5 Tips for Getting Your First Credit Card

5 Tips for Getting Your First Credit Card

By: Brian Savage, Consumer Loans Underwriter

Are you thinking about getting your first credit card? Congratulations! It may not seem like a big deal, but this is where your entire consumer credit history could begin. In an economy where credit is a prerequisite for so many major life milestones – home ownership and car ownership, among others – it’s an important step. Even seemingly mundane activities like making hotel reservations, renting a car and shopping online can be challenging without a credit card. Think about it as a necessity for long-term growth and short-term convenience. But don’t just jump right into applying for any credit card. In the first of a two-part series, I’ll discuss five tips to consider before getting your first credit card.

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1. Research your credit score. A major benefit of establishing a credit card is that you can use it to build up your credit history and credit score. At the same time your credit score and credit experience helps determine your ability to get a card. The average credit score in the U. S., as of May 2020, is somewhere between 680 and 7031, which is considered “fair to good.” So, how does this score factor into your eligibility for a credit card? The three major credit bureaus are Equifax, Experian and Transunion. Lending establishments, such as banks or credit unions, will obtain a consumer's credit score from the credit bureaus to determine terms for a loan. Before you apply for a credit card, check your credit history via one of these bureaus or by using a reputable third-party source. If your credit is bad or limited, it may be difficult to get a card. Even without a card, you may have some credit history and it’s helpful to see where you stand as you start this process.

2. Find a card without an annual fee. Before applying for a credit card, you should do some background research. Finding a credit card that doesn’t require you to pay an annual fee is important! Pay close attention to credit card offers to see if there’s a fee involved; there’s no reason to pay a fee if you can obtain a card that doesn’t include one. Affinity is one financial institution that does not charge an annual fee; you don’t need to pay money to Affinity just for having a credit card. You can take a look at Affinity’s suite of credit card options here to compare factors like rates, features and rewards.

3. Get a card that offers a low interest rate.Interest rates are the next factor you’ll want to look at when choosing a credit card. Obviously, a lower interest rate is better than a higher one, but it’s especially important if you plan on carrying a balance from month to month – in other words, you anticipate not being able to pay off the entire bill each payment period. The Affinity Premium Visa card is an example of an ideal card for someone anticipating monthly carry-over.

4. Look into a card with good rewards. After searching to find a low rate, prioritize good rewards. Rewards credit cards can reimburse purchases you make on your card through cash back, statement credits, merchandise, experiences and more. Typically, such cards have the drawback of higher interest rates than those which lack rewards. If your income and cash flow are high enough to pay off your entire credit card balance each month, this can actually be an ideal “sweet spot” where you’re generating credit and rewards while not having to pay interest on the purchases you make. Affinity offers three rewards cards, each with unique benefits:

Reviewing what each of these cards offer is a good first step towards understanding the benefits and trade-offs of different cards.

5. Utilize resources and ask for help.Finally, look for further guidance on what card works best for you, whether by reading personal finance blogs and websites, talking to a representative at your financial institution or asking friends and family with more credit experience than yourself. If you’re an Affinity member, our skilled personnel will provide guidance every step of the way. Affinity will always do its best to meet the needs of its members. For members with limited credit experience and/or limited employment history, Affinity may offer a Secured Visa card and/or request a co-applicant for further consideration.

Getting your first credit card is a necessary step toward reaching your personal finance goals in life. But once you get a card that suits your needs, you’ll need to know the best practices for using your card and ensuring that you build up good credit without getting into too much debt. That will be the topic of the second part in this series on credit cards, coming next week!

                                                  

This information is for informational purposes only and is intended to provide general guidance and does not constitute legal, tax, or financial advice. Each person’s circumstances are different and may not apply to the specific information provided. You should seek the advice of a financial professional, tax consultant, and/or legal counsel to discuss your specific needs before making any financial or other commitments regarding the matters related to your condition are made.  

1 Retrieved from https://wallethub.com/edu/