6 Tips for Your First Credit Card
Suggestions on how to use a credit card for the first time
No matter how old you are—or where you are in life—the day you get your first credit card is often when your credit history is born. And that first card can help you in countless ways when used responsibly.
It can make buying things more convenient and may even reward you with perks like cash back rewards. But the greatest value of your first credit card? With responsible use, you could use it to build strong credit for the future. Although factors vary from person to person—and based on the credit card company—here are a few tips you may want to keep in mind.
How to Apply for Your First Credit Card
Even though applications vary depending on the card issuer, there are a few steps you can take to prepare before applying for your first credit card.
When you’re trying to figure out how to get a credit card for the first time, it could be helpful to take a look at your credit score and history before doing anything else. Once you know where you stand, consider sticking to cards that match your credit level. You may improve your chances of being accepted—and limit hard inquiries that can impact your credit.
Checking whether you’re pre-approved or pre-qualified is another great way to improve your chances of approval—and to avoid unnecessary hard inquiries on your credit reports. With Capital One’s pre-approval tool, for example, you can find out whether you’re pre-approved for some of Capital One’s credit cards before you submit an application. It’s quick and only requires some basic info. And checking it won’t hurt your credit scores, since it only requires a soft inquiry.
When it comes to the actual application, be prepared to provide your personal information—things like your Social Security number, employment status and income. Card issuers may use that information—along with your credit history and score—when considering your application.
What to Expect After Applying for Your First Credit Card
Applying for your first credit card means you might not have much in the way of credit history. That means a bank may be careful about how much of a credit line it gives you and which perks you’re offered.
While you may not be able to get every cardholder benefit you want with your very first credit card, you may still find cards with low or no annual fees. And, with responsible use, you might eventually have a better chance of getting more credit.
Tips on Using Your First Credit Card
How you use your first credit card can either help or hurt your credit. Here are some things to keep in mind to stay on top of your finances.
1. Make Your Payments on Time
No matter which card you’re approved for, your payment history is an important part of your credit scores. In fact, the FICO credit-scoring model calculates your payment history as 35% of your credit score.
And missed or late credit card payments don’t just affect your credit. They can also lead to late fees or an increase in interest rates.
Making at least your card’s minimum payment on time can help you avoid penalties and keep your account in good standing. Just remember that if you only pay the minimum, you’ll likely be charged interest on the balance you’re carrying.
Some credit card companies like Capital One also allow you to set up automatic payments. This way, a payment of your choice is automatically made on your account’s due date each month. It can be a helpful way of making sure you don’t accidentally miss a due date.
2. Keep Your Account Balance Low
In addition to paying your bills on time, staying below your credit limit could also help you improve your credit scores.
That’s because your scores are affected by your credit utilization ratio, or how much of your available credit you’re using. In fact, the Consumer Financial Protection Bureau says experts recommend using no more than 30% of your total limit to help maintain good credit.
Keeping your balance low might also put you in a better position to pay your balance off in full every month. And that can help you establish a regular payment history while not having to contend with added interest.
3. Stick to a Budget
One way to avoid racking up more debt than you can manage is creating a realistic budget you can follow.
Reviewing your monthly credit card statement can be a good starting place to see how and where you’re spending your money. Once you set aside money for essential expenses like rent, mortgage or utilities, you can decide what a realistic spending limit should be for nonessential purchases or splurges.
Credit cards can still be useful tools. Just make sure you’re able to make at least the minimum payment. Or, better yet, pay off your balance each month to avoid interest charges.
4. Check Your Monthly Statements
Your monthly credit card statement can help you monitor your spending, keep track of payment dates and even identify unauthorized purchases, all of which are important for keeping your account in good standing and your credit scores healthy.
Some card issuers like Capital One also have tools that send you instant purchase notifications and fraud alerts so you can stay on top of your account activity.
If you do spot an unauthorized charge, report it to your credit card issuer immediately. The sooner you report fraud, the quicker you can stop unauthorized spending.
5. Be Aware of Credit Card Fees
With any credit card, it’s a good idea to be aware of fees that might increase how much you owe each month. These can vary, but some common credit card fees include:
- Late fees. If you miss your payment due date, you might incur a late fee.
- Foreign transaction fees. When traveling abroad, you may incur a small percentage fee on transactions.
- Balance transfer fees. If you transfer an existing balance from one credit card to another, there may be a fee involved. It might be calculated as either a percentage of the balance being transferred or just a set amount.
- Cash advance fees. Some issuers charge fees on credit card cash advances—either as a set amount or as a percentage of the cash advance.
- Annual fees. Some cards may have an annual fee associated with them. If so, issuers traditionally bill your account once a year for the amount.
Check your cardholder agreement for information about the specific fees that apply to your card.
6. Use Your Card Regularly
Consistent use of your card can help establish a steady history of paying bills on time and in full. And, since some lenders may close accounts due to inactivity, it can help ensure your card stays active.
Another benefit of using your card is that they can be safer than cash, thanks to the fraud protection many card issuers provide. Plus, you’ll automatically have a record of every transaction in the form of a monthly statement.
Developing Responsible Credit Habits
Your first credit card can be a great opportunity to establish credit through responsible use. And doing things like making payments on time, paying more than the minimum and monitoring your credit can help make sure your card is working to help you.
Another way to monitor your credit is by using CreditWise from Capital One. With CreditWise, you can access your TransUnion® credit report and weekly VantageScore® 3.0 credit score without hurting your score. And CreditWise is free for everyone. You don’t even have to be a Capital One customer to use it.
Government and private relief efforts vary by location and may have changed since this article was published. Consult a financial adviser or the relevant government agencies and private lenders for the most current information.
We hope you found this helpful. Our content is not intended to provide legal, investment or financial advice or to indicate that a particular Capital One product or service is available or right for you. For specific advice about your unique circumstances, consider talking with a qualified professional.
Your CreditWise score is calculated using the TransUnion® VantageScore® 3.0 model, which is one of many credit scoring models. It may not be the same model your lender uses, but it can be one accurate measure of your credit health. The availability of the CreditWise tool depends on our ability to obtain your credit history from TransUnion. Some monitoring and alerts may not be available to you if the information you enter at enrollment does not match the information in your credit file at (or you do not have a file at) one or more consumer reporting agencies.