3 Tips for Choosing the Best First Credit Card

3 Tips for Choosing the Best First Credit Card

Best Secured Credit Card for Rebuilding Credit
#1
First Progress Platinum Prestige MasterCard® Secured Credit Card
  • Great for repairing or establishing credit
  • Refundable security deposit
  • Low interest rate
Best Low Interest Secured Credit Card
#2
primor® Secured Visa Gold Card
  • One of the lowest interest rates available for people with bad credit
  • No minimum credit score required
  • No activation fees

Ready to apply for your first credit card but don't know where to start? Well, you're not alone.

With the dozens of different cards offered by the major banks, not to mention the hundreds of others available from smaller banks and credit unions, it's easy to get overwhelmed when trying to select the best first credit card for you.

The incredibly large selection of credit cards available to you is a sign of a healthy, competitive market. But that may not seem like such a good thing when you have no experience shopping for the right card.

Here’s what you need to know when selecting your first credit card:

What should your goals be for getting the best first credit card for your needs?

Experienced credit card users may select the best card to earn rewards, enjoy valuable benefits, or to help pay off their existing debts. But in order to find the best first credit card for you, your goals should be a bit different.

The point of your first credit card should be to help you learn how to manage your own account, while giving you the opportunity to build your credit history and your credit score.

This means paying your bills on-time, and carrying very little, if any debt.

Having a credit card will also offer you one of the most secure methods of payment possible. Unlike other forms of payment, including debit cards, your credit card account is protected by the Fair Credit Billing Act.

This powerful Federal law says that you will never be responsible for more than $50 in case of a fraudulent charge, or a merchant failing to deliver what it promised.

In practice, every credit card has a zero liability guarantee that means that you won’t ever lose a penny.

You’ll also want to take advantage of a credit card’s unique benefits. For example, most credit cards come with rental car insurance, so you don’t have to pay for the expensive coverage offered by the rental car companies.

Many credit cards also come with shopping protections such as damage and theft protection, price protection, and extended warranty coverage.

Finally, many credit cards also offer purchase rewards. However, when you are looking for your first credit card, earning rewards should be the lowest priority, far behind learning to handle your account responsibly and building your credit.

1) Features to look for in your first credit card:

First, you’ll want to apply for a credit card that you can be approved for. These are credit cards designed for applicants with a limited credit history.

If you’re a student, there are some credit cards that are specifically marketed towards full-time students with a modest income and a limited credit history.

Next, you’ll want to look for a credit card with low rates and fees.

When you have a limited credit history, you can’t expect to be approved for a credit card with the most competitive interest rates, but you can still avoid paying an annual fee.

You’ll also want to look for a credit card that’s easy to use. First time credit card users should avoid cards with complicated reward schemes and try to find a card issued by a company with a reputation for good customer service.

2) Where to start:

Now that you know what you’re looking for, where should you begin? One place to start is with the bank or credit union where you currently have a checking or savings account.

Opening a credit card account where you already bank has the advantage of building on your existing banking relationship while keeping all of your accounts in one place.

Also, you’ll only have to remember one login, and learn how to use a single bank’s website.

And when you have to make a payment from your checking or savings account to your credit card, it’s simply a matter of transferring funds between accounts, not between separate institutions.

Another good place to start is with some of the major credit card issuers. For example, Capital One, Discover, Bank of America, and US Bank all offer credit cards for students as well as anyone with a limited credit history

3) Choosing a card when you’ve had credit problems:

Even if you’ve never had a credit card before, you may have had credit problems in the past.

For example, if you’ve had trouble repaying a student loan or a vehicle loan in the recent past, then you’ve might have fair or poor credit.

But if you can’t qualify for a standard credit card, don't lose hope yet.

Secured cards work much like standard, unsecured cards, except that you must submit a refundable security deposit before you can open an account.

The size of your deposit becomes the amount of your card’s credit limit. But once your account is opened, a secured card is treated just like any other credit card.

You’ll get a monthly statement, and will have to make a minimum payment each month. However, any store where you use your card will not know that it’s a secured card.

Some secured cards come with the same benefits of any other card, such as rental car insurance, extended warranty coverage, and damage and theft protection.

With at least a year of on-time payments, your credit score should rise enough to allow you to be approved for a standard, unsecured card.

Once you open your unsecured card account, you can close your secured card account and receive a refund of your security deposit.

Some good first credit cards

To get you started, here are some recommendations for your first credit card:

Discover It

The Discover It card makes for an excellent first credit card for several reasons. First, it is a simple card with no annual fee, foreign transaction fee, or penalty interest rate. Discover will even waive your first late payment fee automatically.

Also, Discover has a reputation for great customer service, having won the JD Power US credit card customer satisfaction survey for three of the last four years.

All Discover cards also come with a full array of cardholder benefits including rental car insurance, purchase protection, price protection, and a return guarantee.

The Discover It card is also available to applicants with a wide range of credit profiles, and Discover will often offer you the secured card version if you are not approved for the standard, unsecured card.

Finally, the Discover card offers cash back rewards. This is nice to have, but it shouldn’t be a factor when choosing your first credit card.

Capital One Platinum

Capital One is another company that offers a simple card for those with average credit. Their Platinum Mastercard has no annual fee, no foreign transaction fee, and no penalty interest rate.

Capital One will likely approve your account with a modest credit line to start, but may automatically raise your credit limit after five months of on-time payments.

It doesn’t offer you any rewards, but it includes cardholder benefits such as extended warranty coverage, auto rental insurance, and a price protection policy. It’s just that simple.

BankAmericard

This basic, unsecured card is ideal for those who are new to credit. It has no annual fee, low interest rates, and no penalty APR. It doesn’t offer rewards, but it’s perfect for those who already have an account with Bank of America.

Capital One Secured Mastercard

The Capital One Secured Mastercard offers all of the same features and benefits of its Platinum card, but in a version that’s available to applicants with nearly any credit profile.

To open an account, you must first submit a refundable security deposit of $49, $99 or $200, which will result in an initial credit line of at least $200.

You can then get access to a higher line of credit after making five monthly deposits on-time. There’s no annual fee for this card, and no foreign transaction fees.

BankAmericard Secured

Bank of America is a huge retail bank, and it offers its secured card to help customers build their credit.

It requires a minimum of a $300 deposit, with a maximum of $4,900 to open an account, with your credit limit determined by the size of your deposit.

After 12 months, Bank of America will review your account and your overall credit history to see if you qualify to have your security deposit refunded. This card has a reasonable $39 annual fee, and no penalty interest rate.

U.S. Bank Secured Visa

U.S. Bank is another large retail bank that offers a secured card for those who are new to credit cards. Unlike most other secured card, your deposit will be placed in an interest earning savings account.

But just as with other secured cards, your payments are not automatically withdrawn from your account, and you’re responsible for making the minimum payment each month. There’s a $29 annual fee for this card.

To get you started, here are some recommendations for your first credit card:

What's the bottom line?

Applying for a credit card is an important financial decision, especially when it’s your first time. You should take the time to research all of your best options before choosing the right card for your needs.

Just remember that using your first card responsibly will be more important than which card you choose.

Did we miss anything? Let us know in the comment section below. We would love to hear from you!

Save

Editorial Note: This content is not provided or commissioned by the credit card issuer. Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by the credit card issuer. This site may be compensated through a credit card issuer partnership.


Editorial staff

3 Tips for Choosing the Best First Credit Card

3 Tips for Choosing the Best First Credit Card

Read Video Infographic Tips

Ready to apply for your first credit card but don't know where to start? Well, you're not alone.

With the dozens of different cards offered by the major banks, not to mention the hundreds of others available from smaller banks and credit unions, it's easy to get overwhelmed when trying to select the best first credit card for you.

The incredibly large selection of credit cards available to you is a sign of a healthy, competitive market. But that may not seem like such a good thing when you have no experience shopping for the right card.

Here’s what you need to know when selecting your first credit card:

What should your goals be for getting the best first credit card for your needs?

Experienced credit card users may select the best card to earn rewards, enjoy valuable benefits, or to help pay off their existing debts. But in order to find the best first credit card for you, your goals should be a bit different.

The point of your first credit card should be to help you learn how to manage your own account, while giving you the opportunity to build your credit history and your credit score.

This means paying your bills on-time, and carrying very little, if any debt.

Having a credit card will also offer you one of the most secure methods of payment possible. Unlike other forms of payment, including debit cards, your credit card account is protected by the Fair Credit Billing Act.

This powerful Federal law says that you will never be responsible for more than $50 in case of a fraudulent charge, or a merchant failing to deliver what it promised.

In practice, every credit card has a zero liability guarantee that means that you won’t ever lose a penny.

You’ll also want to take advantage of a credit card’s unique benefits. For example, most credit cards come with rental car insurance, so you don’t have to pay for the expensive coverage offered by the rental car companies.

Many credit cards also come with shopping protections such as damage and theft protection, price protection, and extended warranty coverage.

Finally, many credit cards also offer purchase rewards. However, when you are looking for your first credit card, earning rewards should be the lowest priority, far behind learning to handle your account responsibly and building your credit.

1) Features to look for in your first credit card:

First, you’ll want to apply for a credit card that you can be approved for. These are credit cards designed for applicants with a limited credit history.

If you’re a student, there are some credit cards that are specifically marketed towards full-time students with a modest income and a limited credit history.

Next, you’ll want to look for a credit card with low rates and fees.

When you have a limited credit history, you can’t expect to be approved for a credit card with the most competitive interest rates, but you can still avoid paying an annual fee.

You’ll also want to look for a credit card that’s easy to use. First time credit card users should avoid cards with complicated reward schemes and try to find a card issued by a company with a reputation for good customer service.

2) Where to start:

Now that you know what you’re looking for, where should you begin? One place to start is with the bank or credit union where you currently have a checking or savings account.

Opening a credit card account where you already bank has the advantage of building on your existing banking relationship while keeping all of your accounts in one place.

Also, you’ll only have to remember one login, and learn how to use a single bank’s website.

And when you have to make a payment from your checking or savings account to your credit card, it’s simply a matter of transferring funds between accounts, not between separate institutions.

Another good place to start is with some of the major credit card issuers. For example, Capital One, Discover, Bank of America, and US Bank all offer credit cards for students as well as anyone with a limited credit history

3) Choosing a card when you’ve had credit problems:

Even if you’ve never had a credit card before, you may have had credit problems in the past.

For example, if you’ve had trouble repaying a student loan or a vehicle loan in the recent past, then you’ve might have fair or poor credit.

But if you can’t qualify for a standard credit card, don't lose hope yet.

Secured cards work much like standard, unsecured cards, except that you must submit a refundable security deposit before you can open an account.

The size of your deposit becomes the amount of your card’s credit limit. But once your account is opened, a secured card is treated just like any other credit card.

You’ll get a monthly statement, and will have to make a minimum payment each month. However, any store where you use your card will not know that it’s a secured card.

Some secured cards come with the same benefits of any other card, such as rental car insurance, extended warranty coverage, and damage and theft protection.

With at least a year of on-time payments, your credit score should rise enough to allow you to be approved for a standard, unsecured card.

Once you open your unsecured card account, you can close your secured card account and receive a refund of your security deposit.

Some good first credit cards

To get you started, here are some recommendations for your first credit card:

Discover It

The Discover It card makes for an excellent first credit card for several reasons. First, it is a simple card with no annual fee, foreign transaction fee, or penalty interest rate. Discover will even waive your first late payment fee automatically.

Also, Discover has a reputation for great customer service, having won the JD Power US credit card customer satisfaction survey for three of the last four years.

All Discover cards also come with a full array of cardholder benefits including rental car insurance, purchase protection, price protection, and a return guarantee.

The Discover It card is also available to applicants with a wide range of credit profiles, and Discover will often offer you the secured card version if you are not approved for the standard, unsecured card.

Finally, the Discover card offers cash back rewards. This is nice to have, but it shouldn’t be a factor when choosing your first credit card.

Capital One Platinum

Capital One is another company that offers a simple card for those with average credit. Their Platinum Mastercard has no annual fee, no foreign transaction fee, and no penalty interest rate.

Capital One will likely approve your account with a modest credit line to start, but may automatically raise your credit limit after five months of on-time payments.

It doesn’t offer you any rewards, but it includes cardholder benefits such as extended warranty coverage, auto rental insurance, and a price protection policy. It’s just that simple.

BankAmericard

This basic, unsecured card is ideal for those who are new to credit. It has no annual fee, low interest rates, and no penalty APR. It doesn’t offer rewards, but it’s perfect for those who already have an account with Bank of America.

Capital One Secured Mastercard

The Capital One Secured Mastercard offers all of the same features and benefits of its Platinum card, but in a version that’s available to applicants with nearly any credit profile.

To open an account, you must first submit a refundable security deposit of $49, $99 or $200, which will result in an initial credit line of at least $200.

You can then get access to a higher line of credit after making five monthly deposits on-time. There’s no annual fee for this card, and no foreign transaction fees.

BankAmericard Secured

Bank of America is a huge retail bank, and it offers its secured card to help customers build their credit.

It requires a minimum of a $300 deposit, with a maximum of $4,900 to open an account, with your credit limit determined by the size of your deposit.

After 12 months, Bank of America will review your account and your overall credit history to see if you qualify to have your security deposit refunded. This card has a reasonable $39 annual fee, and no penalty interest rate.

U.S. Bank Secured Visa

U.S. Bank is another large retail bank that offers a secured card for those who are new to credit cards. Unlike most other secured card, your deposit will be placed in an interest earning savings account.

But just as with other secured cards, your payments are not automatically withdrawn from your account, and you’re responsible for making the minimum payment each month. There’s a $29 annual fee for this card.

To get you started, here are some recommendations for your first credit card:

What's the bottom line?

Applying for a credit card is an important financial decision, especially when it’s your first time. You should take the time to research all of your best options before choosing the right card for your needs.

Just remember that using your first card responsibly will be more important than which card you choose.

Did we miss anything? Let us know in the comment section below. We would love to hear from you!

Save

Editorial Note: This content is not provided or commissioned by the credit card issuer. Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by the credit card issuer. This site may be compensated through a credit card issuer partnership.


Editorial staff

Best Low Interest Secured Credit Card

Best Low Interest Secured Credit Card: primor® Secured Visa Gold Card
Apply Now
On Card Issuer’s Secure Website

Pros

  • One of the lowest interest rates available for people with bad credit
  • No minimum credit score required
  • No activation fees

Cons

Vague terms of service that basically state the company can place limits on transactions at retailers and ATMs at whim. There’s an annual fee, but it’s not too high.

Details

Application Process: Input info about your name, residence, and income on the online form for this secured primor Visa card. After you submit the app, you’ll have an immediate response unless your criteria requires a manual review.

This is a secured credit card, so you have to fork over some funds before you receive your card. The company offers secured lines of credit that range from $200 to $5000, and you’ll get rejected if you don’t have a checking account.

Bonus Offers: None, but we do like that this card is linked with a personal savings account.

Rewards: This card doesn’t offer rewards, but you can use it to build or repair your credit. The credit card reports your payment history to 3 credit bureaus, and one cardholder reports that their FICO increased by 130 points just 6 months after getting this card.

APR: This card is tied for the lowest APR with the First Progress Platinum Prestige MasterCard. It has a variable APR that’s just 9.99%, which is a third of what some other cards charge folks with subpar credit.

If you use your card for a cash advance, expect to pay a variable APR of 18.99%. Could be worse.

Fees: This card has the usual 3% foreign transaction fee, and you’ll pay 5% or $5 (whichever is greater) for cash advances. If you miss a payment, expect to get hit with a late fee of up to $29.

Best Secured Credit Card for Rebuilding Credit

Best Secured Credit Card for Rebuilding Credit: First Progress Platinum Prestige MasterCard® Secured Credit Card
Apply Now
On Card Issuer’s Secure Website

Pros

  • Great for repairing or establishing credit
  • Refundable security deposit
  • Low interest rate

Cons

This card requires a security deposit, and your payment doesn’t earn interest. There’s also an annual fee.

Details

  • Fund your new MasterCard® secured credit card with your tax refund today!
  • Our card reports monthly to all three major bureaus and approval is based upon a fully-refundable security deposit.
  • We can approve you at any credit score, no minimum required.
  • No processing or application fees required.
  • Full-featured Platinum MasterCard, accepted for car rentals, hotels, and millions of other locations worldwide.
  • Credit Line Secured by Your Fully-Refundable Deposit of $200 - $2,000 Submitted with Application
  • Nationwide Program though not yet available in NY, IA, AR, or WI

Application Process: Apply online in a jiffy by providing some basic info about your name and location. Once approved, you must pay your security deposit in order to receive the card. The deposit has to be at least $200, but you can add more - up to $2000 total - if you want.

Bonus Offers: None, but that’s not surprising in the world of secured credit cards.

Rewards: There aren’t any, unfortunately.

APR: This card has a low variable APR of 9.99%, making it one of the lowest-APR cards on our list of favorites (it’s tied with the primor secured Visa). A cash advance has an APR of 18.99%, which is still lower than the industry norm for this type of card.

Fees: You’ll shell out $49 for an annual fee for this secured Visa card. This is a price that’s 50% - and sometimes even 75% - of the amount competitors charge. It’s the least First Progress can do since they’re basically charging you to spend your own money.

Other fees include a cash advance fee of $10 or 3% (whatever is greater), 3% foreign transaction fee, $38 late payment fee, and $27 returned payment fee.

Jason Steele is a journalist who specializes in covering credit cards, award travel, and other areas of personal finance. As one of the nation’s leading experts in the credit card industry, Jason’s work has been featured at mainstream outlets such as Yahoo! Finance, MSN Money, and Business Insider. Jason’s also well known within the community of travel rewards enthusiasts as the Senior Points and Miles Contributor for The Points Guy and other outlets on the subjects of airline rewards and family travel. Using this expertise in earning and spending points and miles, Jason and his family travel around the country and across the world, consuming an estimated $100,000 worth of award travel in 2013 alone. Finally, Jason’s writing on the subject of travel is further enhanced by the fact that he holds a commercial pilot’s license. Jason lives in Denver, Colorado with his wife and three children.

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