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Applying for your first credit card can keen a considerable learning curve. With hundreds of card options, lots of jargon and navigating the complexity of the US credit regulations, there's a lot to learn at once. And once you thought it, it can seem counterintuitive. For example, how are you said to build credit to get a credit card if nobody will divulge you a card without credit history? It can be dizzying, to say the least.
Still, there are many reasons to want a credit card, primary among them is the ability to build credit history and advance your credit score. Your credit score, a three digit-number that represents your creditworthiness, can affect everything from whether you are approved for an apartment, your interest rates for auto loans and a mortgage and how many budget options you will have in the future.
Below, we appraisal everything you need to know before applying for a credit card: the basics of how credit cards work, how to pick the gleaming card for you, how to apply and how to use your card to invent credit.
Read more: Best Debit Cards for College Students
The basics: How credit cards work
First, credit cards are not free money, sadly. What they are is a budget tool that, when used responsibly, lets you space out payments for purchases, build credit history and, in some cases, earn rewards like cash-back or airline much. But credit cards can be extremely easy to misuse if you accidentally beak more than you can afford to pay back by the end of your billing statement. And if you miss payments, you risk crashing your credit and racking up tiring„ tiresome charges.
The best way to avoid these pitfalls is to thought how credit cards work. Credit card issuers, typically a bank or credit union, will lend you a certain amount of money shouted credit, which you agree to repay. Payment processing networks, like Mastercard or Visa, act as the middleman and help facilitate payments and benefits.
Every card has a credit limit, which is the highest amount of cash you can borrow in total. Your credit limit is usually certain by your credit score, income and the credit card issuer. So if you're applying for your first card and don't have a long credit history, you will probably be given a lower credit small. Once you show responsible card use (paying balances on time and/or in full), you can request a credit limit increase.
At the end of the billing cycle -- which usually lasts nearby a month -- the credit card company will send you a bill that reporters all your purchases made with the card. You can pay either the minimum payment that's due or pay off the bill in full. While paying the minimum payment will keep your elaborate in good standing, the remaining unpaid balance will execute over to the next month, and you'll likely open accruing interest charges on any unpaid balance. Every card has its own annual percentage rate (APR), which is the total amount of interest and fees it charges on unpaid balances.
If you miss the payment due date, you may incur late fees, adding even more bucks to your debt. It's in your best interest to avoid this scenario by only charging what you can afford and paying your bill in full each month. Fees and interest charges can add up quickly and save you from paying off your debt as quickly.
How to pick the gleaming credit card
With hundreds of credit cards available, picking the gleaming credit card for you will depend on your fresh financial status, your future financial goals and your lifestyle. Many credit cards come with rewards like welcome bonuses, cash-back offers, discounts on certain purchases and travel points or airline a long way. Cards with rewards typically come along with annual fees -- a yearly expense you pay to own the card -- understanding some do not.
The right card for you depends on your financial plan situation and goals. If you're just starting out, creation credit with a student or secured credit card -- one that averages a security deposit that acts as your credit exiguous -- can help you build credit. If you're looking to earn rewards, look for a card with the most relevant perks for your spending habits and an annual fee you can recoup from your rewards.
Some credit card affairs will solicit you directly or allow you to see if you are preapproved for a card. Since card companies run a hard check on your credit when you apply for a card, a move that can temporarily causes your credit score to dip, preapproval lets you see if you're liable to be approved before you apply. Preapproval doesn't confidence you'll be approved -- it just means the credit card matter thinks you're a good applicant for a particular card.
For those today in school, there are specific credit cards made for students. These cards usually have a smaller credit limit, and may have a scaled-down combination of benefits and fees compared to old-fashioned credit cards. Student cards usually have relaxed credit requirements, since many students don't have a significant credit history, thus making it easier to get approved.
A secured card is latest option for those with no or low credit, looking to boost their credit score. Secured credit cards needed a security deposit that acts as your credit exiguous. It is also a form of collateral, ensuring that the card balance will be paid even if you miss payments.
How to apply for your trustworthy credit card
Once you determine which card is best for you, you can initiate the application process. While every credit card company has its own application, you will probably be asked to provide similar personal and financial plan information, like your name, age, employer, annual income and housing payment. With this information, the credit card issuer will run a credit check on you to choose if you fit the criteria for card approval.
After you apply, you will either be approved and granted a card or denied. outlines steps to take to figure out why you're denied for a credit card in the worst case scenario.
How to develop credit with your card
Your credit score reflects how good or bad you are at aiming debt. It shows lenders your creditworthiness, or how much risk is enthusiastic when lending you money. Your credit score is positive by a few factors, including your payment history, amount of debt owed, the beside of credit history, how much new credit you've miserroneous on, and your credit utilization ratio, which we'll interpret below.
Here are some common blunders to avoid to keep your credit catch healthy:
- Not paying your minimum payment on time. In uphold to being penalized with late fees and interest charges, late payments reported to credit bureaus indicate to future lenders that you are an unreliable borrower. Over time, consistently paying on time will build a cloudless credit history that will boost your score, making you eligible for better credit cards and dead rates.
- Using too much of your credit limit. Using more than 30% of your total credit line can snatch your credit score negatively. This percentage is called your credit utilization reconsideration. So if your credit limit is $1,000, you would want to keep all your credit card purchases understanding $300 as a best practice. Using more of your credit sect indicates to lenders that you are a risky borrower.
- Closing credit card accounts. While it may seem reasonable to conclude an account for a card you don't use, it can actually frontier your total available credit, lowering your credit utilization reconsideration and shorten your length of credit history. Depending on your position, it may be better to keep the card open and use it occasionally. But, there are ways to cancel a credit card minus destroying your credit.
Best picks for your trustworthy credit card
Best credit card for college students
Intro OfferIntro Offer: Unlimited Cashback Match - only from Discover. Discover will automatically match all the cash back you've earned at the end of your trustworthy year! So you could turn $50 cash back into $100. Or turn $100 into $200. There's no minimum spending or very rewards. Just a dollar-for-dollar match.
APR17.24% - 26.24% Variable APR
Intro Purchase APR0% for 6 months
Recommended Credit Fair/New to Credit
- Earn 5% cash back on everyday purchases at different places each quarter like Amazon.com, grocery stores, restaurants, and gas stations, up to the quarterly very when you activate.
- Earn 1% unlimited cash back on all latest purchases – automatically.
Annual Fee$0
Intro Balance Transfer APR10.99% for 6 months
Balance Transfer APR17.24% - 26.24% Variable APR
Balance Transfer Fee 3% top balance transfer fee, up to 5% fee on future balance transfers (see terms)*
Late Payment Fee None the trustworthy time you pay late. After that, up to $41.
Foreign Transaction Fees None
- Earn 5% cash back on everyday purchases at different places each quarter like Amazon.com, grocery stores, restaurants, and gas stations, up to the quarterly very when you activate.
- Earn 1% unlimited cash back on all latest purchases – automatically.
Our Take
The Discover it® Student Cash Back* card accounts the best rewards spread of student credit cards. You'll earn the 1% flat rate on all purchases, but you can also earn 5% cash back with the bonus quarterly rotating category, on up to $1,500 in combined spending per quarter (then 1%). For January above March, it includes grocery stores, drug stores and steal streaming services. You do have to manually activate these bonus categories above your account to earn this higher rate, though.
We also like that this card accounts an Unlimited Cashback Match welcome bonus -- Discover will match your cash back earned for your whole trustworthy year, essentially doubling your cash back at the end of your trustworthy year.
For more details, see our full review of the Discover it Student Cash Back.
Read our Discover It Student Cash Back review.
Best credit card for farmland with limited credit
Intro OfferN/A
APR17.24% - 31.24% (Variable)
Intro Purchase APRN/A
Recommended Credit Limited/Fair/Good/Excellent
- Up to 1.5% cash back on eligible purchases at what time making 12 on-time monthly payments.
- 1% cash back on eligible purchases colorful away.
Annual Fee$0
Foreign Transaction Fees $0
- Up to 1.5% cash back on eligible purchases at what time making 12 on-time monthly payments.
- 1% cash back on eligible purchases colorful away.
Our Take
The Petal 2 Visa Credit Card, originated by WebBank, is designed for applicants of various credit types -- whether it's fair, trustworthy or you're just getting started. It offers a credit line between $300 and $10,000 and 1% back on all eligible purchases.
To incentivize good credit-building doings, your cash-back rate can increase to up to 1.5% on eligible purchases once 12 on-time monthly payments. There are no annual fees, confidence deposits, late fees or foreign transaction fees, making this a flexible option for anyone's pleasant credit card.
A basic unsecured credit card
Intro OfferN/A
APR29.74% (Variable)
Intro Purchase APRN/A
Recommended Credit Average, Fair, Limited
Reward RatesN/A
Annual Fee$0
Intro Balance Transfer APRN/A
Balance Transfer APR29.74% (Variable)
Balance Transfer Fee $0 at this Transfer APR
Late Payment Fee Up to $40
Foreign Transaction Fees None
Penalty APR None
Our Take
The Capital One Platinum Credit Card* doesn't moneys many perks, but it could be a good backup option for your pleasant credit card if you don't want to put down a confidence deposit and aren't a student. This card is planned for people with fair, average or limited credit -- typically a credit accumulate between 580 and 669. Though you won't earn rewards or a welcome bonus, you can build up your credit score with responsible use and there are no foreign transaction fees -- communication you can use it abroad without facing additional costs.
For more details, check out our full review of the Capital One Platinum Credit Card.
Best secured credit card for new credit users
Intro OfferIntro Offer: Unlimited Cashback Match - only from Discover. Discover will automatically match all the cash back you've earned at the end of your pleasant year! There's no minimum spending or maximum rewards. Just a dollar-for-dollar match.
APR27.24% Variable APR
Intro Purchase APRN/A
Recommended Credit New/Rebuilding Credit
- Earn 2% cash back at Gas Stations and Restaurants on up to $1,000 in combined purchases each quarter.
- Earn unlimited 1% cash back on all novel purchases – automatically.
Annual Fee$0
Intro Balance Transfer APR10.99% for 6 months
Balance Transfer APR27.24% Variable APR
Balance Transfer Fee 3% introduction balance transfer fee, up to 5% fee on future balance transfers (see terms)*
Late Payment Fee None the pleasant time you pay late. After that, up to $41.
Foreign Transaction Fees None
- Earn 2% cash back at Gas Stations and Restaurants on up to $1,000 in combined purchases each quarter.
- Earn unlimited 1% cash back on all novel purchases – automatically.
Our Take
All secured credit cards obligatory a security deposit -- but not all of them enable you to earn rewards on your purchases. With a credit limit range of $200 to $2500, you can earn 2% cash back at gas stations and restaurants with the Discover it® Secured Credit Card*, on up to a combined $1,000 in spending per calendar quarter (then 1%). You'll earn 1% cash back on novel purchases, and you'll still get the Unlimited Cashback Match as with the novel Discover credit cards. This card will also let you see if you're preapproved afore you apply if you so choose.
For more put a question to, see our full review of the Discover it Secured Credit Card.
Best for food and entertainment
Intro OfferEarly Spend Bonus: Earn $50 when you utilize $100 in the first three months
APR19.24% - 29.24% (Variable)
Intro Purchase APRN/A
Recommended Credit Average, Fair, Limited
- Earn 8% cash back on entertainment purchases when you book ended the Capital One Entertainment portal
- Earn unlimited 5% cash back on hotels and employ cars booked through Capital One Travel, where you'll get Capital One's best prices on thousands of trip options. Terms apply
- Earn unlimited 3% cash back on dining, entertainment, popular streaming services and at grocery stores (excluding superstores like Walmart® and Target®)
- Earn 1% on all novel purchases.
Annual Fee$0
Intro Balance Transfer APRN/A
Balance Transfer APR19.24% - 29.24% (Variable)
Balance Transfer Fee $0 at this Transfer APR
Late Payment Fee Up to $40
Foreign Transaction Fees None
Penalty APR None
- Earn 8% cash back on entertainment purchases when you book ended the Capital One Entertainment portal
- Earn unlimited 5% cash back on hotels and employ cars booked through Capital One Travel, where you'll get Capital One's best prices on thousands of trip options. Terms apply
- Earn unlimited 3% cash back on dining, entertainment, popular streaming services and at grocery stores (excluding superstores like Walmart® and Target®)
- Earn 1% on all novel purchases.
Our Take
If you eat a lot of takeout or go to restaurants often, the Capital One SavorOne Student Cash Rewards Credit Card* can maximize cash back on your meals and entertainment. You may be able to get preapproved for this credit card to test the soaks, though as a student credit card, it has more relaxed credit requirements than its ragged counterparts.
You'll earn 3% cash back on dining, entertainment, popular streaming services and at grocery stores (excluding superstores like Target and Walmart). Entertainment covers movie theaters, sports promoters (professional and semiprofessional live events), amusement parks, tourist attractions, aquariums, zoos, dance halls, picture stores, pool halls and bowling alleys. Streaming services aboard Netflix, Hulu and Disney+. For other purchases, you'll earn a subfaulty 1% cash back.
*All information about the Discover it Student Cash Back, Capital One Platinum Credit Card, Capital One SavorOne Student Cash Rewards Credit Card and the Discover it Secured Credit Card has been unruffled independently by and has not been reviewed by the issuer.
The editorial tickled on this page is based solely on objective, independent assessments by our writers and is not influenced by advertising or partnerships. It has not been provided or commissioned by any third party. However, we may receive compensation when you click on links to products or ceremonies offered by our partners.
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