How To Get Your First Credit Card: Tips & Advice

Congratulations! So, you've reached that pivotal moment in your financial journey where you're ready to take the plunge and apply for your first credit card.

No doubt that this is an exciting time, but keep in mind things can get overwhelming and confusing pretty quickly, turning a joyous moment into a fairly daunting task.

Just take a look at all the different options and terms to understand – where would you even start? But fear not! Throughout this article, we'll be going over all you need to know, from practical tips to advice for navigating the complex world of credit cards and setting yourself up for financial success.

No matter if you're currently a student, have recently graduated university, or someone who's simply trying to get started on their credit journey, we've got you covered! Let's dive in and learn how to get your first credit card like a pro.

At this point, we're all aware of the benefits you can get from owning a credit card. With bonuses like having that extra bit of financial flexibility, earning reward points on purchases you make, or even just building credit history, it seems like a no-brainer to sign up for one.

All of these are real advantages you can expect while using your credit card, but don't allow yourself to ignore some of the pitfalls that can come with it.

Choosing the right credit card is a massive financial responsibility, and it's crucial to use it responsibly to avoid debt and protect your credit score.

Before we dive into a few tips on how to select one, let's take a closer look at how important choosing the right one is.

Benefits of Having a Credit Card

When used correctly, a credit card can be so much more than just a bulky piece of plastic sitting in your wallet. Here are just a few of the pros you can expect when using one:

Building Credit History

Nobody wants to be on the undesirable side of the credit score rating. Whether it's a harder time securing a loan or mortgage, the hardship that comes with a bad credit rating can be an awkward one to shake.

Fortunately, using your credit card responsibly can be a big player in helping you establish a positive credit history.

Earn Rewards

A lot of different credit cards offer rewards programs that allow you to earn points, miles, or cashback on purchases, which, suffice to say, can all add up to significant savings over time.

This is actually one of the major advantages credit cards have over a debit card, as you'd expect these types of bonuses less with the latter option.

Fraud Protection

Worried about being scammed when using a credit card online or in person? Don't be – All credit cards come with some level of built-in fraud protection, so even if someone makes unauthorised purchases on your card, you can dispute these charges at a later date to have them removed. No drama!

Convenience

Let's face it – do we really still need to be carrying a large roll of cash or our chequebook with us whenever we're walking around? It's 2023, and credit cards are leaving other, more archaic, financial tools in the past, thanks to their convenience.

Choosing the Right Credit Card

As mentioned, choosing a credit card is no light decision, and the implications it can have on your financial future can be immeasurable.

With this in mind, let's explore some of the more important factors that should be in the front of your mind when selecting a credit card:

Interest Rates

While you'd want a high-interest rate for a savings account, the exact opposite is the case for a credit card – you always want to avoid paying interest. Always ensure you're looking at options with low-interest rates, especially if you plan to carry a balance.

Fees

Not all of them do, but some providers actually charge annual fees, late fees, or credit card balance transfer fees just for using their services. It's dependent on how comfortable your current financial situation is, but you should definitely try to understand all the associated fees with a credit card before applying.

Rewards Programs

We've already touched on this, but the best credit cards typically offer rewards that match your spending habits, such as cashback on groceries or travel rewards.

Credit Score Requirements

Some credit card providers require a high credit score to qualify. If you're just starting to build credit, look for a credit card that's designed for people with limited or no credit history.

How a Credit Card Can Affect Your Credit Score & Financial Future

At some point in your life, chances are you're going to need some credit for either loans or a mortgage.

If you've been slacking when it comes to building your credit record, you may actually find it slightly harder to apply for these things.

While credit cards can be an invaluable tool in helping you gain credit, irresponsible usage can have the inverse effect and damage your credit score.

Here are some tips for using a credit card responsibly:

Pay Your Bill on Time

Naturally, this applies for any bill you'll ever pay. But for credit cards specifically, late payments can have fairly negative impacts on your credit score, which leads to late fees and having to pay interest charges.

Use Your Credit Card Sparingly

Don't max out your credit card or carry a balance that's too high. Ideally, you should aim to keep your balance below 30% of your credit limit.

Monitor Your Credit Score

Keeping regular tabs on your credit score can help you spot errors or identify areas where you need to improve your credit history.

Types of Credit Cards

In this section of the article, we'll be going over all the different types of credit cards available and weigh up some of their pros and cons for you.

1. Secured Credit Cards

This kind of credit card requires some collateral in the form of cash.

You might have heard of something called a “secured loan” before, but while you can typically provide them with any kind of collateral (house, car, valuables), you can only use cash for a secured credit card.

As a general rule of thumb, however much you deposit typically equals your credit limit, so if you deposit £500, your credit limit will be £500. Similarly to secured loans, these types of credit cards are designed for individuals with no credit or poor credit so they still get to use a credit card while the bank doesn't have to worry as much about repayments.

Advantages

Aside from not needing a strong credit file to open one, secured credit cards can actually help you establish credit, making them an effective credit builder card. It goes without saying that this is essential if you have no credit history.

This, along with their generally lower fees and interest rates than unsecured credit cards, make it a great choice for a first time card.

Disadvantages

Secured credit cards require a deposit, which can be a significant upfront cost. In addition, they normally have slightly lower credit limits than other cards, meaning it's a bit more challenging to make larger purchases.

2. Unsecured Credit Cards

In stark contrast to the aforementioned credit card, this type of card doesn't require a deposit as a form of collateral, but they do require good credit.

As a matter of fact, unsecured credit cards are actually the most popular form of credit cards and for good reason; often coming along with a range of benefits and rewards.

Advantages

Unlike secured credit cards, these cards offer higher credit limits, which means you can make larger purchases with a bit more ease. Because you need a solid credit rating to apply for this sort of credit card, banks generally have less of an issue in providing an extended credit limit.

Disadvantages

You're unlikely to be able to apply for one of these if you've had troubles with repaying loans/maxing out your credit cards in the past.

Aside from that, you'll also find they often come with higher interest rates and fees due to all the additional bonuses they offer.

3. Rewards Credit Cards

As seen in both secured and unsecured credit cards, rewards credit cards offer a bunch of different incentives for using them, such as cashback, points, or miles.

Advantages

When used responsibly, these credit cards can be an excellent way of saving money. Think of it this way – if you know for a fact that there's something you need to purchase, using one of these cards can reduce the overall price.

This gives them an edge to other kinds of cards that are strictly used for their credit limits.

Disadvantages

It did sound a bit too good to be true, didn't it? Unfortunately, these cards often have pretty high fees when it comes to interest and various additional charges.

If you're not being vigilant, you might also find them fairly challenging to manage. You might even find yourself saying goodbye to any of the rewards you earned due to the interest charges if you're not paying off your balance each month.

4. Student Credit Cards

If you're currently a student looking to begin your credit journey, student credit cards can be a great addition to another bank account you may have. Because they're primarily for young people without the same level of income as someone with a full time job, these types of credit cards have slightly lower credit limits and fewer rewards, too.

Advantages

Yes, they don't have the deepest of capabilities compared to the other choices in this list, but don't underestimate how useful these cards can be for establishing credit at a young age.

Furthermore, because of their low credit limit, they typically have lower fees than other types of credit cards and sometimes even an interest free period, which is a huge plus for the average frugal student.

Disadvantages

As mentioned, student credit cards don't really have all the same rewards as the other candidates. So, if you're not particularly interested in building your credit (though you should be!) then a direct debit card is probably more useful.

Applying for a Credit Card

1. Determine Your Credit Score

As it has an impact on what kind of credit card you can apply for, it's worth knowing what your credit score is before you apply. If you weren't already aware, your credit score is a three-digit number that represents how reliable you are at repaying loans, among other variables.

When comparing credit cards, certain providers need this credit score at hand so they can deduce what your credit score is.

2. Research Credit Card Options

When shopping about, you'll quickly learn that there are a bunch of different options in the credit card market. We've already discussed the various types of credit cards and their benefits and drawbacks, so make sure your final decision aligns with your personal financial goals and needs.

3. Apply for a Credit Card

Once you've selected a credit card, it's time to apply! You can do this pretty easily online, but there's also the option to do it over the phone or in-person at a bank/credit union. Just make sure that you're always providing accurate and up-to-date info when filling in the forms.

4. Wait for Approval

After you've finished that last step, congratulations! You've officially applied for your first credit card! At this stage, we still need to wait for the credit card company to review your credit score and other financial information to see if you'll qualify for whatever card they're offering.

This process can take anywhere from a few minutes to a few weeks, depending on the card issuer, so don't be worried if you don't hear back from them immediately. If your application is approved, you'll receive your credit card in the mail within a few business days. Happy spending!

Tips for Completing the Application

Let's go over a few things you can do to assist with that last stage of the application.

Provide Accurate Information

Make sure to provide accurate and up-to-date information on your application. Any discrepancies could lead to a denial or delay in approval.

Meet Income Requirements

Credit card companies typically have income requirements for applicants. Make sure to meet these requirements to increase your chances of approval.

Have a Good Credit Score

A good credit score is crucial when applying for a credit card. If your score is low, work on improving it before applying.

Apply for The Right Card

Make sure to sign up for the credit card that best aligns with your financial goals and needs. If you've got a low credit score, consider a secured credit card.

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