Do I Need a Credit Card?

Short Answer: If used responsibly, a credit card is a helpful tool to help build credit.

Before settling on the best first credit card for you, Greg McBride, CFA and Chief Financial Analyst of Bankrate, recommends first determining your ability to pay it off every month.

“Make a small purchase or two every month, then pay the balance in full,” advises McBride.

Deciding on the best first credit card can be daunting. A Troutwood podcast series on credit cards can help you get started.

But if you need the cliff notes for a first-time credit card, here are some helpful tips:

Becoming an Authorized User

Sometimes the best first credit card is already sitting under your nose. If your parent or guardian has a good or excellent credit score, you might consider asking to be added as an authorized user to their account.

What’s the benefit of being an authorized user? You’ll piggyback off of the card holder’s credit history, which can help boost your own.

Becoming an authorized user may feel as simple as making an online request, but consider talking details with the cardholder such as:

How often you’ll pay off the card
What purchases you can use the card for

Being added as an authorized user might be the right fit for some, but keep in mind you’re linking your credit to another person. If you can’t pay off the credit card debt you might rack up, the cardholder will be on the hook to pay it off. Likewise, the holder’s late payments could harm your score.

Start With a Student Credit Card

An excellent first-time card option for some could be a student credit card.

According to McBride, it’s generally easier to be approved for a student credit card, as they come with lower limits. “They’re geared for students,” explains McBride, which means the credit card company expects a short or nonexistent credit history.

Improve Poor Credit With a Secured Card

Perhaps you’ve been burned by credit cards before. If you’re seeking a way to improve past credit mistakes, consider a secured credit card.

With secured credit cards, “you make a deposit equal to the credit line that the lender gives you,” McBride says. While it may be a small limit, it’s enough to establish that habit and kick-start your credit score recovery.

If you’re worried past credit card mistakes will keep you from getting approved for a credit card, a secured card can be a helpful solution.

Avoid Annual Fees

There’s no one-size-fits-all for best first credit cards, with one catch, explains McBride. Start out avoiding any card that comes with an annual fee.

“Some, many, credit cards will carry an annual fee. This fee is charged to you every year for the luxury of having that card,” McBride says.

For a first-time credit card applicant, it’s wise to avoid a card with an annual fee. “You’re probably ten years away from that,” advises McBride.

Is It Best First Credit Card For You?

Suppose you’re considering getting a student credit card or other beginner credit card with a low limit. In that case, the biggest question isn’t likely your qualifications in the eyes of the credit card company. It’s your personal preference. Do you feel ready for a credit card?

Ask why you’re looking for a credit card. Is it to purchase things you can’t afford? In that case, it might not be the wisest choice.

If you’re using it to make small purchases and boost your credit score, you may be ready.

Plan for Small Future Purchases

You don’t have to make major purchases on your credit card. Before applying, think about what you might use the card to purchase.

Is it simple charges at the corner bodega? Or a small monthly subscription? You don’t have to make many charges on a card to benefit your credit score. The true value likely comes from timely repayments and paying off the balance in full each month.

The best first credit card will be one you feel ready to get. There’s no perfect time to apply for a credit card. The decision is up to you.

If you’re interested in everything from the best first credit card to post-collegiate income, consider subscribing to Troutwood’s newsletter for weekly financial insights.

Extra Credit

What is a credit score?

In short, a credit score is a three-digit number reported from three major credit bureaus. Your score is determined by multiple factors, including how long you’ve had an account open and how much debt you have.

Things like paying off debt regularly and avoiding opening too many cards can boost your credit score. On the other hand, late payments or too much debt could drive your credit score down.

What does a credit score influence?

Your credit score will show lenders how trustworthy you are with a loan. A credit score can impact anything from renting an apartment to purchasing a car or applying for a mortgage.