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As a young adult, independently managing your finances is the next step to leveling up in the real world. By now, you might have opened your own checking and savings accounts, secured a steady income, and have a monthly budget you stick to (for the most part). Now it’s time to consider opening your first credit card.
Although there are risks to using a credit card (more on that below), responsible cardholders can earn financial credibility early on, which can pay off later.
5 reasons to get your first credit card
The benefits of getting your first credit card grow over time if you maintain positive borrowing habits. Here are a handful of reasons a credit card could improve your financial health.
1. You can build your credit
Your FICO credit score — the standard score 90% of lenders use to evaluate your creditworthiness — is made up of a few different factors. The algorithm uses your payment history (which makes up 35% of your score), amounts owed (30%), length of credit history (15%), new credit (10%), and credit mix (10%) to determine your score.
If you already have student loans and other installment loans such as a car loan, a new credit card account favorably affects your “credit mix,” since it represents a different type of borrowing. Also, as you make on-time credit card payments, you can continue building your credit over time.
The First Progress Platinum Prestige Mastercard Secured Credit Card is one example of how a secured credit card can help you build your credit as the card issuer reports your on-time payments to all three credit bureaus.
Another example is the Secured Chime Credit Builder Visa® Credit Card1, which could help you build a credit history2 without requiring a minimum security deposit3.
2. You can earn rewards or other perks
Many credit cards offer points or cashback programs that earn you rewards toward gift cards, travel, shopping, or cash back. And those rewards, which you can earn with your everyday spending, can be quite valuable to some cardholders.
According to an Experian survey, 42% of consumers say rewards programs are their top consideration when opening a new credit card account. Add in sign-up bonuses offering extra rewards points valued at $150 or more, and it’s easy to see the appeal.
3. Credit cards can be free — when used wisely
Using a credit card can be free if you use and manage it responsibly. For credit card newbies, it’s often advisable to look for cards without an annual fee. This ensures you’re not paying out of pocket just for the privilege of carrying the card.
Also be sure to avoid interest costs whenever possible. To do this, pay your entire statement balance every month, and be careful not to charge more than you can afford with the card.
4. There are card options specifically for newbies
Jumping head-first into the slew of credit card options can be intimidating. Fortunately, there are specific credit cards created for new card users.
A secured card is one example of a credit card that comes with training wheels and can be a useful tool for those who haven’t built up substantial credit yet. When opening the account, you’ll make a refundable deposit toward your account which acts as your credit limit. You can then use your secured card the same way you would use a traditional credit card.
For example, the Secured MasterCard from Capital One can provide credit building benefits with no annual fee. This is a useful credit card option if you’d like to control your spending while building your credit. After making an initial security deposit based on your creditworthiness, you’ll get an initial credit line of $200.
There are also student credit cards to look into if you’re still enrolled in school. For example, the Journey Student Rewards Credit Card come with no annual fee and allows student cardholders to earn rewards on purchases.
For student credit cards, you’ll need to provide your school’s information and demonstrate consistent income to qualify.
5. Credit cards can be safer than other payment options
Credit cards typically offer consumer protections against fraud, which other payment methods may not provide. For example, under the Fair Credit Billing Act, you’re only liable for up to $50 on unauthorized credit card charges. Depending on your specific situation, your credit card company might not hold you liable at all in the event of fraud.
On the other hand, debit cards have different fraud protections. According to the Electronic Funds Transfer Act, you could be liable for up to $500 of unauthorized charges. As a college student or new professional starting your financial journey, that liability could be a huge blow to your budget.
And although the saying is “Cash is king,” you have zero protection if you lose your money or it’s stolen. Using a credit card can help make your transactions safer overall.
Our recommendations for your first credit card
| Card | Welcome offer | Rewards rate | Annual fee |
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Discover it® Student Cash Back
4.75
|
Discover will match all the cash back you’ve earned at the end of your first year. | Earn 5% cash back on everyday purchases at different places you shop each quarter like grocery stores, restaurants, gas stations, and more, up to the quarterly maximum when you activate. Plus, earn unlimited 1% cash back on all other purchases. | $0 |
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Discover it® Cash Back
4.7
|
Discover will match all the cash back you’ve earned at the end of your first year. | Earn 5% cash back on everyday purchases at different places you shop each quarter like grocery stores, restaurants, gas stations, and more, up to the quarterly maximum when you activate. Plus, earn unlimited 1% cash back on all other purchases. | $0 |
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Capital One Platinum Credit Card
4.4
|
Get credit report alerts from CreditWise: a free monitoring tool that won't damage your score | None | $0 |
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Chase Freedom Rise®
5.0
|
$25 statement credit for enrolling in automatic payments within the first three months of account opening | 1.5% cash back on all purchases | $0 |
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Petal® 1 "No Annual Fee" Visa® Credit Card
4.3
|
Earn a credit line increase in 6 months with Petal’s Leap program | 2% to 10% cash back at select merchants | $0 |
Using your first credit card
A credit card can be an empowering financial tool if it’s used carefully. Having a positive first credit card experience starts with being savvy about how to safely use your card.
To help you start off on the right foot, remember to:
- Assess your spending budget. Calculate how much you can afford to spend on your credit card each month — then stick to it.
- Review your statement each month. It’s easy for fraud, billing errors, and overspending to slip past undetected if you don’t look at your statement. Take a few minutes each month to read your bill, and see if the charges and your spending habits are sound.
- Pay your statement balance in full. Letting your monthly balances roll into the next month could spiral you into debt. Not only can you accrue interest fees, it might be harder to get out from under your debt if you only pay the minimum amount due.
- Protect your credit card information. Don’t give your card information to unsolicited emails or phone calls. Credit cards give you added purchasing power and convenience, but in the wrong hands, you might be in for a headache.
If you’re unsure about your ability to handle your first credit card, consider a secured credit card instead. With a secured card, you’ll be able to practice and strengthen your plastic habits before jumping into a traditional credit card.
FAQs
What’s the easiest first credit card to get?
Secured credit cards and student credit cards tend to have lower credit requirements, making them good choices as beginner cards. We recommend the Discover it® Secured Credit Card and Discover it Student Cash Back if you’re looking for your first credit card.
How do I get my first credit card with no credit history?
What bank is the best for first time credit card?
Discover is an excellent bank for credit card beginners because of its various and rewarding card options. Here are some of our recommendations for your first credit card:
Great Starter Card for Those With No Credit
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Petal® 2 "Cash Back, No Fees" Visa® Credit Card
Current Offer
Reports to all three major credit bureaus
Annual Fee
$0
Rewards Rate
Unlimited 1% cash back on eligible purchases; after 6 on-time payments, earn 1.25% cash back; after 12 on-time payments, earn 1.5% cash back