What Should be Your First Credit Card

Obtaining your first credit card is one of the biggest choices you will make on your road to making your credit history. There seems to be such a variety of different credit cards that it can be a daunting choice just choosing a first credit card. How do you decide on the right one?

If you are looking for your first credit card, it is likely that you have little or even no credit history at all. Credit card companies like to grant the use of their card to consumers who have already shown a propensity for credit worthiness. However, you can still find ways to obtain a credit card and begin making a positive credit history.

Gas/Department Store cards

Some of the easiest credit cards to obtain are ones issued by oil companies like Chevron or Shell. The application process is easy for these cards and approval is almost always likely, even without a credit history. Gas cards are good for starting out on your road to credit building, but know the limitations for use are usually just at service stations and convenience stores owned by the issuing gas company.

You can also start your credit card collection with a card from your favorite department store like Target or Macy’s. These cards are also relatively easy to obtain and allow you to make purchases on the card when you shop.

However, having a gasoline or department store credit card comes with responsibility. Never charge more than you know you can pay at the end of the month, and always try to charge no more than 30% of your credit limit. Make you payments on time every month. By doing so, you can be on your way to graduating to an all-purpose bank-issued credit card in as little as six months.

Visa/MasterCard cards

There are plenty of banks and credit card companies that issue Visa and MasterCard, but you could start with your own bank. If you have a checking account, use it wisely. Make deposits and use a debit card prudently for a period of six months or so. You could then request a Visa or MasterCard from your bank since you have shown them that you are worthy of managing finances.

You could also apply for a secured card. A secured credit card is issued upon approval by the credit card company and after a deposit is made by you. Usually deposits are small amounts up to $500. Your credit limit is the amount of your deposit. But by starting with a secured card, you can begin making small charges, and then when you pay on time each month, you build a positive credit rating along the way.

When you are looking for a first credit card, choose wisely when it comes to annual fees and interest rates. Don’t get caught up in a frenzy of applications and end up with four or five credit cards all with annual fees. For instance, should you end up with four credit cards all with a $39.95 annual fee, that’s almost $160 a year you have to pay out of pocket just for the privilege of possessing the cards. Also, look for credit cards that offer low interest. It’s best to always pay your balance in full each month, but if you do leave a revolving balance, a 25% interest charge can rack up quickly.

Your first credit card will set the course your credit history. Make sound choices when you apply and use them with care.

Write to Grace Carter at grace@creditdonkey.com