Getting your first credit card is a critical first step into adulthood. With a line of credit comes a new level of maturity, and the decision about what card to start out with should not be made lightly.But before you venture out for your own piece of plastic, consider taking a baby step: Ask your parents to make you an authorised user on their credit card. This will help you build a little credit history, so you won’t have to procure a card completely fresh.
It will also enable your parents to teach you the basics of how to manage credit. Otherwise, you must be 18 years old to get a credit card on your own.
“I encourage parents to teach their kids how to manage credit before they go to college,” says Beverly Harzog, Credit.com’s credit expert. “It’s good if they know what they’re doing when they start responding to credit card offers. Just letting them know that they need to pay bills on time and that their credit score follows them for life are important lessons to teach.”
Bill Hardekopf of LowCards.com agrees that parents should play a role in educating their children about how to handle credit. “I think we, as parents, do a very poor job of training our children to be financially responsible,” he says. “We train them to ride a bike, to drive a car, we even potty-train them, but we don’t do a good job of sitting down with them and teaching them how to manage their money.”
If your parents won’t authorise you to use their card, Harzog recommends that you open a checking account and start practicing with a debit card.
Once you’re in college or around that age, it’s a good time to branch out and get your own credit card. Since your expenses can be better controlled in college than in the real world, “It’ll be a more safe environment,” says Anisha Sekar, vice president of credit and debit products at NerdWallet.com, a credit card comparison site.
U.S. News spoke with a few credit card experts, who highlighted these options for beginners:
Discover Student Card. This card charges zero per cent APR (the annual interest rate for the card) for the first nine months—”not bad for a student card,” Harzog says. “It’s going to be for someone who’s had a little bit of experience. It might be hard to get this card if you haven’t had any credit experience at all.” It also offers rewards: 5 per cent cash-back on things like gas, groceries, and restaurants—places that students frequent (you’ll earn 1 per cent cash-back on everything else). No annual fee.
Capital One Journey Student Rewards Card. This card offers a 19.8 per cent APR. “You might be able to qualify for this with limited credit history,” Harzog says. This card also rewards you for paying your bill on time: a 25 per cent bonus on the cash-back you earned that month. No annual fee.
Orchard Bank Secured Mastercard. With a secured card, you have to make a deposit into a savings account that’s linked to the card. The deposit you make is like collateral for the card; that’s your credit limit. This particular card comes with a low 7.99 per cent variable purchase APR, and the $35 annual fee is waived for the first year.
Chase Freedom Credit Card. “The Chase Freedom card has been very friendly to people with little or no credit,” Sekar says. The card offers 5 per cent cash-back on purchases at gas stations, grocery stores, and restaurants. There’s also zero per cent APR for the first 15 months on purchases and balance transfers.
Citi Forward for College Students Card. “This card has great rewards,” Sekar says. Earn points for every $1 spent at restaurants (including fast food), and on books, music, and movies. There’s no annual fee, and the card offers zero per cent APR on purchases for the first seven months.
The Capitol One Cash Card. This card charges no annual fee and offers 1.5 per cent cash-back on all purchases. Sekar points out that there are no foreign transaction fees, so “it’s a good card if you’re going abroad.”
If you’re having trouble qualifying for a credit card, Sekar recommends checking with your local credit union to see what credit cards they offer. “They tend to be more individualized,” she says.
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