4 Things To Consider When Choosing Your First Credit Card

So you’ve reached an age where you’re eligible for your first credit card now, eh? Well, look at you all grown up and ready to take on the world of adults! We totally get the excitement that you must feel after learning that you are now qualified to open your own line of credit. 

To apply for your very first credit card, the most basic requirements banks ask for is that you are of legal age to make decisions about your own finances and that you have proof of a stable, recurring income (check this out).

A calculator and credit cards

Of course, banks and financial institutions want to make sure that they are not setting up their creditors for a life of debt because no one comes out a winner in that situation. If you’re now eligible to open your own credit account, that means that you’ve successfully cleared these two basic requirements. Congratulations!

Now, the bigger question is, what type of credit card should you get as your very first one?

I’m sure that doing a quick search on the internet is enough to make your head spin. After all, there are so many banks that offer over a dozen credit card packages that it can quickly get very confusing for someone who’s just entered the credit card scene. 

Your first card is basically what’s going to introduce you to the world of credit – choosing the right one can either make or break the experience for you

Most cards have similar function: They offer you a set credit limit based on your current income capacity, you have a minimum of 21 days until your credit is due, the banks charge a percentage interest (usually 3%) for unpaid balances, and you have to pay at least the minimum amount due (which is a portion of your total credit balance) in order to avoid any issues with your bank and your credit score. 

What they would differ on is the perks and benefits that come with each card. Some have more travel perks; others have more shopping benefits. There are also credit cards that offer fast cash, free gadgets, and similar stuff like that. When choosing your first card, you should check whether the perks align with the type of lifestyle you live (or want to live).

Below, we’ve listed 4 things you should consider when choosing your first credit card:

The Annual Fee

That’s right; you’re not getting to use a credit card for free. There is an annual premium for it. 

Depending on your card type, perks, and limits, this annual fee can vary from $100 to $500 so make sure that you take this cost into account when applying for credit cards, so you don’t end up activating too many of them and end up paying hundreds of dollars on annual fees. Read more here: https://money.usnews.com/credit-cards/articles/what-is-an-annual-fee-on-a-credit-card.

There are ways to get around annual fees, though. There are credit card companies that waive the annual fee for the first year or waive the fee for life if you meet certain conditions — such as, meeting a required spend within the first 60 days of using the card. 

Paying online with a credit card and a laptop

The Credit Limit

The next consideration that you should take into account is the credit limit. Ask yourself: Is the credit card even worth activating based on its credit limit and the annual premium I have to pay for it? If the limit is too low, then it might not even be worth activating as you might get a better offer from another bank.

When choosing your first card, it’s important to choose one that you can conveniently use for your everyday needs, as well as something you can use to pay off monthly bills and such. This can help you build your credit score much faster. 

The Interest Rate

Next, we have the interest rate. This is definitely something you should concern yourself with as it has to do with how much you will be paying the bank in interest should you be unable to pay your card balances in full. 

Life is full of unpredictable moments and sometimes, we may find ourselves in a financial pinch. When this happens, you may not always be able to commit to paying for your card in full and it would be a big advantage if your card has lower interest costs. Credit card interests are generally around 3 to 4%, but if you can find something lower then even better.

The Perks & Benefits

Another thing you really have to take into consideration as well is the perks that come with the card you choose. Credit card companies often offer different card types, each having different reward point systems and benefits, such as Chase Sapphire Preferred vs. Amex Gold. For example, there are cards that are more ideal for traveling where you can earn free flights and discounted accommodations; there are also cards that are more ideal for those who love to shop because it offers a lot of discounted deals for major brands. 

All in all, you should choose a card that fits your lifestyle so you can maximize its benefits!