How to pick a credit card if you are new to credit
Quick insights
- Starter credit cards are designed for those just starting out and applying for their first credit card.
- Making on-time payments and paying your credit card balance in full every month can help establish good credit.
- New card users may want to look for a low APR, low fees and a rewards program that works for them when considering card options.
Understanding how credit cards work may help support longer-term financial goals. If you're just starting out managing your own money and are brand new to using credit, there are credit cards options designed specifically for you.
In this article, we'll share ways to use your first credit card to help build a credit history and some things to consider when choosing your first card.
A first credit card for people who are new to credit
If you're new to using credit altogether, there are credit cards—often called starter or student cards—that are designed specifically for those just starting out and applying for their first credit card. You could think of them as a credit card for beginners.
Starter cards often have fewer or lower eligibility requirements than other types of cards. For example, Chase offers the Freedom Rise® credit card. The Freedom Rise card does not require a prior credit history to apply. And if applicants have or decide to open a Chase checking account and deposit at least $250 within 3 days of submitting their credit card application, it may increase their chances of being approved for the card, although there are no guarantees.
When used responsibly over time, may help you create a positive credit history. Having a solid credit history may increase your odds of getting approved for credit cards in the future that have higher credit limits, lower interest rates and rewards.
Becoming an authorized user
Another potential approach for those new to credit is becoming an authorized user on the credit card account of a friend, spouse, parent or guardian first. An authorized user is permitted to use another person's credit card as long as the primary cardmember signs off on it. The authorized user gets a card in their name that's linked to the primary cardmember's account, but they are not responsible for making payments on the account.
You don't need a credit history to become an authorized user, but you may be able to begin building a positive credit history if timely payments are made to the card you have access to. Keep in mind, not all credit card issuers report all authorized user activity to credit bureaus. For authorized users, special terms and conditions may apply, so you may want to check with the credit card issuer regarding authorized users.
Ways to build credit with your first credit card
Credit bureaus track how individuals manage credit accounts, and responsible usages over time is reflected in credit history. It's a gradual process but could impact your ability to qualify for loans or secure favorable interest rates in the future.
Here are a few ways you to help build a credit history:
- Making on-time payments: Credit bureaus track whether payments are made by the due date. Consistently paying at least the minimum amount due is one way payment history is established. It may be helpful to set up auto payments or text alerts to remind you when your bill is due.
- Paying-in-full each month: While paying the minimum amount due is typically factored into credit, paying your full balance each month may also contribute to positive credit profile. Not only can it help you avoid interest charges, but it may also demonstrate to lenders your ability to manage credit wisely. If you can't pay the balance in full, paying more than the minimum may show your ability to pay off the debt efficiently.
- Keeping a low credit utilization: Your credit utilization ratio, which is the percentage of the available credit you're using, plays a vital role in your credit score. Keeping this ratio below 30% can be beneficial to a credit profile.
- Monitoring your credit: Regularly checking your credit reports can help identify any inaccuracies and monitor any changes to your credit score. You will have three credit reports—one from each major credit bureau. You can access a copy of your report once every 12 months for free from each bureau.
You can also enroll in Chase Credit Journey®, a free online credit monitoring tool for anyone—not only Chase customers—to access your credit score, ExperianTM credit report, credit history, limits and balances across all accounts. This tool provides insights into credit and offers an array of services for you to keep track of your credit, including credit and identity monitoring and a credit score improvement feature.
Things to consider when choosing your first credit card
When deciding what credit card to apply for, there are some features you may want to consider:
Low annual fees
Annual fees are what the card issuer charges annually to the cardmember to have and use a credit card. These fees vary by card, and there are many cards with low annual fees. Starter and student cards typically have low annual fees.
Rewards program
Cardmembers may enjoy reward programs that allow them to earn cash back or reward points on most purchases. For example, the Freedom Rise card earns 1.5% cash back on all purchases. Some credit cards allow cardmembers to earn rewards points that can be redeemed for gift cards, flights, hotel stays, statement credits and more. When evaluating rewards programs, it can be helpful to assess if your routine spending is in line with the purchases that earn the most rewards with the card.
Low intro APR
A student or starter credit card may have higher interest rates than other credit cards, so you may benefit from finding a credit card with a low introductory APR offer. During this introductory period, interest is applied at the lower rate on purchases made until your regular interest periods begins.
It may be helpful to read your cardmember agreement and monthly statements so you can keep track of when your low-interest period ends. You'll start paying interest on your credit card balance once this promotion ends.
The bottom line
There are various types of credit cards designed for those new to credit. Understanding potential options and how credit works can help you make informed decisions as you work to build your credit profile over time.
