Your first credit card

What to know

1. Know why you want one. Paying on time, every time, builds a credit history, and good credit helps you get housing, bank accounts, cards and loans, and lowers what you pay in interest. Source: CFPB¹ Debit cards, prepaid cards and cash don't build credit, because you aren't borrowing anything. Source: CFPB¹
2. Check whether you can qualify on your own. Card companies generally can't issue a card to anyone under 21 unless you can show an independent ability to make the payments, or someone 21 or older cosigns and agrees to be responsible if you don't pay. Source: CFPB³ A part-time job's pay stub counts as your own income.
3. No income or no history yet? Look at a secured card. You put down cash, for example $500, and can spend up to that amount. Paying the bill restores your spending room. Source: CFPB¹ Generally, the bigger the deposit, the higher the limit. Source: CFPB⁵ Many secured cards let you "graduate" to a regular card after a stretch of on-time payments. Source: CFPB⁵
4. Or ask to be an authorized user. A parent can add you to their card. You get a card with your name on it, but only they are legally responsible for the bill. Source: CFPB⁵ It won't necessarily build your credit, because not every issuer reports authorized users to the credit bureaus, so ask first. Source: CFPB⁵ And if either of you runs up charges or misses payments, it can hurt the other's score too. Source: CFPB⁵
5. Ask your bank or credit union what they offer. CFPB suggests asking your bank, credit union or a nonprofit credit counseling agency about cards and credit-builder loans made for people starting out. Source: CFPB¹
6. Compare the real costs before you apply. Look at the APR (the standard way to compare what borrowing costs), any annual fee, and whether there's a grace period on purchases. Source: CFPB⁴ Secured cards can carry several kinds of fees, so check whether you'd be approved for a regular card first. Source: CFPB⁵ Ask every issuer the same question: "Do you report to all three credit bureaus?"
7. Apply for one card, not five. Applying for a lot of credit in a short time can look to lenders like you're having money trouble. Source: CFPB²
8. Set up autopay the day the card arrives. CFPB suggests automatic payments or electronic reminders so you pay on time, every time, and says most scores treat payment history as the number one factor. Source: CFPB² Set it for the full statement balance if you can, and at least the minimum. Source: FTC⁶
9. Keep the balance low. Experts advise using no more than 30% of your total limit, and you don't need to carry a balance to get a good score. Source: CFPB² On a $500 limit, that's $150 or less (made-up example).
10. Pay the full statement balance by the due date. Most cards give a grace period on purchases, so paying in full by the due date usually means no interest. Source: CFPB⁴ If you pay only the minimum, you pay interest on the rest. Source: FTC⁶

If it doesn't work

• Denied? Under 21, ask whether a cosigner is allowed, or start with a secured card from your bank or credit union. Source: CFPB³
• A charge you didn't make, or a double charge? Write to the issuer at its billing-inquiries address so it arrives within 60 days of the first bill with the error. Federal law limits what you owe for unauthorized charges to $50. Source: FTC⁶
• While a billing dispute is being investigated, you can hold off paying the disputed amount, but pay the rest of the bill. Source: FTC⁶
• Carrying a balance you can't pay off? Pay more than the minimum, stop adding new charges, and see APR and interest in plain English and the credit card payoff calculator.
• Thinking about a store card? They often come with low limits, which make it harder to run up a big bill. Source: CFPB¹ Compare the APR before you sign up at the register.