Choose your first credit card wisely

Girl on her laptop with a credit card

Choosing your first credit card is an important decision that requires plenty of investigation into your options. There are many features that credit cards offer. And, likely, as many reasons why you would choose one card over another. From the terms stated in agreements to getting ready for the responsibility of managing your own account, weigh all factors carefully when choosing your first credit card.

What to consider when choosing a credit card

You’ve probably seen the credit card ads pop up in your inbox or the offers pile up in your mailbox. Before you apply for a credit card or accept a credit card offer, ask yourself why you want it. One good reason is it allows you to build a credit history using the revolving credit limit, which will help boost your credit score. A high score shows potential lenders that you’re worthy of a future loan or line of credit for a car or a house.

There are commonalities between all credit cards. You can buy now and pay off the balance when the statement arrives or pay the monthly minimum due. Most retailers accept all major credit cards which makes shopping very convenient. If you experience incorrect or fraudulent charges on your statement, credit card companies make the dispute process very simple.

Plus, many credit cards offer perks like travel rewards or cash back just for using the card. This may make one offer more appealing to you than another. As you sift through the many pre-qualified offers, you’ll want to review other key credit card attributes before making a final decision:

Low APR
Select a card that comes with a low annual percentage rate (APR), so you’ll pay as little interest as possible if you carry a monthly balance. LGFCU’s Visa® Credit Card offers a competitive, variable rate. You should try to pay your bill in full before the grace period ends and interest rates take effect. This way you’re not paying more for your purchase.

Introductory rates
Some cards come with a low introductory APR. Issuers then raise the rate after the promotional period ends. Some card rates, such as LGFCU's card, remain steady across purchases, cash advances and balance transfers. So be sure to read the fine print on your application about rates.

Fees and penalties
Added one-time fees can apply to features like cash advances, which do not typically carry a grace period. Those fees hit your account as soon as the money is borrowed. There could also be more longer-term penalties assessed like separate interest rates for cash advances. The APR could also change if you’re late on a payment or go over your limit; that’s on top of any possible late fees. If you’re not careful, those fees could add up quickly, making it difficult to pay off monthly balances. Do your homework and look for a card that has low fees or possibly no fees.

Are you prepared?

Credit card selection is a personal choice based on which card best fits your needs. There is no ideal number of cards to have, but it does get harder to track expenses when trying to manage too many. Shop around and review your options before making a final decision.

The advice provided is for informational purposes only.

This article originally appeared February 2015.

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