Best Credit Cards for Beginners: Tips to Get Started

Credit cards can be confusing for newcomers. Annual fees, interest rates, reward points – it’s enough to make your head spin! The trick is to get your needs right and get the card that helps you start a good financial habit without extra costs or confusion. Whether it’s rewards that you are looking for or just a way to build credit, the right card can change the game for you. This guide will equip you with the knowledge to navigate the options and find the best credit cards for beginners.

What is a Pre-Approved Credit Card?

Let’s walk through some things that should factor in your search for the best credit card for beginners.

1. Understand Your Spending Habits

Are you spending primarily on groceries, fuel, or dining out? Or do you travel frequently? Some cards come with cashback points or travel miles. Thus, finding the kind of rewards that work for you would be beneficial. The insights tab in the One Credit Card app helps you get an analysis of all your spending, facilitating you to make the right choices.

2. Look for Low Fees

The best credit cards for beginners carry low or no annual fees, especially if you are not sold on repaying your balance in full each month. With interest rates, small purchases can mean a very significant debt to clear.

ALSO READ: First Credit Card: Things to Consider Before Applying

3. Check the Eligibility Criteria

Not everyone is eligible for a credit card. As a first-time applicant, you might have a limited credit history, ruling you out of some premium credit cards. Some cards cater specifically to individuals with no credit or a limited credit profile, making them ideal best starter credit cards. These cards often come with relaxed credit card eligibility criteria, yet they are excellent tools for improving your credit score.

4. Start with a Secured Credit Card

Secured credit cards are a good option for beginners. These cards require a deposit, which serves as collateral in case you miss a payment. The deposit usually matches your credit limit. Although secured cards don’t offer the same rewards as traditional cards, they are an excellent way to build your credit.

5. Prioritise Credit Building Features

One of the primary goals for any beginner should be to build credit. Look for a card that reports to all three major credit bureaus: Experian, Equifax, and TransUnion. You can ask for a credit report online from most credit information companies to verify this. This is important because your credit score is influenced by how consistently you pay off your credit card. The best credit cards for beginners usually offer credit tracking tools to monitor your progress.

ALSO READ: Secured Credit Cards vs Unsecured Credit Cards: Key Differences

6. Consider a Student or Beginner-Specific Card

Most banks and financial institutions offer credit cards intended for students or first-time cardholders. These cards are usually free of annual fees and have rewards geared toward the young professional or student, such as streaming service discounts or travel perks. A best starter credit card will include such benefits but centre its efforts around helping you build a credit history. One Credit Card, for instance, offers 5x reward points in the top two categories every month.

7. Look for Introductory Offers

Introductory offers like the 0% APR periods and sign-up bonuses can be so enticing, but there normally is a catch. After the first few days or months, interest rates shoot through the roof. So before you subscribe to a card with some alluring offer, make sure you read the fine print and understand the long-run implications of it.

8. Read the Fine Print

Don’t ignore the terms and conditions. Dive deep into the credit card fees, interest rates, and rewards structure. A card might promise you a lot, but the fine print could reveal some hidden pitfalls. And while we’re at it, don’t forget about customer service and security features. You want a card issuer that has your back, both financially and in case of any issues.

9. Avoid Applying for Multiple Cards at Once

Applying for too many credit cards at once is a recipe for disaster. Each application leaves a mark on your credit report, and too many marks can lower your score. So, focus on finding the best credit cards for beginners that fit your needs and apply for them one at a time. Remember, patience is a virtue, especially regarding credit cards.

10. Monitor Your Credit Usage

Once you get your first one approved, you have to be mindful of its usage. Try to keep your credit utilisation ratio low. It signifies to credit card companies that you are not credit-hungry and can take care of your credit responsibly. The best cards for beginners are lifetime free credit cards that are convenient to use and help you qualify for better credit cards in the future.

ALSO READ: How Many Credit Cards Should You Have?

There you go! By adhering to these suggestions and selecting a card that matches your financial objectives, you will be prepared to navigate the realm of credit cards successfully. Keep in mind that your credit card is a valuable tool that is most effective when used responsibly.

FAQs

1. How do I know which credit card is best for me as a beginner?

To find the best credit card, consider your spending habits (groceries, travel, dining, etc.), fees, and eligibility. Start with a card that aligns with your needs, has low fees, and offers credit-building features.

2. What is a secured credit card, and is it a good option for beginners?

A secured credit card requires a deposit as collateral, which becomes your credit limit. It’s an excellent option for beginners because it helps you build credit while offering more flexibility than debit cards.

3. How can I use a credit card to build my credit score?

To build credit, ensure your credit card reports to all three major bureaus. Pay your balance on time, keep your credit utilisation below as low as possible, and regularly monitor your credit progress.

4. What should I look for in the fine print of a credit card offer?

Check for hidden fees, interest rates, and reward structures. Also, verify the security features, customer service quality, and any potential penalties for late payments or exceeding limits.