2 Things to Look for When Getting Your First Credit Card Ever
The idea of getting a credit card for the first time can cause a mix of emotions - excitement that you’ll be able to buy whatever you want or fear that you’ll end up spending too much! Prior to that, how the heck do you even pick a credit card? There are sooo many options out there, that frankly, it’s overwhelming. Let’s break it down to the 2 things you should make sure your first credit card ever has.
1. Avoid a credit card with an annual fee at all costs
When you’re ready to get your first credit card, you won’t have as many options as someone who’s held a credit card or other loan accounts for some time. You won’t have access to the best reward offers out there, but that’s okay! If you take one thing from this article, let it be this. When you’re getting a credit card for the first time, do not open a credit card that has an annual fee!
An annual fee is pretty much what it sounds like. Every year you continue to have the credit card, you will have to pay a certain dollar amount just for having the card. This is charged even if you do not use the card! There are SO many credit cards that do not offer an annual fee, so be hesitant to consider any credit cards that do. In my opinion, credit card annual fees can only be justified when they come with extravagant rewards - think travel perks and high cash back offers. (Sorry, but these things shouldn’t be your first priority when getting a credit card for the first time!)
Now, if for whatever reason, you CAN’T find or think you won’t ever be approved for a credit card with no annual fee, it’s not the worst thing in the world to open an account with an annual fee. You can still use it to your advantage to get ahead. Here’s how. Once you open the account, think of it like a stepping stone. For one year, use the card very sparingly, as if you don’t even have a credit card. Treat it as though it is a debit card and you are using your own money. Consider limiting your credit card transactions to gas or grocery snack trips only. Keep the balance low and pay off the full balance, or everything you owe, on or before the due date. Do not become a victim to credit card debt!
Once the year is up, you’ll have 12 months of exceptional credit card usage under your belt, and your credit score will have begun to reflect that. Now, you can feel more confident applying for a credit card that does not have an annual fee! You may even be able to become approved for a card that comes with some rewards benefits, like cash back.
2. Find a credit card with options to upgrade
There are many many things to consider before you apply for a credit card. However, I highly recommend you consider annual fees and upgrades during your search for your first credit card. Having a credit card with spectacular perks and benefits is something you have to work towards - just like you have to work hard in high school and get good grades so you can prove to a college that you’re worthy of attending. Receiving cool cardmember rewards on categories like travel and entertainment is something you have to earn. Fortunately, there are paths to get there offered by many credit card companies.
If you’ve never had a credit card before, you won’t be approved for the best travel credit card or best cash back rewards credit card out there. However, you can start on the bottom and work your way up. Look for a credit card company that offers multiple credit card products. They should have a basic no annual fee starter credit card. They should also have credit cards that offer excellent cash back or miles. Once you have the basic card for a year or so, you can inquire with customer service on how you can upgrade to a better credit card. This way, you don’t have to shop around and switch issuers, meaning you won’t have to open a new credit card account elsewhere and transition to a different online banking system.
When you first turn 18 years old, you should consider opening a credit card account. This means you should be thinking about having a credit card as you leave high school and start college. It’s super important to start learning how to manage credit as soon as you possibly can! Personally, I did not open a credit card until I was 22. This is because I didn’t know or understand why I needed one. I wish that I would have opened one at 18 so I could start to build up my credit. I’ve learned a lot since then. If or when I have children of my own, they will be opening a credit card account at 18.