Guide to Choosing Your First Credit Card

When you are considering getting your first credit card, it is important to take that step after serious consideration. Credit cards can help you to build your credit, make it easier to travel, and can help you during an emergency. They can also make it possible for you to damage your credit and make some serious financial mistakes. As you take the step to get your first credit card, you need to be committed to using the card wisely. It is just as important to find a credit card that has the most benefit for you. Here are five things you need to consider when applying for your first credit card.

1
Interest Rate

Westend61/Westend61/Getty Images

The first thing you should look at is the offered interest rate on the credit card. This is important even if you never plan on carrying a balance. You may have a month or two when you end up paying interest on the card, and you need to find the card with the lowest possible interest rate. Since this is your first credit card, you may not qualify for the lowest available rates, but you should find some that are reasonable. Anything over twenty percent is too high, and you should work to get it down closer to thirteen percent.  

2
Avoid Annual Fees

Many credit cards used to charge annual fees in order to qualify for the card. Now, it is much easier to find a credit card that does not charge you an annual fee. You can look at your bank or credit union to see if they are willing to issue you a credit card without an annual fee. Many of the offers you receive in the mail or on campus may also not have an annual fee. 

3
Look for Rewards

Although you should not just get a credit card for the rewards, if you are shopping for one to build your credit, you may want to take advantage of the rewards that are available to you. Cash back cards are fairly straightforward and easy to claim the rewards, but if you have particular travel goals, you may want to consider that type of reward too. Be sure to read reviews on how easy or difficult it is to claim the rewards. Additionally remember the reason the cards offer the rewards is to have customers run up a balance so they can make money off of you. If you use the cards responsibly then you can benefit from the rewards, but if you carry a balance, they rewards are not worth it. 

4
Avoid Store Cards

Store credit cards are some of the easiest to get. They also have the highest interest rates. It is best to avoid the store credit cards for several reasons. You cannot use a store credit card at another location and so it negates benefit of traveling with a credit card. You cannot use it in an emergency to pay for a car repair bill either. Additionally, it may be too tempting to take advantage of a sale and the additional money off and you may end up overspending. It is best to look for a credit card you can use anywhere if you are looking for your first credit card.  

5
Understand the Penalties

Most credit cards will charge you a late fee and raise your interest rate if you are late with a credit card payment. It is important to know what the penalties are for late payments and going over your balance. Choose the cards with the best options available to you. While you should never be late, sometimes things happen like you forget to send in a payment or it gets lost in the mail. You can avoid that by looking for cards that offer one time late payment forgiveness or similar benefits.