The Top 5 Best Choices for Your First Credit Card

This week’s financial challenge – choosing a credit card… when you’ve never had a credit card.

 You need to build credit. You’re making a large purchase. You’re taking a trip. Maybe you’ve just decided… it’s time. There are a lot of reasons why you might decide to get a credit card. But it’s not always easy choosing the best card for your needs or situation.

If you're looking to make your first foray into credit cards, it's essential to choose the one that fits your lifestyle. With so many options available, it can be overwhelming to know where to start. Let’s take a look at the best first card choices and some crucial things to consider when selecting a card.

What to Consider When Choosing Your First Credit Card

Before diving into specific card recommendations, it's important to understand the key features that could determine which card is right for you. When you start comparing cards, keep these factors in mind: 

• Credit Score: If you have a limited credit history (and if you don’t have a credit card, there’s a good chance you don’t have much in the way of a credit score) or if you have a low credit score, you may not qualify for certain credit cards.
  
  Look for cards designed for people with no credit or limited credit history, like a “secured card,” where you start by depositing money into the card. It’s kind of a debit card that builds credit.

• Interest Rates: Pay attention to the interest rates offered by each card. If you plan to carry a balance, you'll want a card with a lower interest rate to save on interest charges.
  
  This is a key feature to shop because interest rates can vary by double digits. Also, beware of introductory offers that give you a low rate to start, then jump to 20% or more.

• Fees: Many credit cards charge annual fees, balance transfer fees, foreign transaction fees, and other fees. Be sure to read the fine print and understand any fees associated with the card.
  
  Of course, the most common fee is also the easiest to avoid is – the late payment fee. As a first-time cardholder, it’s crucial to ensure you pay your balance (at least the minimum required balance) on time every month – especially if your goal is to build a solid credit rating.

• Rewards: Some credit cards offer rewards programs that allow you to earn points or cash back for purchases. Consider whether you want a card with rewards and what type of rewards program would be most valuable to you.
  
  Standard credit card rewards include cash back on certain purchases, hotel or airfare discounts or points, or discounts at specific retailers. You have a lot of options when it comes to choosing a card with the rewards that fit your lifestyle.  

The Top 5 Best First Credit Card Choices

1.    Discover it Secured Card

If you're just starting to build credit, a secured credit card is a great option. Discover it Secured is a popular choice for people with no credit or limited credit history. It requires a security deposit of just $200 (that’s lower than most), and a max deposit of $2,500, which becomes your credit limit.

The card has no annual fee and offers cashback rewards on every purchase – and it doubles the rewards cardholders earn the first year. It also includes many of the same benefits that come with an unsecured Discover Card, like a free FICO score each month and alerts if your social security numbers appear on a “dark web” site. There are automatic reviews starting at seven months to see if you can transition to an unsecured card.

2.    Capital One Platinum Credit Card

The Capital One Platinum Credit Card is another good option for people with limited credit history or “average” (less than perfect) credit. It has no annual fee and offers access to a higher credit line after making your first five monthly payments on time.

The focus here seems to be squarely on credit, including security features like alerts, $0 fraud liability, credit score updates, and the ability to lock the card from the phone app.  The one caution with this card – an APR of 29.74%. (Check current rates when considering any cards discussed here.)

3.    Petal 1 or Petal 2 Credit Cards

Ok, so technically, these are two possible card options – both are good choices for first-time cardholders. The Petal 1 “No Annual Fee” Visa and the Petal 2 “Cash Back, No Fees” Visa Credit Card are specifically designed for people with limited credit history.

Each offers a unique cash-back reward program that rewards responsible credit behavior. The Petal one offers 2% - 10% cash back at select merchants. With the Petal 2, you can earn 1.5% cash back on eligible purchases when you make 12 on-time payments, and 2% - 10% cash back on purchases at select retailers. The card has no fees, including no annual fees, foreign transaction fees, or late fees. Petal also offers a “Leap” program that lets you earn a credit line increase every six months by making payments on time.

4.    Bank of America Cash Rewards Credit Card

The Bank of America Cash Rewards Credit Card is a good option for people who want a card with a rewards program. It offers 3% cash back in a category of your choice, including gas, online shopping, dining, travel, drugstores, or home improvement/furnishings.

You'll also earn 2% cash back at grocery stores and wholesale clubs and 1% cash back on all other purchases. The card has no annual fee and offers a sign-up bonus for new cardholders.

5.    U.S. Bank Cash+ Visa Secured Card

The U.S. Bank Cash+ Visa Secured Card offers a more extensive rewards program than most secured cards… although it is a tad specific. You can earn up to 5% cash back on your first $2,000 in combined eligible purchases each quarter in the two categories you select. You can also earn 2% cash back on your everyday purchases, like gas, groceries, restaurants, etc.

There’s no annual fee, but there is a high annual APR. The card also allows you to choose your monthly payment date, a nice feature if you’re struggling to get your budget (and credit rating) in check.

The best choice for you?

 Choosing the right first credit card can be a daunting challenge, but by considering your options, interest rates, fees, and rewards programs, you can narrow down your options. The cards above are good choices for people new to credit cards, and there are many more options we didn’t cover here. Do your homework. Shop carefully and you can get a card that works for you.