Ready to get your first credit card? In this case, take the time to assess your options before signing on the dotted line. Being a credit card holder has its share of challenges.
The average American receives his first credit card at age 20. Most people nowadays have at least four cards. Actually, only 22 percent of the U.S. population doesn’t have one.
Visa and MasterCard are the most popular options, followed by Discover and American Express. Each provider features a multitude of options, from travel rewards credit cards to debit cards and cash back cards.
The question is: which one best suits your needs?
Since you’re a first time user and have no credit history, your options are limited.
Need help to choose the best credit card? This guide will break down the most popular options for young adults and customers with no credit. Keep reading to learn more!
How to Choose Your First Credit Card
Shopping for your first credit card is a major decision. The right choice can help build your credit, so you can later receive more money and extra perks.
A poor choice, on the other hand, can get you into debt. This will ruin your credit score and affect your chances of buying a home, a car or even getting a loan.
When it comes to the best first credit card, there is no one-size-fits-all solution. The perfect option depends on your needs.
First, evaluate your financial situation. Can you afford a credit card? Do you really need one?
Determine what you’re going to use the card for. Are you planning to travel? Perhaps you’re interested in saving on groceries and other purchases?
Compare the different types of credit cards available. Some offer free airline miles and VIP lounge access. Others will give you points for every dollar spent on food, gas, hotels, or specialty products.
Next, decide whether you want to carry a balance or pay off your card every month. If you choose the first option, look for cards with a low APR (annual percentage rate). Better yet, select one with a low introductory APR to cut costs.
Consider your monthly budget, spending habits, and personal interests.
For instance, avid travelers can choose credit cards that feature special discounts on airfare, taxis, and flights. Some even include travel insurance. Citi ThankYou Premier Card and Citi Expedia+ Card are a good example.
Types of Credit Cards
Once you know what to look for, compare the different types of credit cards. Check the eligibility requirements for each.
In general, customers with no credit have limited options. The same goes for those who have a bad credit score. They can still qualify, but a security deposit may be required.
Let’s take the Platinum Select MasterCard from First Progress. It requires no minimum credit score or credit history. Plus, you can sign up online and receive the card by mail.
Every month, First Progress will send reports to the credit bureaus. Pay on time, and your credit score will go up. If you have no credit history at all, this card will help you build one.
As you see, there are credit cards available for just about any customer. Your only job is to pay off your balance before the due date.
When choosing the best first credit card, think about how you’re going to use it. Consider these options:
- Standard credit cards
- Rewards credit cards
- Travel rewards cards
- Student credit cards
- Secured/unsecured cards
- Limited purpose credit cards
- Charge cards
- Business credit cards
Sure, you might not be eligible for all of these cards, but it’s good to know your options.
Limited purpose cards, for example, can only be used at gas stations, in stores, and other specific locations.
Charge cards have no spending limit, but they require a good credit score. Even if you don’t qualify now, you can get one later when you have a solid credit history.
No matter what you choose, the key is to show financial responsibility. If you do so, it will be easier to qualify for a higher credit line.
Select the Best First Credit Card for Your Needs
Now that you know the basics, it’s time to check your options. The best first credit card is the one that meets your needs. Here are some popular choices for young adults with no credit:
Capital One Platinum Credit Card
With fraud coverage and no annual fees, the Capital One Platinum appeals to those who need to build their credit history. As soon as you make your first five monthly payments on time, you’ll get access to a higher credit line.
Touted as the best first credit card for young customers, it offers lots of perks to keep your expenses low. Customers receive travel accident insurance, 24-hour roadside assistance, and extended warranty on the products bought with the card.
The Capital Platinum One makes it easy to manage your banking account on the go. It features mobile apps, online banking, and credit monitoring tools. Other benefits include:
- Fraud liability coverage at no extra charge
- Personalized payment options
- Personalized email or text reminders
- Free access to Capital One Wallet
- 24/7 travel assistance services
- No foreign transaction fees
- Helps build or strengthen your credit
All of these perks sound great, but there are drawbacks too. First of all, the card doesn’t offer any rewards or cash back. Secondly, it has a high APR of 24.99 percent.
Since the Capital Platinum One has no annual fees and requires no credit history, it’s worth checking it out. It might be the best first credit card around.
To keep the costs low, avoid carrying a balance from one month to the next.
Discover it Secured Credit Card
We have added Discover it to our list for its cash back rewards program and zero annual fees. If you want the best first credit card, go for it.
With this card, you’ll earn five percent cash back on most products, including food and gas. Plus, you can use it at restaurants and online to receive cash back. Redeem the rewards anytime as they never expire.
The Discover it Secured Credit Card is ideal for building your credit history and saving money on purchases. Since it requires no credit score, it’s perfect for young people. Customers also get:
- Up to two percent cash back on gas and dining out
- One percent back on everything else
- Free Social Security number alerts
- Banking account review after eight months of use
- Refundable security deposit
- No annual fees
- Full coverage for unauthorized purchases
- Fast mobile and online banking services
- Free FICO credit score checkups
- Zero percent introductory APR for 14 months
In our opinion, this is the best first credit card – or at least one of the top choices for first-time customers. Check it out – it has lots of great perks!
Like everything else, this credit card has its downsides. After 14 months of use, it charges a variable APR of 13.24 percent to 24.24 percent. Additionally, you’ll pay a three percent fee for each balance transfer.
The Discover it requires a minimum security deposit of $200. Even though it’s not a large amount, students and young people may find it too high.
Another drawback is that most ATMs and stores outside the U.S. don’t accept Discover cards. If you travel a lot, this could be a major turn-off.
For many customers, the benefits outweigh the costs. After all, few credit cards for first-time users offer so many perks. The cash back alone is worth it.
With Chase Freedom, you’ll earn five percent cash for PayPal and grocery store purchases up to $1,500.
This is just a promotional offer, but you can activate new cash back categories every three months. Plus, customers receive unlimited one percent bash back on everything they buy using the card.
Once you sign up, you’ll get a $150 bonus as soon as you spend $500 (within three months from opening your account). Add an authorized user to earn another $25. There are no annual fees to worry about.
Chase Freedom is one of the few credit cards in its category which offers cash back. The rewards don’t expire as long as your account is active.
Customers pay a zero percent APR in the first 15 months. Afterward, the APR will vary. Other perks include:
- Free access to the cash back calendar
- Fraud alerts
- Extended warranty protection
- Purchase protection for up to 120 days against theft and damage
- Free liability coverage
- Real-time fraud monitoring
- Redeem the cash back for gift cards, travel-related purchases, online purchases, or direct deposit
Not even the best first credit card is a perfect fit for everyone. Chase Freedom appeals to a wide range of customers, but it has its drawbacks.
Unlike most cards, it charges fees on foreign transactions. This means it may not be a great choice for avid travelers.
Another downside is the variable APR of 14.24 percent to 24.24 percent. However, it’s zero in the first 15 months.
Some users say that tracking and activating the cash back categories every three months can be tedious. You might forget about it or realize that the new categories don’t match your spending habits.
On the other hand, you can activate the bonus categories online, by email, by phone, or via ATMs. Plus, you’ll receive email reminders.
So, which one of these credit cards is your favorite? The choice is up to you.
Shopping for your first credit card can be overwhelming. Nowadays, most banks provide at least one type of card for customers with no credit history.
The best thing you can do is to research your options. Read the fine print and the FAQ section. Check out online reviews to compare credit cards before making a decision.
Once you’ve established your credit history, you can give up the card and choose a better one. The key is to pay off your balance on time.
If you need help to build or improve your credit, visit our blog. Be smart when it comes to choosing the best first credit card.
We have reviewed and compared credit cards for customers with poor credit as well as for the first-time users. Our team will answer any questions you may have, so contact us!