Getting your first credit card is a big step and the best first credit cards don’t necessarily come with big interest rates. The best first credit cards are typically the same as the best credit cards overall, with no annual fees and a low interest rate, or at least a reasonable interest rate that does not plunge you deeply into debt.
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Options for Your First Credit Card
Not having a solid credit history or no credit history at all may make it a bit more difficult to apply for your first credit card. Certain cards that are easy to obtain typically come with a higher interest rate, such as gas credit cards, hotel credit cards, airline credit cards, and other for specific businesses.
Instant approval credit cards are another option with no credit history, although they, too, can often feature high interest. Despite their high interest rates, such cards may still be useful for building your overall credit when paid on time.
Another option for a first credit card with no credit history include secured credit cards, where you put money into an account to match the amount of credit you are issued. This way the company knows it will be reimbursed if you do not pay your bill.
Student credit cards, some of which may be instant approval credit cards, are another option, although they come with several caveats.
Credit Cards through Your School or Alumni Association
Universities and alumni associations can often sell their students’ information to credit card-issuing giants in return for revenue, according to a report in BusinessWeek.
Once they have your information, the credit card companies can then bombard you with offers for instant approval credit cards, student credit cards, reward credit cards, or any other credit cards they think will hook you in.
However, there is a major warning, as noted by New York Gov. Andrew Cuomo’s office, which launched an investigation into the link between universities and major credit card companies. His office warned that certain schools seem to be picking credit companies to represent their school based on how much the credit card companies pay the school, not necessarily based on which company will best benefit the students.
That does not mean every student credit card offer is sneakily deceptive, but it does mean you should do your homework and read the fine print. This tactic applies to any first credit card, whether it is a student credit card or not.
What to Look for in Your First Credit Card
Reasonable terms that you can feasibly pay off without accruing extra debt are a must. You want a first credit card that helps build, rather than destroys, your credit.
A number of factors to evaluate when choosing a first credit card are outlined by the Federal Trade Commission’s Money Matters website. The overall interest rate is a big thing to note, as is when that interest rate goes into play.
Pay strict attention to any fees your new credit card enforces. These may include, but not be limited to, fees listed as:
- Monthly maintenance
Review what these terms mean as defined by the credit card company and if you are willing to shell out for them. Also, examine the fees charged for cash advances, late payments and going above your credit limit.
Grace periods and introductory rates are other important factors. Grace periods give you leeway for a specified time frame with no interest rate as long as you pay off your balance before the grace period expires.
Introductory rates may appear to offer a low interest credit card, but it is typically only for a specified amount of time. Make sure you are aware of the interest rates after the introductory rates expire and when that rate expires.
One more factor to examine is how the credit card company calculates any interest charges. See how that calculation works with the manner in which you intend to pay off your debt.
You may be able to save money by picking finance charges that match your repayment habits and intentions, such as paying off your balance due every month or paying off your balance over an extended amount of time.
Learn more about your credit card options with the FREE credit card finder now!
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