Best First Credit Cards for First-timers

When choosing your first credit card, remember that your main goal should be establishing your credit history. A record of on-time payments and smart handling of credit will smooth the way to success in securing car loans and mortgages.

Here’s some of the top starter options.

First-timer Credit Cards Worth Considering

Here’s a look at a few solid credit card options for those looking to build a line of credit.

Deserve EDU Mastercard

Rewards rate: 1% cash back

APR:

Annual fee: $0

Why It Stands Out

This starter card designed for students charges no annual fee and a rewards rate of 1%. For spending $500 over the first three months on the Deserve EDU Mastercard, customers earn a full year of Amazon Prime Student. This is a standard Prime account — a $59 value — with some student-centered bump-ups, including free food delivery from GrubHub and a 10% discount on hotels and flights through Student Universe.

The Deserve EDU is for students currently enrolled in a U.S. college or university. The card does not require an applicant’s credit history, a security deposit or a co-signer. International students are also invited to apply. While they do not have to provide a Social Security number, they are required to have another form of identification and a bank account in good standing.

What To Look For

Pre-qualifying for the Deserve EDU card takes you through a series of basic screens and will not impact your credit score. However, applicants must provide their email address, meaning that unsolicited offers of various credit products may show up if the application is approved.

The card carries the range of benefits available to Mastercard platinum cardholders, including $600 of cellphone insurance for customers who pay their monthly bills with the card. The insurance reimburses for theft or damage to your phone.

Through the Bonus program, if you qualify for a credit card, you can earn a nice $30 credit after making your first purchase.

Petal 2 Visa

Rewards rate: 1% to 1.5% cash back

Annual fee: $0

APR:

Why It Stands Out

An important draw of the Petal 2 Visa for first-timers is the fees — or lack thereof. There are no late fees, annual fees or foreign transaction fees charged to Petal 2 customers. The rewards rate starts at 1% and increases to 1.5% after 12 months of on-time payments. The Petal 2 also offers much higher rewards, up to a juicy 10%, at select merchants.

Applicants who have not yet established a credit score are welcome to apply. Petal 2 will assign a “cash score,” which relies on current assets and income. No security deposit is required, and credit limits on this card range from $300 to $10,000.

What To Look For

The Petal 2 Visa offers a range of benefits available to Visa customers. These include Uber credits, collision insurance when renting a car with the card and access to Visa’s roadside assistance program. By enrolling in ID Navigator, customers can be advised of any potential hacking or identity theft related to the card.

The card is unavailable to anyone who has filed for bankruptcy protection within the last 48 months.

Discover it Student Chrome

Rewards rate: 1% to 2% cash back

Annual fee: $0

APR: variable

Why It Stands Out

Another attractive choice for those with short or no credit history is the Discover it Student Chrome, which comes with an unlimited cash back match offer for the first year. At the end of a year of use, Discover will match all cash back earned, effectively doubling the rewards rate. No minimum or maximum amount is applied to this offer.

The Discover it Student Chrome carries a standard 1% cash back rate, but doubles that rate to 2% for gas, restaurant and takeout purchases on up to $1,000 in combined purchases each quarter.

What To Look For

Unlike many cards designed for students and those with limited credit, the Discover it Student Chrome offers introductory annual percentage rates. On purchases, the intro APR is 0% for six months, while on balance transfers, the rate is 10.99% for six months from the date of the first balance transfer. For those who might miss a payment deadline, there’s no penalty APR charged.

OpenSky Secured Visa

Rewards rate: N/A

Annual fee: $35

APR:

Why It Stands Out

A secured credit card requires a deposit of funds to open an account. The customer’s credit is limited to the amount of the deposit. For those with poor or no credit, a secured card is a way to get back on track with a record of on-time payments and responsible card use.

For the OpenSky and other secured cards, that means no credit check is required when applying. The security deposit required ranges from $200 to $3,000. Since secured credit is less costly, the APR on this card is a reasonable , a few points lower than standard rates on unsecured cards. Customers are also charged an annual fee of $35 and a 3% fee on foreign transactions.

What To Look For

After six months, the card may be eligible for an increased credit limit without an additional deposit. Alternatively, customers can be considered for approval of an OpenSky Gold unsecured account.

Capital One Journey Student Credit Card

Rewards rate: 1% – 1.25%

Annual fee: $0

APR:

Why It Stands Out

Good financial habits are learned and developed over time. The Capital One Journey Student card rewards one such habit, on-time monthly payments, with a boost in the cash back rate, from 1% to 1.25%. This is a good incentive for first-time cardholders to keep track of their account and an easy way to improve a credit record.

On the other hand, not-so-good behavior is penalized. A late fee of up to $40 is assessed for payments not made on time, and a variable-rate APR of will kick in on balances carried over the payment deadline. When considering any credit card, keep in mind that in an environment of rising interest rates, as began in early 2022, these variable rates will likely go even higher.  

What To Look For

Capital One cards come with a nice set of perks for cardholders, including travel perks, push notifications when purchases are made, and Capital One Shopping, a program that applies valid coupons automatically when the card is used for purchases.

Capital One Platinum Secured

Rewards rate: N/A

Annual fee: $0

Regular APR:

Why It Stands Out

The Capital One version of a secured card does not levy annual or other fees and requires a minimal security deposit of $49, $99 or $200. This makes the card an optimal choice for those who want to start the credit journey with small purchases and payments. Making on-time payments may also be rewarded by a statement credit in the amount of the initial deposit.

What To Look For

Capital One makes it easy to set up recurring payments to vendors and utilities. For example, a streaming subscription can be put on the card and set to pay automatically before the due date. A series of on-time payments to several accounts set up through the card this way will help quickly boost a credit score.

The card also offers flexible due dates, making it easier to fit payments into a budget that varies from one month to the next.

Chase Freedom Student

Rewards: 1%

Annual fee: $0

APR:

Why It Stands Out

There’s no better incentive for a new credit cardholder than good old cash. The Chase Freedom Student card returns a $50 bonus for a first purchase made within three months of the account start date. A $20 credit is also awarded on the first five account anniversary dates as long as the account remains in good standing.  A credit limit increase is granted after the first five months of on-time payments.

Keeping good standing is important on this particular card, as it carries a punishing 29.99% penalty rate if a payment is missed or late. In the fine print appearing on the account terms, credit card issuers will also reserve the right to raise this rate.

What To Look For

Chase rewards points never expire, so as long as your account remains open and active, you can rack up rewards and save for a larger credit or another perk.

BankAmericard Secured

Rewards rate: N/A

Annual fee: $0

APR:

Why It Stands Out

The BankAmericard offers many useful bells and whistles when the card is linked to a Bank of America checking account. Overdraft protection helps customers avoid those pesky fees as well as declined purchases. Online and mobile banking platforms are available, smoothing payments and deposits. Account alerts by text or email will remind customers of upcoming payment dates, and FICO scores can be accessed every month, a practice that helps keep credit scores in good standing.

The credit limit on the card is equal to the amount of the initial deposit, and a credit review may result in a higher credit limit.

What To Look For

The initial security deposit can range from $300 to $5,000. By the terms set for this card, the deposit may be returned to the customer after a positive review of the overall credit history, which will include other credit card accounts.

What Should You Look for in a First Credit Card?

If you’re shopping around for your first credit card, keep the following key selling points in mind.

Easy Approval

It’s vital when applying for a card to get approved — try not to apply for cards you’re unlikely to be approved for. Each time an applicant requests credit, it shows up on their credit history as a “hard inquiry” that remains on the credit report for up to two years. Multiple hard inquiries adversely affect credit scores, and a rejected application means a hard inquiry occurred with no credit secured.

Check the card’s eligibility requirements before applying. This will appear as a numbered credit score range or simply as “good” or “excellent” credit required. Secured cards may not require a good credit score or any credit score.      

Easy on the Fees

Credit cards normally charge fees for late payments or over-the-limit charges. These are standard in the industry, but some cards also charge for foreign currency transactions and an annual fee that hits the account no matter how much or how little activity occurs.

Check the fees on the card before applying. Try to find one with no annual fee, and watch out for “penalty APRs” that kick in after the first late payment or over-the-limit charge. If benefits such as cash back rewards outweigh fee expenses, it may be a worthwhile starter card. It’s also wise to set up monthly minimum payments directly out of a bank account so that deadlines won’t be missed.

Reasonable APR

Advertising and promotions for a credit card will reveal the card’s annual percentage rate or APR. The APR can range quite a bit from one card to the next. When using a credit card, it’s wise to pay off the balance each month. Otherwise, the balance carried to the following month will accrue interest that must also be paid, typically ranging from 15% to 30%. “Penalty” APRs, charged when a payment is late or missed, go even higher.

Reaping Rewards

Check for a rewards program that is generous and useful. This may come in the form of a 1% to 5% “cash back” bonus on all purchases, which can be rewarded as points and redeemed on specific purchases, like gas, travel or groceries. Rewards may also come as miles, which can be redeemed for air travel or hotel stays.

Final Take

Which card is right for each individual depends on their priorities for rewards, fees and perks. For the best first credit card, browse offers for cards described as “student” or “secured” cards. These are the cards most likely to accept applicants with no credit history or a low credit score. Pay close attention to the fees charged, the annual percentage rate and any rewards plan.

FAQ

• Is there a grace period on payments?

  • Terms and payment schedule will vary by financial institution. Some will offer a grace period, but many will not. It's important to read the terms and conditions of your card agreement carefully before signing up for any credit card.

  • Additionally, if the balance on a credit card is paid in full by the payment due date, no interest is charged. Any balance carried over to the next month is charged an annual percentage rate or APR, which can vary as interest rates rise and fall. It's a good idea to initially charge only small purchases on a new card. This will help you get in the habit of paying the card in full and avoiding expensive interest.

• How many credit cards should I have?

  • There is no set number of credit cards each person should have. Your card choices should depend on what rewards you'd like to earn and how many cards you can manage without accruing too much debt or paying too many fees.

  • A good policy for those starting out with credit cards is to select one card with the most useful benefits and perks. Frequent travelers, for example, might find that a good choice is a card that does not charge a foreign transaction fee and offers travel-oriented rewards on hotels and air tickets. As your spending habits change, it may make sense to apply for additional cards with different rewards. Just be careful about cancelling credit cards, since that can hurt your credit score.

• What credit card is best for a starter?

  • A solid starter card is one that charges no annual fee or other fees such as over-the-limit fees and foreign transaction fees. A card that can be linked to a bank account also is a smart choice, as this kind of card is good for budgeting, automatic payments, paycheck deposits and access to mobile and online banking platforms that integrate all financial accounts.

• What banks are easiest for getting a credit card?

  • Cards that advertise as accepting "low or no credit scores" will be the easiest to secure. They're the "starter cards" that have low credit limits or require a security deposit. Watch out for high fees and interest rates, though.

• Does opening your first credit card hurt your credit score?

  • Late payments and high credit utilization – the ratio of balances to the total credit limit on all accounts – can negatively impact your credit score. A new card that establishes a credit history will not harm a credit score, but credit scores are affected negatively by inquiries made by potential lenders, so it's smart to keep applications to a minimum.

Rates are subject to change; unless otherwise noted, rates are updated periodically. All other information on promotions is accurate as of July 12, 2022. Additional requirements may apply. Offers and terms are subject to change.

GOBankingRates is a personal finance and consumer interest rate website owned by ConsumerTrack Inc., an online marketing company serving top-tier banks, credit unions and other financial services organizations. Some companies mentioned in this article might be clients of ConsumerTrack Inc., which serves more than 100 national, local and online financial institutions. Rankings and roundups are completely objective, and no institution, client or otherwise, paid for inclusion or specific placement. Any opinions, analyses, reviews or recommendations expressed in this article are those of the author alone and have not been reviewed, approved or otherwise endorsed by the companies included in the article. All fees and rates are subject to change at the issuers’ discretion. Some interest rates might be short-term or promotional offers only, and it is possible additional terms and conditions must be met to obtain the interest rates listed. Rates and availability might vary by region. Verify terms and conditions before opening an account.

GOBankingRates bases its assessment of “best” and “top” products on the above-stated parameters to create a baseline for comparison. This assessment is an approximation of “best” and “top” designed to help consumers find products that might be appropriate for them. There could be other options available as well. Consumers should consider various options appropriate for their circumstances.

This article originally appeared on GOBankingRates.com: Best First Credit Cards for First-timers