In today’s world, cash is out, and credit cards are in. They’re easy to pay with, provide great incentives for users, and are a great way to build your credit history without taking out a large loan. However, with so many options, it’s easy for anyone to be overwhelmed, especially college students.
That’s where I come in! I applied for my first credit card right on my 18th birthday since I was so eager to get one. Now, with four cards, I can provide a comprehensive guide to getting your first credit card.
Remember that this is not a substitute for financial advice. While I have lots of experience, I’m not a financial expert, so be sure to also use your own judgment.
what is a credit card, and how do they work?
A credit card is an alternative to paying with cash. Instead of paying with your money upfront, you take out a small loan each time you make a transaction. At the end of your billing cycle, you are expected to pay some, if not all, of your transactions. When you do this, you are repaying the bank for all the charges you made.
To get a credit card, you have to apply. If your application is denied, it will temporarily hurt your credit score, so be careful with how often you apply. I generally suggest waiting every couple of months before applying again.
When applying for your first credit card, it’s best to use a secured one. They tend to approve more people with little to no credit history and provide an opportunity to build your credit.
secured credit cards: what are they?
A reliable first option, a secured credit card is good for anyone with little to no credit history. The process of obtaining one is slightly different compared to a regular card since it requires a security deposit. Yes, unfortunately, you must put money down to secure your card. However, with responsible use, such as making all your payments on time and in full, you will eventually get your deposit back in the form of a check.
The secured credit card I used was from Discover, but other banks also offer it, such as Capital One. I paid a security deposit, which equaled my credit limit, or the maximum amount I could charge on my credit card at any given time.
My personal favorite cards
There are many credit cards out there, so I understand that it can be overwhelming to choose. The best way to narrow it down is to figure out the most beneficial rewards for you based on your spending habits. However, if you’re really stuck, here are a few I recommend:
- Discover it cash back
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Discover is a good option, especially for beginners. This card gives you 5% cash back on everyday purchases at different places each quarter, plus 1% cash back on all other purchases. 5% cash back is unbeatable, however, where you’ll earn that cash back will change each quarter. This is a good card to start with after using a secured card, but I definitely think that once you’ve gained enough credit history, it’s good to explore other options.
- Citi custom cash
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Though I don’t have a Citi card, I have heard good things, especially about this card. This card allows you to earn 5% cash back in your top eligible spending category, which can be very beneficial depending on your spending habits. For example, I spend a lot of money on food, so this card would be good for me because I would earn 5% back in the dining category.
- Chase Freedom Flex
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This card is also a solid option, as you can earn 3% back on dining, drugstore purchases and 1% on everything else. I own this card, and I like it because it’s helping me build a relationship with Chase. Though I don’t use this card as frequently, I consider it a good option if you spend a lot on dining.
- Capital One Savor rewards
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Last but most certainly not least, this Capital One card is my all-time favorite. I earn 3% cash back on dining, entertainment, and grocery stores, and I can earn 8% back when booking events through Capital One Entertainment. I love using this card because its benefits are tailored to my spending habits, and it’s easy to use. It’s also not too difficult to get once you’ve built up your credit history, so it’s definitely worth looking into.
My advice for responsible use
It’s very easy to get swept up in mindless transactions. By tapping your card instead of paying cash, it’s possible to forget about the value of money. That’s why it’s also important to be responsible when using a credit card. Here are some of my favorite tips:
- Set a personal limit
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Despite the bank giving you a limit, setting your own limit that’s lower than the bank’s is wise. This will minimize the amount of money spent, which will make your wallet happy. If it’s easier, you can split the limit up into weeks rather than monthly. This will allow you to keep better tabs on your spending habits.
- one card at a time
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Even if you have multiple credit cards, I don’t advise using them all simultaneously. I tend to get confused and lose track of how much I’ve spent overall. I like to use one card primarily while saving the others for situations where they give better rewards. This way, I can still effectively keep track of my spending habits.
- budget!
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Finally, budgeting is vital for responsible card use. There are many ways to budget, such as using an app like YNAB. I recommend experimenting to see what works best for you, but do so before applying for a credit card so you can establish a strong habit.
final thoughts
Credit cards can be confusing, especially for those just beginning their journey to good credit. However, with time and experience, it will all become second nature. It’s best to start building your credit as soon as possible, so what are you waiting for? Remember not to get too carried away, and you’ll be setting yourself up for your future.