Credit cards can be a great tool to help you build credit because they allow you to show that you can pay your bills on time. If you get a rewards credit card, you can also benefit from all your spending by earning miles or points that you can use for travel or merchandise or earning cash back.
While there are plenty of good reasons to open a credit card, getting your very first card can be tricky, especially if you don’t have a lot of credit history, as card companies will check your credit score. Here are four tips to help you make sure you’re able to open a card and get the one that’s right for you.
1. Consider a co-signer
Sometimes credit card companies will be reluctant to give you your first credit card because they have no way of knowing if you will be paying responsibly. If you want the widest selection of card options for your first credit card, it’s worth considering having someone co-sign.
A co-signer agrees to share legal responsibility for payments, so card issuers won’t have to worry so much about your default. If you can get someone to co-sign for you who has good credit, you should be able to get approved for just about any credit card because the card issuer will have a fallback option if you do not pay as promised.
Just be sure to pay your bills if you go this route, otherwise your co-signer could be held liable and your late payments or non-payments could hurt their good credit.
2. Look in secure maps
If you can’t or don’t want to get a co-signer, a secured card might be the perfect choice for your first credit card. Secured cards require you to make a deposit equal to your line of credit. So, for example, you would need to deposit $500 to get a credit card with a $500 line of credit.
Card issuers will allow almost anyone to get a secured card as there is no risk for them as they could seize your deposit if you do not meet your payment obligations. But you can build credit with one, since your payments will be reported to the credit bureaus.
Over time, many secured cards can turn into unsecured cards, so this is a good way to get your foot in the door and start being able to borrow.
3. Pay attention to fees
Chances are you don’t want a card with high fees for your first credit card. Sometimes it makes sense to pay an annual fee if it gets you access to a generous rewards program or great cardholder benefits. But when you’re just starting to build credit and get your financial ducks in order, you might not be spending enough on your card to justify paying an annual fee.
4. Research reward programs
Finally, you’ll want to research the rewards programs offered by different cards. If you can find and get approved for a card that gives you bonus rewards for the things you spend the most, you can lower the effective cost of all your purchases.
By considering these four tips, you should hopefully come up with a great card. Remember that credit cards have high interest rates, so you should use them responsibly, avoid carrying a balance, and always pay your card on time, no matter which card you sign up for.
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