mentioned before, different credit cards provide different offerings, which could include travel rewards, a low intro APR or other perks. For that reason, you’ll want to do your research and figure out which card is best suited for you and your credit scores before applying for one. If you’re an avid traveler, for example, getting your hands on a travel credit card could be a great choice. On the other hand, if you often find yourself in your local grocery store’s cheese section, a reliable cash back credit card could be the card you’re looking for. Although most rewards credit cards require a longer credit history, there is likely an option for you — look for cards that require fair or average credit for approval. To learn more about credit card specifics, you can read our credit card reviews.

We should note that regardless of the card you select, you’ll want to make sure you completely understand the card’s terms before you apply. After all, you will be on the hook for anything hiding in the card’s terms and conditions. Thankfully, thanks to a number of laws, credit card issuers are required to be straightforward about the card’s terms, but it still doesn’t hurt to know what to look for in the terms and conditions.

Plan to use your first credit card

Before you get your first credit card, another point to keep in mind is that it’s one thing to get a credit card, but it’s another to use it — and you’ll need to carry out the latter if you want to build your credit history through your card.

Here’s why: When you apply for a loan, dream house or job, those on the receiving end of these applications (e.g., lenders, mortgagors and businesses) pull your credit reports and look at your credit history. The reason? To better predict your likelihood of paying owed payments in full and on time. These predictions help them decide if they’ll be extending that loan, home or job to you. As a result, if you want to have a credit history that helps you get on lenders’ good sides, having a credit history that shows how you’ve repaid credit in a timely manner is important. Moral of the story? Don’t just let your credit card sit useless in your wallet. Instead, actively use it to pay for purchases you know you can afford — by doing that, you can make sure you avoid the cycle of debt.

Be sure to pay your bills on time

Late credit card payments are something you want to avoid, as they can result in late fees, derogatory items on your credit reports and an increased APR. They will also appear on your credit reports and impact your credit scores (payment history accounts for 35% of your credit scores). After all, failing to pay your credit card bill on time can hurt your credit history, since your credit scores and credit reports take blows when you miss a credit card payment or showcase unreliable financial behaviors.

Take time to read your credit card bills

As you may have imagined, credit card statement errors can lead to consequences, which is why you’ll have to watch out for these potential issues after you get your first credit card. A statement error (e.g., there’s a charge you didn’t make) could be a sign of potential fraudulent activity — something to keep an eye on, given the increasing number of data breaches involving people’s financial information. That’s why it’s best to comb through your credit card statement every month to confirm all of the activity reflects your actions. Doing so will allow you to check your payment and spending habits, and regularly reviewing your statements can also help you catch errors, fraudulent charges and identity theft early on.

While getting your first credit card does take a bit of work, this effort leads to many benefits for you down the road. To learn more about which credit card should be your first credit card, check out our reviews of credit cards.