The Guide to Choosing First-Time Credit Cards: What’s the Best First Credit Card for YOU?
It can be difficult to function in today’s society without a credit card. Not only do you need one for many everyday expenses, but not having one can actually prevent you from doing many of the things that will, at the very least, make life easier.
Finding a good first credit card and using it responsibly is also one of the best ways to quickly establish or rebuild a positive credit history.
For most readers, the facts above probably come as no surprise. Most young adults know how important credit cards for first-timers can be. On the other hand, with all the choices available, knowing how to find the best first-time credit cards is another matter. Let’s explore how to determine which are the best credit cards for first-time holders.
Choosing a Good First-Time Credit Card is about Who You Are
One of the first things to understand about finding the best first-time credit cards is that the best card isn’t the same for everyone. That’s because who you are and what your current life status is has an impact on your needs.
College students, for instance, are likely to have little to no credit and limited income. Therefore, the best first credit card for students may be one with easy qualification and a low spending limit.
Image Source: Best First Credit Card
A young newlywed couple may have two incomes and some individual credit established through car loans or other channels. They’ll also have more expenses than the typical college student, so a card with a higher spending limit may be the best first credit card for young adults not enrolled in school.
As you can see, the process of finding the best first credit card for your purposes should start with determining your needs and financial status. Here are a few of the most basic criteria you’ll need to consider:
- Debt-to-Income Ratio: This is the first thing that any financial institution will consider in determining whether to approve individuals for first-time credit cards. The reason is obvious: if you don’t make considerably more than you spend on a monthly basis, you may not be able to pay off the debts you charge. Most credit card companies prefer to issue standard cards to people with a debt-to-income ratio of 30% or less. So, if your total monthly income is $2,500, you’ll need to have a total monthly debt of $750 or less in order to qualify for the best first-time credit cards. Otherwise, you may have to go with one of the alternatives, such as one of the many secured credit cards for first-timers.
- Credit Score: Before you get excited about that great offer you received in the mail for a good first credit card, know this: those prime offers usually require a FICO score of 750 or higher for approval. If your score is 599 or below, your only option will probably be a secured credit card. We’ll detail the types of first-time credit cards available a bit later in this article. If you don’t know what your credit score is, take a few minutes to find out at a site like FreeCreditReport.com before you start your search for a good first credit card. Better yet, consider a free account at CreditKarma.com, which will allow you to monitor your credit.
- Payment History: Even if your credit score is high, a credit card company will check your payment history during the full qualification process. If you’ve had late loan payments, collection actions, or other detrimental reports, your chances of approval for the best first-time credit cards are going to be low. In such cases, it’s important to remember that even a secured card can be a good first credit card.
With all of the above in mind, let’s look at some of the best first credit card options for individuals in certain situations.
The Best First Credit Card for Students
As mentioned earlier, students tend to have limited incomes and may not have established any kind of credit history. In the past, some credit card companies targeted college students with offers for premium first-time credit cards that sometimes had disastrous results. These days, the best credit cards for first-time holders are determined by more realistic criteria.
Generally speaking, the best first credit card for students will have a low or nonexistent annual fee, a low interest rate (APR), and minimal qualification requirements. A cash back or rewards program is a nice feature that encourages use of the card.
The following credit cards for first-timers are specifically designed with students in mind:
- Citi ThankYou® Preferred Card for College Students: (0% Annual fee, 0% APR for 7 months, good rewards program)
- Capital One® Journey Student Credit card: (0% Annual fee, 20.24% variable APR, free credit tools, cash back, increasing credit line)
For students with little or no credit, a secured card may be the best first credit card. The primor® Visa God Secured Credit Card one linked below requires a $200–$5,000 deposit (securing an equal credit line). It features a 9.99% APR on purchases and has an annual fee of $49.00. It also reports your payments to all three major credit reporting agencies, so it can help you establish good credit if you use it wisely. Click the image below to apply:
Image Source: securedcardchoice.com
The Best First Credit Card for Young Adults
Young adults just starting out on their own and not enrolled in school may have better odds at being approved for prime credit cards for first-time holders. These cards usually charge lower interest rates and have better rewards programs than typical first-time credit cards.
Applications from these individuals or couples tend to have a higher approval rate for a good first credit card for a few reasons, including:
- Full-time employment
- Possible multiple incomes
- Possible joint applicant
- Home rental history
- Established credit
For these individuals, MoneyUnder30.com’s top first-time credit card pick is the DiscoverIt® Cashback MatchTM card. It’s important to note that qualifying for this card will require a good credit rating. For those who do qualify, the rewards are plentiful, including doubling the cash back bonus at the end of the year for new members. Click the image below for full details and the application:
Image Source: discovercard.com
For those with good credit, the best first credit card for young adults might be the one with the perks that suit your lifestyle. Here are two more you may want to consider:
- Chase Freedom®Visa: (0% APR for 15 months, up to 5% cash back, $150 bonus on $500 in first 3 months)
- Capital One® Venture Rewards card: (Great for travelers, 2X miles on purchases, no annual fee for first year)
If you’re a young adult whose credit isn’t quite so well established or you have a few late payments or other problems on your credit report, you may still qualify for a good first credit card. You may have to pay a slightly higher interest rate or go without some bonus rewards. Take a look at these options:
- Capital One® QuicksilverOne® Cash Rewards Card: (0% APR for 9 months, 23.14% APR after, $39 annual fee, 1.5% cash back)
- Barclaycard Rewards MasterCard®: (No annual fee, 25.24% variable APR, earn points on all purchases to redeem for cash or gift cards)
As you can see from the points above, the best first credit card for young adults depends on both your lifestyle and financial status. Even with less-than-perfect credit, there are some excellent choices in first-time credit cards. As a general rule, qualifying for a good first credit card with no deposit will require a minimum FICO score of 600. For people with lower credit scores or no credit, the choice often narrows down to a secured card.
The Best Credit Cards for First-Time Holders with No Credit or Damaged Credit
If you’ve never had a credit card and don’t have any credit, the best choices for first-time credit cards available to you may be limited to the range of secured cards available. This may also be the case for individuals who have poor credit and are trying to rebuild their credit history.
In the latter case, you may qualify for a secured card even if you’ve had trouble with credit card payments in the past. Either way, a secured card is one of the most common credit cards for first-timers and individuals with poor credit.
A secured credit card simply requires you to deposit funds in an account with the institution that issues the card. The size of your deposit determines your credit limit, and the funds are held as collateral for the card. Unlike a debit card, purchases you make aren’t deducted from your account. The funds are only held for security in case you default on your payments.
While first-time credit cards of this type may not initially appeal to many readers, they are much more common than you may realize. Because they work exactly like any other credit card, secured credit cards are among the best credit cards for first-time holders. They provide emergency funds, help individuals build credit and teach the discipline necessary to maintain a credit card account in good standing.
Secured credit cards are available from all major credit card companies, most banks and many independent agencies. Rates, fees, and features can vary widely. If you’re among the great number of people who don’t qualify for a standard credit card, this is probably one of the best first credit card choices for you. Here are three of the most highly recommended secured options for first-time credit cards:
Living in today’s society is easier with good credit and much easier still with a credit card. Having a credit card can not only help get you through life’s rough spots, but it can actually help you build your credit rating. It can also provide a means for you to rebuild damaged credit.
When it comes to finding a good first-time credit card, there is a myriad of options. In general, however, the choice of best credit cards for first-time holders comes down to the lifestyle, income, and credit rating of the applicant. The range of features, fees, and interest rates is incredibly wide, especially for credit cards for first-timers.
Selecting the right first-time credit card for you or you and your partner can be a grueling process, but by following the guidelines above, you should find your way to the best choices in no time. Here’s to building your solid financial future!
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