Choosing the Best First Credit Card

Applying for your first credit card is a major financial milestone. So what should you do to make sure you’re building good credit with it? Your best bet is to start by selecting the right card. The credit card you choose and your ability to use it wisely may impact your credit history for years to come. With multiple options available, take the time to research your options before taking the plunge.

The Best Credit Card Types for Beginners

For a first-time credit card applicant, there are several types of cards well suited to your financial needs.

• Credit-building cards. These are a great choice if you have no credit history and are also perfect for people rebuilding their credit. These cards usually require a minimum deposit that is equal to your credit limit. However, unlike a debit card, you make monthly payments as long as you have a balance. Often, these first-time credit cards are intended to be a stepping stone to a traditional credit card.
• Student credit cards. Some credit card issuers offer special cards for enrolled college students. They may have low income eligibility, lower interest rates and student-friendly rewards. These cards are intended to help build healthy credit habits, but usually require some credit history to qualify.
• Rewards cards. Most credit cards offer rewards, including cash, airline miles or points toward bonus items. If you plan to use your card in place of your debit card, and pay off the balance each month, a card like Navy Federal’s More Rewards American Express® Credit Card that offers extra rewards for cash spent on items like groceries or gas can provide great rewards potential. If you prefer cash over rewards points, a card like cashRewards Plus or cashRewards offers cash back on purchases you make, so you can earn on what you spend.
• Zero interest cards. You may get offers for 0% interest cards in the mail or online. Typically, these are introductory rates, and once the introductory period is up, the APR is higher than average. A 0% interest rate card can be useful to make a large purchase, like a new appliance or couch, as long as you can budget your payments to pay down the total in full by the end of the introductory period.

How do you plan to use your first credit card?

Knowing what the best first credit card is for you starts with considering how you plan to use it. Here are some reasons you might decide to get your first credit card:

1. Building credit for a healthy financial future. Building good credit, or a credit history, is an important step to meeting some financial goals, like buying a house or starting a business. Opening a credit card account and paying off the balance each month is one of the best ways to build credit with a credit card. If this is your plan, you can use a credit card to make everyday purchases like gas and groceries. As long as you stay within your normal monthly budget, repayment shouldn’t be an issue.
2. Keeping credit cards for emergencies. Many people like to have a credit card for emergency use only, like a car repair or other unexpected expense. A solid emergency savings fund is the best way to pay for these expenses. However, having access to a credit card can provide the peace of mind that you can get out of a bind should you need more money than you’ve saved. If you do have to use a credit card for an emergency, make sure to pay off the balance, to avoid paying interest on purchases.
3. Taking advantage of credit card rewards. One of the great benefits of some credit cards are the rewards programs. These may include cash back, special offers and airline miles. Each rewards card has its own benefit structure, and you can choose one that works well with your spending habits or lifestyle.
4. Making large purchases that fall outside your budget. If you’re planning to get a credit card to buy items you can’t afford with your current income, you might want to reconsider. Credit cards aren’t “free money”, and buying more than you can pay back within a month will mean paying interest on your purchases. Look for a card with a low or 0% introductory offer if you plan to spend outside your budget.

What makes a good first credit card?

Now that you’ve thought about how you plan to use your first credit card, you can start to research a credit card that’s right for you. No matter how you plan to use your card, here are a few features you should look for and compare.

• Low or no annual fees. Check the annual fees on credit cards. Be especially sure to check the fees on cards that offer rewards. There are many cards available with low or no annual fees—as a first-time credit card user, these are best for you.
• Credit builder features. Look for cards that have higher approval chances for applicants with limited or no credit history—like you.
• Monthly reporting to all three major credit bureaus. It’s especially important when establishing and building credit that the card you choose reports to all three major credit bureaus—Experian®, Equifax® and TransUnion®—at least once per month. These three organizations track your payment history, which is part of your credit report. However, let’s say the credit card company only reports to two of the organizations, Equifax and TransUnion. Someday, when you apply for a mortgage, if that lender pulls your credit score from Experian, you won’t get the full benefit of the credit you’ve built.
• Rewards of at least 1% back on purchases in many cases. Even if rewards aren’t your top priority, it pays to look for cards that offer some kind of rewards structure—even if it’s a secured card. For example, Navy Federal Credit Union’s nRewards® Secured card offers point rewards while you build your credit, with the potential to upgrade to cashRewards card after 6 months of good credit history.
• Competitive annual percentage rate (APR). As you shop for cards, pay attention to the APR, which is the cost of using the card’s credit line. The higher the APR, the more interest you'll pay if you carry a balance from one month to the next. With most credit cards, to avoid paying interest, you can pay your balance in full every month. Often, low or 0% interest rates are introductory offers that depend on making on-time payments. Read the disclosures on interest rates to make sure you understand what you’re agreeing to.

Requirements for a First-Time Credit Card Applicant

When you apply for your first credit card, credit card companies need to verify your identity and your ability to responsibly manage a line of credit. They use this information—along with your credit score—to determine how much credit to extend to you. These factors also determine what kinds of cards you’re eligible for, such as secured cards for building credit or credit cards with rewards.

You’ll need to meet the issuer’s age and income requirements and provide some basic personal information:

• Your SSN helps issuers verify your identity and decide on your creditworthiness.
• Your contact information allows issuers to communicate effectively with you. 
• A mailing address is required to send tax documents and monthly statements to you.
• Income information is required to evaluate how much credit the issuer can extend to you. 

Having a checking or savings account is also a common requirement for getting a credit card. This allows you to make payments and proves you can meet your financial obligations if your application is accepted. Meeting these requirements shows your financial stability and responsibility, which increases the likelihood that you’ll be approved for your first credit card.

Can you get a credit card with no credit history?

Yes, it's possible to get a credit card with no credit history. In fact, there are specific options made especially for new credit card users who are working to build their credit. "Secured" credit cards are often the best choice for anyone trying to establish credit for the first time. A secured card means that a security deposit is required. This is used as collateral and minimizes risk for the credit card issuer.  If you use your secured card responsibly, you can build a positive credit history over time. A good option for people with no credit history is the Navy Federal nRewards Secured Credit Card. 

Keep in mind that secured credit cards don't always have the highest credit lilmits or the best rewards programs. Instead, they're meant to help you build credit until your history and credit score are strong enough to apply for better cards. Focus on making responsible purchases and regular, on-time payments to show your creditworthiness.

Can you get a credit card with no income? 

Proof of income is a major consideration for most credit card issuers because it shows your ability to repay debts. Usually, the higher  your income, the higher your credit limit; however, there are ways to get a credit card with little-or-no income. 

The best way to get a credit card with no income is to become an authorized user on someone else's credit card. If a family member or friend agrees, you can use the opportunity to build credit until you have steady income to apply for your own card. However, it's important to remember that the primary account holder is responsible for any debt. If you fail to make payments, it could negatively impact both of your credit histories.

It's best to apply for a credit card 30-60 days after securing a job. This shows credit card issuers that you have consistent, stable income over several pay periods, which can help increase your chances for credit card approval.

What is a good line of credit for a first credit card?

For a first-time credit card application, a reasonable line of credit often falls between $500 and $1,000. A line of credit is the maximum amount of money your credit card company is willing to lend you. It is the total amount available for purchases, cash advances and balance transfers. This provides some flexibility for you to make essential purchases without carrying cash. It also helps you build credit without racking up excessive debt. 

A lower initial credit limit is common for first-time applicants—especially if you don't already have a strong credit history. As you make payments on-time and in full, you may become eligible for credit limit increases. You can also request credit limit increases periodically (every 6 months to a year). That's why it's so important for first-time credit card users to start with a manageable credit limit. You'll be able to build credit, establish responsible credit habits and eventually get credit limit increases as you prove your creditworthiness. 

Applying for Your First Credit Card

Now that you know what the best first credit card should offer, you can research and compare rates, fees, credit limits and rewards to find the card that works for you. Still have questions? Read up on How Credit Cards Work so you can make the best choice on your first credit card.