How To Get A Credit Card For The First Time – Forbes Advisor

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If you’re in the market for your first credit card, congratulations and welcome to a whole new world of opportunity! We here at Forbes Advisor are here to guide you through the ins and outs of getting your first card.

Credit cards offer major convenience and fraud protections plus rewards, financing opportunities and more. It’s important to make sure your first credit card caters to your needs and doesn’t pose significant risk to your financial wellbeing. And remember to always do your research before accepting any credit card offer.

Find The Best Credit Cards For 2022

No single credit card is the best option for every family, every purchase or every budget. We’ve picked the best credit cards in a way designed to be the most helpful to the widest variety of readers.

Reasons To Get a Credit Card

Like everything in life, credit cards come with trade-offs. While having a credit card can allow you to cash in on benefits like rewards points and frequent flyer miles, those perks are quickly nullified if you do not pay your bill on time. For the most part, whether to get a credit card or not boils down to your own ability to use it responsibly.

Below are some of the reasons you might consider a credit card:

To Build Credit

Whether financing a new cell phone or buying a house, credit reports and scores are used by lenders to evaluate your creditworthiness and establish your borrowing terms. Credit scores are based on how you’ve managed debt in the past, and lenders use your score to establish the level of risk you pose as a borrower.

If you have a long history of making on-time payments and managing debt responsibly, you likely have a good credit score and may have a better chance of getting approved for credit with favorable terms.

If you don’t have much experience with credit or have negative factors weighing you down, such as late payments in your credit history, you may have difficulty receiving approval for a new account. If you do receive approval, you’ll likely receive less-favorable terms.

Credit cards help you build credit because credit card issuers typically report your account and activity to the national credit bureaus — Experian, TransUnion and Equifax. The bureaus then use this information to create your credit reports, which are the basis of your credit scores.

Convenience

Visa and Mastercard credit cards are accepted nearly everywhere while American Express and Discover are widely accepted throughout the US Credit cards can also be used in person, online or over the phone and are not the same as cash in the sense that when stolen, you have recourse to protect your assets.

Credit cards can also be beneficial when traveling. One reason is because some major car rental companies and hotels require a large hold on a credit or debit card to reserve a vehicle or book a room. This procedure can take several days or longer. During this time, the amount of the hold on either a credit or debit card is not available to use.

Because you may not have the necessary funds in your bank account, credit cards increase your purchasing power, providing you with the required funds at the time they are needed. This doesn’t mean you should spend money you don’t have, but it does protect from overdraft in the event your paycheck doesn’t clear immediately.

Many credit cards also allow you to make purchases with just the tap or a hover of the card or even your cell phone.

Fraud Protection

Credit card fraud protection benefits safeguard you from responsibility for unauthorized purchases made on your account. While many cards market a $ 0 fraud liability benefit, legal protections also exist.

The Fair Credit Billing Act prohibits credit card companies from holding you responsible for unauthorized purchases on your credit card if you report it stolen before the thief uses your card. The same goes if someone manages to steal your credit card number but not your physical card.

If the fraudulent purchase occurs before you report the card stolen, federal law limits your liability to $ 50. Many credit card issuers offer $ 0 fraud liability protection, which means regardless of the circumstances, you’re not responsible for any unauthorized purchases at all as long as you notify the issuer.

Rewards

Many credit cards provide you with rewards for using them, but finding the best one (s) for you can be a challenge. Rewards come in several flavors including cash back, airline miles, points and more. When deciding on a credit card, it’s important to understand the terms and conditions of a rewards program in order to prevent leaving points — or cold, hard cash – on the table.

Benefits

Credit cards offer all sorts of features and additional benefits to incentivize your application and use of a card. Here are just a few of the most basic ones:

  • Protection against some types of credit card fraud
  • Free credit score information
  • Increased purchasing power
  • Airline perks including free checked bags
  • Free nights at co-branded hotels
  • Membership application reimbursement credits for programs including TSA PreCheck, Global Entry, NEXUS, CLEAR and more
  • Free delivery or even gifts from co-branded partners

Welcome Bonuses

A credit card welcome bonus is an incentive banks offer to entice new customers to apply for and use credit cards. Often, welcome bonuses offer additional points or cash back after a new cardholder meets a certain spending threshold in a limited amount of time. Sometimes welcome bonuses include additional perks, reduced annual fees or merchandise.

Like many financial products, you should be aware of the fine print and the eligibility requirements before signing up for a credit card. If you want to take advantage of welcome-bonus offers, you should understand the type of welcome bonus received, what you need to do to earn the bonus and the eligibility requirements.

Intro APR Periods

Annual percentage rate (APR) refers to the interest rate — stated as a yearly rate but typically calculated daily — credit card companies charge if you carry a balance. An introductory APR is a lower-than-standard APR you can take advantage of for a set period of time when you open an account. Intro APR may apply to a card’s purchase APR or balance transfer APR or both.

Cards with introductory APR offers might have restrictions and fees you should know about before applying. For instance, you should not ignore minimum payment requirements during an introductory APR period. Learning all the facts about the offer can help you find a card you can use to help meet your financial goals.

How To Qualify for a Credit Card

Issuers including American Express, Bank of America, Capital One, Chase, Citibank and Discover will let you check to see if you’re pre-qualified or pre-approved for credit cards. In order to improve your chances of being approved, clear up any outstanding debts. Make sure to pay off any past due or delinquent accounts as soon as you can.

An option you can use if you’re starting to build credit from scratch is to become an authorized user on someone else’s account. An authorized usership allows you to gain access to a credit card with your name on it but attached to someone else’s account. Negatively-reflecting credit activity by the other person on the account, however, may adversely affect your credit score as well.

How To Get a Credit Card for the First Time

Research the Available Options

When you’re just beginning to build your credit, look into cards requiring little or no credit history. The best first credit card for you may be a secured credit card or student credit card.

With typical secured credit cards, your credit line will equal the amount of the required cash deposit after you are approved. The difference between this and a debit card is that your on-time payments help build credit with responsible use as your activity is reported by the issuer to credit bureaus.

Also consider a student credit card with a low annual percentage rate (APR) and a rewards program rewarding purchase categories you’ll most often use.

How To Choose Your First Credit Card

A first credit card is a major milestone and often among the first major financial decisions in a person’s life. Before getting click-happy with applications, however, you’ll want to conduct research to make sure you choose the right credit card for your financial goals and situation.

First, 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.

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. Many consumers find secured or student cards to be good first cards to carry.

Apply Online

The internet makes applying for a credit card fairly straightforward: you can visit most card issuers’ websites and fill out an online application in minutes. Approval (or denial) is often issued near-instantaneously, but also may take several days. If you’re denied, the issuer is required to provide you with reasons for your denial.

If approved, you’ll be notified and a card will be sent to the address you provided. Mobile device and online access to virtual card numbers is often available almost immediately, as are the specific terms of your card agreement.

What you do next with your new card is also important.

Build Your Credit Score

Depending on your experience with credit, you might not have a credit report at all yet. Or, your credit report might not have enough information for credit scoring models to assign you a meaningful credit score. If that’s the case, you’ll need to focus on building your credit score.

Opening of new accounts will be reported to the major credit bureaus — most major lenders and card issuers report to all three — and this is a most important first step to building a credit profile. You can’t build a history as a borrower until there are accounts in your name, so having open and active credit accounts can be helpful.

Find The Best Credit Cards For 2022

No single credit card is the best option for every family, every purchase or every budget. We’ve picked the best credit cards in a way designed to be the most helpful to the widest variety of readers.

Bottom Line

Credit cards provide users many benefits if used responsibly. Whether you like to travel or you want to start building your credit score for larger home or auto purchases, you want to make in the future, a credit card may be an important part of your financial planning. Be sure to do your research before choosing at random — your first credit card may be an important element of your credit score for a long time.

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