Credit cards are an important part of a person’s financial status and identity, and they are necessary to help build a person’s credit score and financial reliability (which are essential when seeking employment, mortgage loans and looking to make large budget purchases). Getting one is therefore an important decision, although many young people may find themselves a bit stuck or confused when trying to determine what is the best first credit card for them.
Financial experts tend to agree that the best time to get a first credit card is while you are still a student (in college). If you are in the military after high school that is a good time to get one as well. If you are currently a college student, you may very well have already had your mailbox flooded by student credit card offers. In many cases, the best first credit card for students like you will be among these offers. They typically have lower spending limits, but the qualifications are designed around a typical student’s life and therefore they are not as hard for students to get as other credit cards may be. Basically, student credit cards are for people with no credit (and this really means no credit, not poor credit). Many of them come with no annual fees, such as a 0 percent introductory APR (annual percentage rate) on purchases made with your new card, which lets you hold a balance from one month to the other without incurring interest for a predetermined period of time. In fact, the best student credit card will not cost its owner anything to have, provided of course they keep up with paying off their balances.
Now, it is important to know that certain credit cards you will be able to keep using after college while others are just student cards. This means that certain benefits only apply while you are a student, and they are apt to change when this is no longer your occupational status (so read the paperwork closely). Student credit cards vary in their exact qualification requirements and details, but in the United States they are generally designed for college students over the age of 18 and often offer some kind of reward system or additional incentives, like cash back, when students pay their bills on time. Some may even offer special bonuses when cardholders achieve good grades. A credit card will also come in handy when paying for everyday expenses such as groceries and utilities. Some student cards even offer their cardholders a points system that awards points for every dollar that is spent.
Nevertheless, many people still do graduate before getting that first credit card. Graduate with a decent job in place and you won’t have much trouble getting a card, but the fact is that this has become somewhat of a rarity in today’s economy and job climate. It isn’t at all impossible to get a credit card as a recent graduate, but it can be more difficult. In the plainest of terms, credit card companies want people with good credit scores and a steady source of income— both of which many recent graduates are without. While technically their credit slate is clean (despite having student loans to pay off), having no credit history is considered worse than having bad credit history. Why? Bankers and card companies know it is always possible to restore bad credit over time, but without any credit history, they have no way of gauging your ability to repay loans or to pay bills on time. Many people face this same problem while students, but student cards and deals make this hurdle easier to jump over. So if this is you, what is the best first credit card for a college graduate, and how can you go about getting it?
Large name brands and banks offer a variety of credit cards. They have different spending limits, APR, incentives, etc. To get one when you have no credit or good source of income, you may need someone to cosign with you. Ideally, the co-signer is someone who has good credit score and financial history, and in many cases it winds up being the parent of a first-time credit card applicant. In fact, sometimes you end up needing a co-signer even if you are getting that first card while still a student. So, how does cosigning work? Say, for example, you apply for a Chase credit card. Chase will then want to verify that you can pay off the purchases you make on the card, but they are unable to do so because you have no credit history. Enter in the cosigner. Chase will then look at the cosigner’s credit history, because if you are unable to pay your balance, the bill will then bounce to the cosigner. Either way, Chase gets paid, and that is the bottom line for credit card companies.
With that in mind, know that your handling of the account directly impacts the co-signer’s credit score as well. Therefore, should you be delinquent in your payments, both you and the cosigner will suffer the consequences. So, always buy what you can pay for, and alert the cosigner immediately if you do fall behind with your payments. Even the best first credit card companies will not hesitate to come after you if you do not pay them.
Regardless of your situation, always remember that the best first credit card is one that should allow you to build credit. However, with all the different types of cards out there, it is near impossible to say which exactly is the best first credit card to build credit. After all, it depends on your needs and financial situation, and in some cases where you live may even be a factor (certain credit cards are not accepted in some places). Never apply for a credit card without reading the fine print, and be sure to continue to do so for as long as you are a card carrier.