Getting and managing a first credit card be exciting for older teens and young adults.

A first credit card is often connected to a parent or other adult’s account. When someone is added as an authorized user, they typically don’t get to choose the type of card—they receive the same version the primary accountholder has.

But if you’re getting a first credit card entirely on your own, then there may be a lot of options to consider before deciding what type of card to apply for. It can be both exhilarating and confusing to consider all the many types of credit cards that could be available. But managing money is serious business, so it’s a good idea to take some time to carefully research, investigate and evaluate a range of different cards before applying to your top candidates. Decide on key features important to you and try to compare them between cards to filter and funnel down to favored candidates.

Be aware that a credit card is not a debit card (which debits, or transfers cash from an account, often a savings or checking) or a pre-paid card, where a limited, specific amount of money—such as $500—has been loaded on to the card for payments that can be made only up to the exact amount added to the card. A credit card issuer is essentially offering regular, short-term loans to a user—the issuer is accepting charges based on cardholder purchases, and the charges should be reimbursed by the cardholder to the issuer every month.

Obtaining a first-ever credit card—what to look for and consider before applying for and committing to a card

• Look through the extensive (and sometimes complicated) features, requirements, qualifications and conditions of each card candidate so you understand them before applying. Getting a credit card requires signing onto a contract, a legal document that may be very long, published in a very small size font and full of complicated sentences and legal terms. Make a point of at least looking through the entire information so you are comfortable with what is being offered and what you will be required to do in the contract.
• Be aware of any outstanding debts or problems in your financial history that may cause a card issuer to deny your application for a card. If you have had any problems with loan repayments, rent payments or disputes with merchants—even if they are errors or misunderstandings—they could affect your credit report. A credit report may then influence the amount or type of credit a company is willing to extend to you, including credit cards, delayed payments or almost any kind of loan. Getting a copy of your credit report may give you a better idea of how companies view your creditworthiness and the types of credit cards you may be eligible for.
• When comparing cards, especially look at the annual interest that will be charged on the card balance (the debt from charges that are made)—which is known as the annual percentage rate (or APR)—and try to find a lower rate. Annual interest rates on credit cards could range to above 30 percent. These interest rates may be higher than what would be charged on many mortgages, vehicle or personal loans. If payments to the card issuer aren’t made regularly, the interest will cause the debt to accumulate and grow larger, making it more difficult to pay off. Be honest with yourself about the interest rate you can afford.
• Keep an eye out for some cards that are specifically marketed to consumers as being designed for first-time cardholders to build credit and that may have easier payment choices. During a credit card acquisition investigation, a researcher may uncover credit cards designed for (and marketed to) beginning cardholders. These cards may be especially attractive due to lower interest rates, more relaxed payment options (such as repeated forgiveness for missing a payment) and a quite basic rewards program. As with any card being examined, read the fine print, understand all the features and rigorously compare these types of cards with others on your list.
• But…when researching a beginning credit card, it may be necessary to only apply for a special type of card known as a secured card. For anyone with limited credit card history who wants their own card that isn’t linked and dependent on someone else’s account—such as a parent’s or other relative’s—a secured card may be the best (or only) option. The U.S. government agency the Federal Trade Commission (FTC), which assists consumers and businesses with their finances, has a straightforward explanation of how secured cards operate: “To use a secured credit card, you deposit money with a bank or other credit card lender. That money then secures your repayment, so the card issuer knows it will get paid. The money you deposit also determines your credit line — which is how much you can spend. Your credit line is a percentage of the deposit — typically 50 to 100 percent. A secured credit card can help you build your credit history. You may have to pay an annual fee to use one, but not all cards require it.”
• Don’t forget to look for—and compare—rewards programs offered by cards. Many (but not all) credit cards come with some type of rewards programs, a type of loyalty program that provides specific benefits to the cardholder for using the card. When using a credit card with a rewards program, card usage will typically generate monthly rewards points, which can accumulate and be used in various ways. Just a few examples of how rewards points might be able to be used—depending on the specific program attached to the card—include getting cash back, redeeming points for merchandise, accumulating airline frequent flyer miles, building up hotel stays, paying for gasoline or groceries, paying off credit card charges or even contributing to an Individual Retirement Account. Rigorously evaluate the reward programs available and decide if they are beneficial to you.
• Decide if you want to pay an annual fee for your first card. While many cards can be obtained at no cost and with no ongoing, required fees just for simply having the card, other specialized types of cards—including some travel and luxury benefits cards—have mandatory annual fees. Consider thoughtfully if a card with fees has benefits that make the extra cost worthwhile.
• Look for a card that could meet your needs for several years. Credit rating agencies usually prefer to see long-term relationships between a consumer and their credit; they might assign a higher credit score to someone who has held the same card for several years instead of someone who regularly acquires and then quits credit cards. Consistent, ongoing use of the same card over a relatively long period—while staying current with balance payments—could help boost a credit score, which should be a key long-term financial goal for anyone starting to build a reputable credit history.

For a beginning credit card to be used effectively and return the maximum benefits possible, there are some key behaviors a user should focus on, including being thoughtful, responsible and exercising monetary restraint. Don’t go overboard on card usage; manage other finances maturely so that monthly credit card balances are paid off and don’t start to build up debt that could become difficult to pay down. Getting your first credit card may feel like reaching a major milestone—but it’s really just one important step in a lifelong journey of prudent financial management.

Interested in more advice on personal money and credit management?

Please look into some of the free Delta Community Financial Education Center live workshops which are available to both Credit Union members and the general public. The Financial Education Center's Events & Seminars page has a registration form for its monthly, no-cost webinars with practical, actionable advice on managing personal finances, including saving and spending suggestions. The work of the Financial Education Center reflects Delta Community’s mission to help both its members and others in the community achieve financial success throughout their lives.

Delta Community’s blog has some more timely, practical financial advice to check out, with new posts available every month.