A Guide To Your First Time Credit Card
4 Min Read | Last updated: August 28, 2023
This article contains general information and is not intended to provide information that is specific to American Express products and services. Similar products and services offered by different companies will have different features and you should always read about product details before acquiring any financial product.
Want to know how to get a credit card for the first time? Discover the benefits of having your first credit card and start establishing a solid credit history.
At-A-Glance
- It’s important for beginners getting their first credit card to understand their own financial needs and spending habits.
- Researching card options can help you make a good, informed choice.
- Responsible use can help minimize financial risk.
The time has come for you to get your first credit card. Congratulations! Credit cards can offer a whole new world of possibilities. It’s exciting, but the seemingly endless options may leave you feeling overwhelmed.
Here are five steps you can take that may help you worry less and get on track to becoming a responsible first time credit cardholder.
1. Understand What a Credit Card Is—And Isn’t
Credit cards are essentially mini loans that you can use to pay for things. Credit cards can help you build credit history and rack up rewards like cash-back bonuses, airline miles, or points.
But despite a credit card’s benefits, it’s important for first-time cardholders to understand that a credit card isn’t a source of free money. You must pay back every purchase. And if you don’t pay off your balance in full each month, the remaining debt usually starts to accrue interest—something that can add up over time. Certain additional purchases may incur fees or interest charges as well, such as balance transfers or foreign transactions, so be sure to read your card’s terms and conditions before you apply.
2. Research to Find the Best First Time Credit Card for You
Choosing the right credit card for a beginner might seem like a daunting task, given the wide range of available card options, each with its own features and specifications. Ultimately, the “best” credit card choice will depend on your financial situation and needs, so it’s important to look at a card’s rates, fees, and benefits to make sure that card aligns with your spending habits.
3. Learn the Key Terms of Credit Card Member Agreements
All credit cards will have a card member agreement that provides detailed terms and conditions. These agreements usually list your card’s annual percentage rate (APR), annual fee, any other associated fees, rewards and bonus criteria, restrictions, and more.
Here are a few terms that every first time credit cardholder should know:
- Credit limit: The maximum amount of credit you can charge on your card.
- Minimum payment: The lowest amount you must pay by the due date.
- Late payment: A bill payment made after the due date. Late payments may incur a fee.
- Grace period: The period between the end of a billing cycle and the date your payment is due. You usually aren’t charged interest on transactions made during the grace period, as long as you pay your statement balance in full, on time, each month. There are some exceptions, however. For example, cash advances and balance transfers may still incur interest or fees, even during the grace period.
- Foreign transaction fees: A fee for making a purchase in a foreign currency.
- Cash advance: Using your credit card to obtain cash, such as through an ATM. All cash withdrawn must be paid back, usually with an added fee and accrued interest based on a different APR than the card’s APR for purchases.
4. Apply for Your First Credit Card
There are a few factors that will influence how easy—or difficult—it may be for you to become a first time credit cardholder. For example, must be 21 or provide proof of independent income to get a credit card without a cosigner.1 Credit history also plays a role in what kind of credit card you can get. But if you don’t have credit history, don’t fret. There are plenty of credit cards directed towards people with little to no credit history.
Another option is to become an authorized user on someone else’s account.2 A parent or older sibling, for instance, could add you to their account, and the card company would send you a credit card with your name on it. This can be a great way to get your feet wet and learn about responsible credit card use, and in some cases, it can help you to start establishing your credit history as well.
When you find the best first time credit card for your needs, you should be able to apply online. You might need to supply your driver’s license and social security number, phone number, and other information depending on the application.
5. Treat Your Credit Card Like Real Money
For a first time credit cardholder, it can be important to remember that credit cards come with real financial risk and require responsible use. With the rate at which a card can accrue interest, debt can quickly get out of hand, and if your balance becomes unmanageable, late payments can negatively impact your credit history. But if you treat your card like cash and use it responsibly, you can establish a good credit history and build up rewards, which can lead to greater financial opportunities in the future.
Here are some tips for using your credit card responsibly:
- Avoid overspending
- Pay on time and in full
- Understand all associated fees
- Keep a low credit utilization rate (your balance as a percentage of your credit limit)
- Keep your card safe and private.
5 Steps for First Time Credit Cardholders
- Understand the pros and cons of having and using a credit card
- Research the best credit card options for beginners
- Learn the key terms you’ll encounter when reading your card member agreement
- Apply for a card
- Start spending—but treat your card like real money!
Frequently Asked Questions
The minimum credit score needed to qualify for a credit card will vary depending on the credit card. Certain cards are designed for those with limited or no credit history. However, having a higher credit score can improve your chances of qualifying for cards with more generous rewards and benefits.
When applying for a credit card, it’s important to avoid certain actions that could harm your creditworthiness, such as applying for multiple credit cards in a short period of time. It’s a good idea to do research up front and only apply for cards that fit your criteria. It’s also important to apply for cards that you have a good chance of being approved for in the first place.
When applying for their first credit card, beginners should consider:
1. Credit-building opportunities
As a beginner borrower, you’ll likely have limited to no credit history. To start building your credit, look for credit cards specifically designed to help you succeed on your credit-building journey. While some credit building cards may have lower credit limits, most provide tools and resources to help you achieve good financial hygiene that can boost your score and open up further credit opportunities.
2. Annual fees
When choosing your first credit card, consider whether you are willing to pay an annual fee, or if you would be better served by a card that has no annual fee. Keep in mind that often, cards with an annual fee tend to correspond to more generous rewards but this will vary depending on the card in question.
3. Rewards and/or cashback programs
Consider cards that align with your spending habits and offer rewards you can benefit from. For example, if you enjoy traveling, consider opting for a travel card that offers miles or points that can be redeemed for trips. Alternatively, if cashback perks are better aligned with your lifestyle, look for a card that provides cashback bonuses when you purchase from participating merchants.
The Takeaway
Getting your first credit card might seem daunting, but proper preparation and research can help you determine the right card for your financial needs, what to expect when you apply, and how to use your card responsibly.
1 “Credit Card Accountability Responsibility And Disclosure Act Of 2009,” Federal Trade Commission
2 “Will Authorized User Status Help You Build Credit?,” Nerdwallet
Megan Doyle is a business technology writer and researcher whose work focuses on financial services and cross-cultural diversity and inclusion.
All Credit Intel content is written by freelance authors and commissioned and paid for by American Express.
Related Articles
What Is a Credit Card? Definition of Credit Cards and Their Types
Here's a definition of credit cards and an exploration of the different types of credit cards. Find the credit card that's right for you and apply online today.
How to Apply for a Credit Card
You have to meet a few conditions to apply for a credit card. Read more for factors to consider before applying for a credit card & take a well-informed decision.
Choosing the Right Credit Card: Adapt to Changing Landscape
Before choosing a credit card, make sure to do some research around the best cards that fit your needs. Here’s how to choose one.
The material made available for you on this website, Credit Intel, is for informational purposes only and intended for U.S. residents and is not intended to provide legal, tax or financial advice. If you have questions, please consult your own professional legal, tax and financial advisors.
Shop All American Express Credit Cards
