5 steps to selecting your first credit card

March 05, 2020

A first-timer’s guide to making the best decision for your wallet.

Signing up for your first credit card is a rite of passage into independence. While it’s tempting to see dollar signs in credit offers that come your way, choosing the right card is not a decision to take lightly. How you use that card can have a big impact on your long-term financial wellness.

But don’t be intimidated: When used correctly, credit cards are a great way to start cultivating a credit score. That number will come in handy when you want to make a larger purchase, such as a home or a car. With all of the credit card options available, use the following steps to determine the best choice for your wallet.


1. Examine your finances

No matter what you’ve been told, a credit card is not “free money.” Before you submit a credit application, you need to be honest with yourself about your financial wellness. Do you have a job and the money to cover the full amount you charge to your card every month? Credit card companies don’t typically verify income through pay stubs or tax returns. However, you will be asked to state how much you make on your application, and providing false information is illegal.


2. Consider your options

As a first-time credit card applicant, card choices will be limited, but options exist to begin building your credit. The simplest method may be to have your parents add you as an authorized user to their credit card account. As you accumulate a credit history, your parents can monitor purchases and teach you how to properly use the card. While this is especially beneficial for those under 18, who aren’t eligible for their own card, there is no maximum age restriction on becoming an authorized user.

If this isn’t realistic, consider getting started with a secured card. It determines your credit limit based on a deposit made from your checking or savings account. This guarantees you will have the money to pay off your balance.

If you’re enrolled in college, research student credit cards, which typically feature no annual fees and low annual percentage rates.

A first-timer’s guide to choosing a credit card


3. Evaluate annual fees

Some credit cards have an annual fee – basically, a membership cost that can range from $0 to $500. In general, the higher the annual fee, the greater the benefits. Think: travel insurance, more cash back or points, and no foreign transaction fees, to name a few. As a first-timer, those perks might not outweigh the yearly cost for the card, especially with so many $0-annual-fee options.


4. Understand APR

The annual percentage rate is perhaps the most important element to understand when it comes to credit cards. Simply put, this interest number is the cost you pay to charge purchases to your card.

Let’s say you carry a balance of $1,000 on your card and your APR is 25 percent. That means you’ll be charged $250 (1,000 x .25) in interest alone over the course of a year. Pay off your balance in full every month, and you won’t have to worry about interest charges. However, allowing those charges to build can spell trouble for your financial wellness.

While you can’t completely avoid APRs, look for cards that are generous to first-time users. Some cards offer a 0 percent introductory APR, followed by a low 11.99 to 23.99 percent APR after the first 20 billing cycles.


5. Consider the rewards

One perk of using a credit card for purchases, as opposed to a debit card, is the rewards you can rack up every time you swipe. Think about the rewards that make the most sense for your life. They may help you pick the right card – and benefit your overall financial wellness.

If you travel a lot, consider a card that exchanges dollars spent for airline miles. But if you want to maximize your rewards potential beyond travel, a cash-back card might be the way to go.


There are more options – find the best fit for you. Or brush up on the importance of maintaining good credit health.

Related content

How to improve your credit score

Decoding credit: Understanding the 5 C’s

What’s your financial IQ? Game-night edition

Why credit cards should be the first choice for business payments

Mortgage basics: How does your credit score impact the homebuying experience?

What is a good credit score?

What type of loan is right for your business?

How liquid asset secured financing helps with cash flow

Hybridization driving demand

Webinar: Approaching international payment strategies in today’s unpredictable markets.

Momentos Financieros: Cómo financiar una ampliación de la vivienda

Increase working capital with Commercial Card Optimization

The surprising truth about corporate cards

How to request a credit limit increase

How to accept credit cards online

Common small business banking questions, answered

These small home improvement projects offer big returns on investment

Authenticating cardholder data reduce e-commerce fraud

3 signs it’s time for your business to switch banks

3 ways to secure purchasing power

4 small business trends that could change the way you work

5 ways a business credit card program can grow your business

5 tips to use your credit card wisely and steer clear of debt

How to build and maintain a solid credit history and score

6 essential credit report terms to know

Leverage credit wisely to plug business cash flow gaps

Managing the rising costs of payment acceptance with service fees

How to establish your business credit score

5 tips to help you land a small business loan

Streamline operations with all-in-one small business financial support

How to establish your business credit score

Business credit card 101

Do I need a credit card for my small business?

What kind of credit card does my small business need?

7 steps to keep your personal and business finances separate

How to choose the right rewards credit card for you

5 steps to selecting your first credit card

What applying for store credit card on impulse could mean

Credit: Do you understand it?

What types of credit scores qualify for a mortgage?

Test your loan savvy

Can you take advantage of the dead equity in your home?

Is a home equity line of credit (HELOC) right for you?

How to use your home equity to finance home improvements

Should you get a home equity loan or a home equity line of credit?

How to use credit cards wisely for a vacation budget

Dear Money Mentor: How do I begin paying off credit card debt?

10 uses for a home equity loan

Know your debt-to-income ratio

Common unexpected expenses and three ways to pay for them

Should you give your child a college credit card?

Myth vs. truth: What affects your credit score?

Improving your credit score: Truth and myths revealed

How to spot a credit repair scam

5 unique ways to take your credit card benefits further

5 reasons why couples may have separate bank accounts

5 tips to use your credit card wisely and steer clear of debt

What’s a subordination agreement, and why does it matter?

How to build credit as a student

Your quick guide to loans and obtaining credit

4 questions to ask before you buy an investment property

Good debt vs. bad debt: Know the difference

U.S. Bank asks: What do you know about credit?


Start of disclosure content

Loan approval is subject to credit approval and program guidelines. Not all loan programs are available in all states for all loan amounts. Interest rate and program terms are subject to change without notice. Mortgage, Home Equity and Credit products are offered through U.S. Bank National Association. Deposit products are offered through U.S. Bank National Association. Member FDIC.