Where Can I Get My First Credit Card?

There are numeorus types of credit and charge cards available to consumers. Before you set out to get your first credit card, you should consider the different kinds, the features that you would like in a card, and which lenders are more likely to give credit approval to a consumer with no credit history. The only type of credit card that you are guaranteed to be eligible for is a secured credit card. These cards require a deposit, generally equal to the credit limit of the card, in order to secure your debt. Other types of credit cards include prepaid cards (which are not true credit cards, but debits and do not build a credit history), conventional bank-issued credit cards such as Visa and MasterCard and store-issued credit cards. Within bank-issued credit cards, you can choose from different features such as reward points, rebates and promotional card rates.

If you were turned down for an unsecured bank credit or store-issued card, consider getting a secured card that requires a deposit. This money is put into a savings account by the lender, and you use the card as usual, paying the minimum due (or more) each month. The money will be refunded to you after an agreed-upon period of good payment history. In the meantime, you will have been building a positive payment history, which can help you to get a non-secured card or another type of loan. Before you sign up for any credit card, be sure to do some comparison shopping on the Internet. There are scads of different credit card programs, many designed for new customers, and rates and terms can vary greatly from product to product.

Particularly with a first credit card, the key to building an excellent credit record is to use your credit card, but wisely. This means always paying at least the minimum payment on time, and not using your entire credit limit. Although making minimum payments will keep your payment history current, it will not get you out of debt. In fact, the minimum payment amount doesn't always even cover the interest that you have amassed in one month. In most cases, you won't make a dent in the principal that you owe unless you pay above the amount due each month. Many consumers get their first card during the college years and do not pay the balance in full, carrying that debt for years afterward. Remember, when you put a charge on a credit card and do not pay it off right away, you ultimately end up paying for that item several times over in the form of interest.

Having a credit card can provide many benefits. First of all, the judicious use of credit establishes a positive payment history, which can help you get the lowest interest rate when you are ready to make a major purchase such as a home or a car. Second, many businesses require the use of a credit or debit card, either as collateral or as a means of making regularly scheduled payments. Car rental companies, for example, will only rent to customers with a valid credit card. Third, it is good to have one credit card in case of an emergency, particularly while traveling. In the event of a car mishap or other emergency, you will be able to use the credit card to pay for the unforeseen expense without undue worry.

College-age consumers often carry a credit card with their name on it but is attached to their parent's credit account, believing that in using this card they are establishing a credit history. However, this is not the case. For a payment history to be reported to the credit bureaus, you must apply for the card on your own. Another common misconception is that having a credit card, whether it is used or not, establishes a positive credit history. The truth is that in order to have any information reported, you must use the card. The best way to do this is to make several small purchases and pay them off in full. It is even better if these purchases occur over time so that there are many months of payment history.