4 Things You Should Know About Choosing Your First Credit Card
4 Things You Should Know About Choosing Your First Credit Card


(BPT) - Whether you are headed to college, joining the armed forces, or simply looking to take greater control of your finances, you might be wondering if it’s time to open your first credit card.

Although credit cards are not for everyone, they have some important benefits you should consider. First, responsible credit card use is a great way to start building a strong credit history, which can be key in qualifying for a car or the home you dream of owning one day. A credit card with rewards enables you to make the most of everyday purchases by earning points on your expenses. And for those who live life on the go, credit cards will help you take advantage of emerging payment technologies that offer more secure and faster ways to pay.

Of course, these benefits of owning a credit card are quickly offset if you are unable to make on-time monthly payments. Navy Federal Credit Union, among other financial institutions, encourages its members to pay off their balance in full each statement period. If you feel confident about your ability to use a credit card responsibly and you are ready to begin your search, consider these tips:

1. Go with an issuer you trust.

“You may not know all about credit cards right away, and that’s okay,” says Randy Hopper, vice president of credit cards at Navy Federal. “You should choose a financial institution you feel has your interests at heart. They should be willing to walk you through your questions over the phone or in-person, any time.”

2. Limited credit history? You still have choices.

So you don’t have a long record of on-time mortgage and car payments, resulting in a strong credit history. Although people with stronger credit tend to be eligible for a greater number of credit card offers, you still have plenty of options. Look for a credit union or bank that will qualify you for a credit card not just based on your credit score, but based on their overall relationship with you. Some financial institutions like Navy Federal offer what is called a secured card, created in large part for consumers who have not had the opportunity to develop credit history.

3. Find a straightforward offer.

By reading the fine print of an offer carefully you can determine whether the credit card offer is straightforward and excludes certain “gotchas.” Be mindful of the fees associated with the offer and whether your rate could potentially increase after an “introductory period,” a specified period of time on some offers, usually lasting a few months.

4. Find a product you can be proud of.

“Do your homework and make sure you find a credit card with a low rate,” says Hopper. “Although some great cards do carry an annual fee, try to find a credit card that requires only a low fee or no fee at all.”

Rewards are also a big part of this equation. Make sure your rewards program is both simple and easy to use. You should be able to quickly determine the cash or travel value of your current points, at what rate you can earn points, and find easy options for claiming your rewards. Look out for programs that place a cap on your ability to earn points, set an expiration date on your points or require a certain points balance before you can claim rewards.

Making a decision about your first credit card does not have to be stressful. And if you follow the tips above, you may even discover that you enjoy taking charge of your finances and watching your credit score develop.

Personal Finance: "4 Things You Should Know About Choosing Your First Credit Card"