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Perhaps you are trying to figure out what the best first credit card to get is. Doing so can help you build a credit history and avoid some of the other hassles that come with only having a debit card. Plus, some even earn rewards points and come with benefits that other cards don’t have.
However, while there are many credit cards you can apply for, your first card probably won’t be the best credit card you ever own, like the Chase Sapphire Preferred or another travel rewards credit card. This is because banks keep their most lucrative cards for those with a 740 credit score and several years of responsible credit card usage.
For now, the best thing to do is focus on picking a “starter credit card.” Two traits to look for in your first credit card are no annual fee and the ability to earn rewards points. While you might upgrade to a better card in a few years, keeping this card open for years to come continues to improve your credit score as your average account age increases and keeps your total credit utilization ratio lower.
Best First Credit Card to Build Credit
If you are starting from scratch, your only credit card option isn’t one that charges an annual fee but offers zero rewards. Although you won’t have a high initial spending limit, you can use your first credit card for key purchases like buying gas or food.
Discover it Secured
The Discover it Secured can be excellent first credit card option for these reasons:
- No annual fee
- Earn 2% back on gas and restaurant purchases (On the first $1,000 in combined quarterly spending)
- Unlimited 1% back on all non-bonus purchases
- All cash rewards matched for the first year
- Late fee waived on your first late payment
The purchase rewards and a signup bonus that matches purchase rewards for the first year make this card unique amoung secured credit cards. With the first-year matching reward, all your rewards are doubled. For example, if you earn $40 in rewards the first year, Discover gives you $40 bonus cash.
Discover also provides a free FICO credit score you can monitor. After eight months of responsible use, Discover will evaluate your account history and may refund your security deposit.
Secured credit cards like the Discover it Secured are best if you have a 620 credit score or less. These cards have small credit limits and almost always require a refundable security deposit of an equal amount. For example, you must make a $500 security deposit if you want a $500 card spending limit.
It’s not easy to make big purchases with such a small spending limit, but these cards make it easy to understand how credit cards work so you can responsibly use an unsecured credit card that may have a credit limit as high as $10,000.
Best First Credit Card for Students
One advantage of being a student is that you can qualify for better credit cards than your non-student friends. These cards can have higher credit limits or more attractive purchase rewards. It’s also easier to avoid an annual fee. College can be one of the best times to build credit because of these student advantages.
Journey Student Credit Card from Capital One
The Journey Student Rewards Credit Card from Capital One is an unsecured card that doesn’t require a security deposit and it may offer a higher credit limit than secured credit cards. It also doesn’t charge an annual fee or foreign transaction fee and it earns purchase rewards.
You get 1% cash back on every purchase. On-time payments mean you get a 25% boost. This means you get 1.25% back on every purchase when you pay your balance in full each month. If you spend $200 a month, you get a $2.50 bonus cash instead of the standard $2 bonus cash (minus potential late fees) with the 1% bonus.
As the industry-standard credit card purchase reward is 1% back, the 25% boost means you will earn more and is also an incentive to pay your bill on-time to build credit. Capital One may also increase your credit limit after your first 5 monthly payments which makes it easier to maintain a low credit utilization ratio to see your credit score grow faster.
This card doesn’t offer a signup bonus, but it’s still one of the best student cards because it’s fee-free and earns 1.25% back.
Best First Credit Card for Good Credit
If you have a credit score of 640 or higher, there’s a chance you can skip the secured credit card route and go directly to an unsecured credit card. Unsecured cards don’t require a security deposit, have higher credit limits, and can offer better purchase rewards.
Credit cards aren’t the only way to build good credit. Repaying loans like student loans or auto loans mean you already have a credit history.
Chase Freedom (Expired)
The Chase Freedom is a card you can keep for a lifetime. New cardmembers can also earn $150 bonus cash by spending $500 in the first three months.
You earn 5% back on the first $1,500 spent on rotating quarterly bonus categories. Some of the bonus categories include gas stations, supermarkets, and Chase Pay mobile wallet payments. All non-bonus purchases earn an unlimited 1% back. Note that you must activate each quarterly spend through your Chase account (usually an email will be sent to the cardholder).
Maximizing the 5% bonus means you get $150 in purchase rewards each year plus everything you earn at the standard 1% back rate.
This card is part of the Chase Ultimate Rewards program. Although many consider the Chase Freedom as a cash back credit card, your rewards points are also redeemable for award travel, gift cards, and Amazon.com points. Your points are worth one cent each for each redemption option.
Once you achieve a 740 credit score, you can qualify for the Chase Sapphire Preferred which is one of the best travel credit cards because your points are worth 25% more when redeemed for travel. It currently comes with a great 60,000 sign-up bonus after new cardholders spend $4,000 in their first 3 months of account opening. Another good option is the Capital One Venture. Read this post to compare the Chase Sapphire Preferred vs Capital One Venture Rewards.
Getting your first credit card is an exciting time. Picking one of these cards can provide rewards and benefits that match that excitement level. All of us have different financial situations, but getting a card without an annual fee makes your first credit card a free and easy way to improve your credit and qualify for better credit options in the future.
Chase Sapphire Preferred® Card
- Earn 80,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $1,000 toward travel when you redeem through Chase Ultimate Rewards®.
- 2X points on travel and dining at restaurants worldwide, eligible delivery services, takeout and dining out & 1 point per dollar spent on all other purchases.
- Get 25% more value when you redeem for airfare, hotels, car rentals and cruises through Chase Ultimate Rewards. For example, 80,000 points are worth $1,000 toward travel.
- Get unlimited deliveries with a $0 delivery fee and reduced service fees on orders over $12 for a minimum of one year on qualifying food purchases with DashPass, DoorDash's subscription service. Activate by 12/31/21.
- Earn 5X points on Lyft rides through March 2022. That’s 3X points in addition to the 2X points you already earn on travel.
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Editorial Note: The editorial content on this page is not provided by any bank, credit card issuer, airlines or hotel chain, and has not been reviewed, approved or otherwise endorsed by any of these entities.