Getting a credit card as a young adult is a big step. To help, we’ve researched the best first credit card options and how to make this important choice.
Getting your first credit card is a significant financial milestone. Maybe you’re a college student jumping into personal finance for the first time. Or maybe you’ve just never had a reason to get a credit card before. Regardless, you may be overwhelmed with all the options that are out there.
When it comes to getting your first credit card, I recommend first looking at your spending habits. Then, choose a card that offers the most rewards based on those spending habits. Here are three recommendations for first credit cards: one for general cash back, one for travel rewards, and one for gas rewards. I also discuss secured credit cards and student credit cards for your reference.
First Cash Back Credit Card: Discover it® Cashback Match™
The Discover it® Cashback Match™ is a no-fee card that offers plenty of attractive perks. It’s an excellent choice for your first credit card if you’re looking to maximize your cash back rewards right off the bat.
You’ll earn 1% cash back on all credit card purchases and 5% cash back on new bonus categories each quarter. Currently, through December, the bonus categories are for purchases at Amazon.com,and Target–perfect for holiday shopping! What’s more is that new cardholders will get a “dollar-for-dollar match of all the cash back you’ve earned at the end of your first year.” This makes it the perfect time to sign up for Discover it if you’re looking for your first cash back credit card.
Other perks include the ability to view your FICO® score for free each month on your statements. You’ll also have the ability to immediately freeze your account with an on/off switch (online or via the mobile app), should you suspect fraud.
Resource: How to Get Your Credit Report for Free
There’s no annual fee, no fee for your first late payment, no overlimit fee, and no foreign transaction fee. You’ll also pay no interest on purchases made during the first 14 months after opening this credit card.
- Learn more about Discover it® Cashback Match™
First Travel Rewards Credit Card: Capital One® Venture® Rewards Credit Card
The Capital One® Venture® Rewards Credit Card is an excellent choice for first-time cardholders who plan to travel a lot. You’ll earn 2 miles for every dollar you spend, regardless of category. One hundred miles is equal to $1 in travel rewards. There’s also a one-time bonus of 40,000 miles (equal to $400 in travel rewards) once you spend $3,000 on the credit card within the first three months of opening it.
In addition to having no foreign transaction fees, this credit card also offers the many perks that come with being a Visa Signature card. These include:
- Complimentary travel upgrades
- Complimentary concierge service
- 24-hour travel assistance services
- Special access to premier sporting events and concerts
- Shopping discounts at select online merchants
- Extended warranty on purchases
There’s an annual fee of $59, which is waived the first year. If you use this card often and take advantage of all the travel rewards, it should easily make up for the annual fee.
- Learn more about Capital One® Venture® Rewards Credit Card at CardRatings.com
Best First Gas Rewards Credit Card: Blue Cash Everyday® Card from American Express
If you’re a frequent driver, you may be looking for a credit card that offers good gas rewards. The Blue Cash Everyday® Card from American Express is the perfect credit card in this instance. You’ll receive the following cash back rates:
- 3% cash back at the grocery store
- 2% cash back at gas stations
- 2% cash back at select department stores
- 1% cash back on everything else
There’s no limit on the amount of cash you can earn, and it never expires. You can redeem your cash to your bank account, as a statement credit or in the form of gift cards. There’s also no annual fee.
Another perk of the Blue Cash Everyday® Card from American Express is that you’ll get online access to view your FICO® score for free. This comes in handy for monitoring your activity, especially if you’re new to building a credit history
- Learn more about Blue Cash Everyday® Card from American Express at CardRatings.com
A Note About Secured Credit Cards
Secured credit cards require you to put down a refundable deposit as collateral. This deposit becomes the credit line for your card. Secured credit cards can help you establish or rebuild your credit history, and are useful if you have no credit or bad credit.
If you’ve been paying off a loan in your name or otherwise have some credit history, you may not need to get a secured credit card before applying for a regular credit card. Regular credit cards tend to offer more attractive perks than secured credit cards.
A Note About Student Credit Cards
Student credit cards are a great option for young people to get their feet wet with credit. I got my first credit card while I was in college and still have that credit card to this day. It’s a Wells Fargo cash back credit card.
Most credit card issuers offer at least one student credit card. These credit cards are often comparable to their other rewards credit cards but come with a low initial limit. As you establish your creditworthiness by making on-time payments, you’ll likely see your limit increase over time. If you’re in college, I highly recommend starting to build your credit now by getting a student credit card.
Getting your first credit card is an exciting time and the process shouldn’t be taken lightly. Which credit card you choose as your first can have a huge impact on your finances. If you choose correctly based on your spending habits, you can reap some great benefits such as travel rewards or cash back.
Once you receive your first credit card, remember to use it wisely. Only make purchases that you can afford to pay in full when the bill comes. Try to keep your credit utilization ratio low by not using more 30% of your credit card balance at any given time. Above all, enjoy the many perks that come with being a cardholder.
Updated October 13, 2017 and originally published December 12, 2016.