Here’s What I Recommend for a First Credit Card
There are hundreds of credit card options out there, so how does someone pick their first credit card?
“What should I get for my first credit card?” is a question I’ve heard from many people. What I’ve learned over the past few years is that most people are not looking for a bunch of options. They just want to know which card I recommend – and why.
Most people realize that even if they don’t like their first credit card they can always sign up for another one. But they obviously prefer to sign up for a solid first credit card that they will continue to use for years to come.
I’ve actually been meaning to write this blog post for over a year now because my answer has remained consistent for a long time now.
The Best First Credit Card
The card I recommend for a first credit card is the Discover it® Card.
Coincidentally (or perhaps not), Discover was my first credit card. I opened my Discover card about a decade ago and have been using it ever since.
Here’s some reasons I think the Discover It credit card is the ideal first credit card:
1) No Annual Fee
When it comes to a first credit card, having no annual fee is the most important feature I look for. If a card has an annual fee, it’s not a good first credit card.
Your credit score is, in part, based on your credit history. If you open a card with no annual fee you can keep it open forever even if you decide to stop using it. If you open a card with an annual fee you will likely end up closing it, perhaps even within a year of opening it.
The Discover it® Card does not have an annual fee and this is by far the most important feature of the card.
2) Solid Rewards
While it’s true that there is no huge sign-up bonus for the Discover it card that will allow you to travel hack your way to Europe, it does have some solid rewards that I think you should take full advantage of.
These include:
- 1% Cash Back The Discover it® Card has always offered 1% cash back, regardless of where the purchase was made, what was purchased, etc. No matter what you will always get 1% cash back.
- Dollar for Dollar Cash Back Rewards the First Year While the Discover it® Card does not offer the lucrative sign-up promos that some of the top travel rewards credit cards offer, they do offer a special incentive to those signing up for the first time.The incentive is this: for each dollar in cash back rewards you get throughout your first year, they will give you an additional dollar. So if you racked up $150 in cash back rewards, you’d get an additional $150. Essentially you get 2% cash back your first year.
- 5% Revolving Cash Back Each quarter of the year Discover offers new 5% cash back offerings. For example, you can earn 5% cash back bonus on up to $1,500 in purchases made at Home Improvement Stores & at Amazon.com July through September 2016. Last quarter it was a 5% cash back bonus on up to $1,500 in purchases at restaurants and movies.If you take advantage of these revolving 5% offerings you can rack up cash back bonuses quick.
- Partner Gift Cards One of my favorite benefits of the Discover it® Card is the partner gift card program. My wife and I have used this for years and it’s always nice to get a “free” gift card.It’s a really simple program. If you use your cash back rewards to redeem a gift card, you will get the gift card at a discounted rate. For example my two personal favorite gift cards to get are $50 Starbucks and Chipotle gift cards. You can get either of these for just $45 of cash back rewards, another free $5 on top of the $45 you already accumulated through cash back rewards.There are currently 140 participating stores/brands and some have even better deals than what I described for Chipotle and Starbucks. For example, a $50 Gap gift card can be had for just $40 in cash back rewards. A $60 1-800 Flowers gift card can be had for just $40 in cash back rewards, and so on.
3) Good Dashboard & Customer Support
The design of the online dashboard and customer support are definitely less important features than having no annual fee and having a good rewards program, but I still think it’s worth noting.
The online dashboard that Discover has is my favorite of any credit card I’ve used – and I’ve signed up for a lot of credit cards the past few years. It’s clean, easy to navigate, and I’ve never had problems with it. Other dashboards can be clunky or overly simplistic to the point where it’s difficult to navigate.
I thankfully haven’t had to interact with customer support that often with Discover, but I did talk to them prior to going on a cruise so that they were aware of the countries I’d be visiting and potentially using my Discover card at. They were kind, courteous, and overall I just got the feeling that if anything went wrong with my Discover card they would quickly resolve the issue (with a smile on their face!).
Tips for People Getting their First Credit Card
While I could easily write a whole post (or series of posts) on tips for people getting their first credit card, I figured it would be worthwhile to briefly touch on the topic in this post.
Here’s 3 tips for people getting their first credit card:
- Treat your credit card like cash The fact that you are getting your first credit card means that you haven’t gotten into credit card debt. You have an opportunity to never get into credit card debt, but it requires you to immediately get in the mindset of treating your card like cash.If you don’t have the money, don’t charge it, and make sure you pay off your credit card in full each month.
- Only use 1/3 of your available credit at any one time Using only 1/3 of your available credit may not seem like common sense, but your credit score is impacted by how much credit you utilize. So if you were approved for $1,000 in credit you should keep the balance on your card below $333 at any one time.There is no penalty for making multiple payments towards your credit card throughout the month, so consider taking that approach if you are worried you will go above the 1/3 “utilization” threshold.
- Request a credit increase after 6-12 months Along the same lines of only using 1/3 of your available credit, you will also want to consider requesting a credit increase after 6-12 months. If you have been consistently paying off your card you are likely in a good position to have your request approved.How do you request a credit increase? With Discover it’s an option within the online dashboard. If you aren’t approved, don’t sweat it. You can wait another six months and submit the request again.
To summarize, I recommend the Discover it® Card as a first credit card. It has no annual fee, solid rewards, and a good online dashboard and customer support.