HOWTO: Choose Your First Credit Card

Choosing your first credit card is serious business. Reader Travis writes in with a question: How should he choose his first credit card? It’s a good question.

From Travis’ email: “I know some of the basics of a credit card are simply to pay your bill off in full each month, watch out for fraudulent activity, and things like that, but I have absolutely no clue how to pick a credit card that would suit a student like me without becoming a nightmare in the long run.”

No worries Travis, Consumerist to the rescue….

Since it’s apparent from your email that you understand why not to get a credit card, we won’t talk about interest and APR, blah, blah. You plan on paying off your balance every month, but remember that credit cards are designed to make you forget about your vow to do this. If your debit card offers the protection of a credit card when you use it as one, you don’t need to get a separate card to take advantage of those offers…(extended warranties, extra protection, etc.) Ask your bank about what features your debit card offers.

If you’re interested in building credit, you might want to avoid cards that have annual fees. That way, if you pay your balance off every month, the credit card costs you nothing… and you can begin earning various benefits like frequent flier miles, depending on the card you choose. Keep in mind some debit cards also have rewards systems built in.

Or, with a card like Discover, you can earn cash back. The most important thing is to make sure you get a card from a company with good customer service. You’ll want to make sure that they mail your bills on time, and that if something happens, dealing with the company will be pleasant.

Our best advice to you is to ask around to your responsible friends and family to see they have had any positive experiences with credit card companies. Do the research before applying. Don’t just send in any card that comes pre-approved, or you might find yourself arguing about bogus late fees and yelling the word “cocksucker” on the telephone. Also, you can set up your account so that your credit card automatically debits from your checking account, that way you’ll never forget to pay the bill.

Good luck to you, and remember, pay it off at the end of the month! Balances are for suckers.

Travis’ email below…

Hello,

I’ve been reading Consumerist for quite some time, now, and it’s easily become one of my favorite sites. I love the many different reports the public now gets about how companies misbehave and what some people have to go through just to get some decent service. But, there’s one feature on the Consumerist that I think doesn’t get enough attention. That’d be the HOWTO: guides we see posted every so often. And well, I have a suggestion..

You see, I’m a terribly naive college student who has next to no understanding of the world and how it operates, but even so, I find myself drawn to applying for a credit card. Now, that’s not to say I haven’t tried to be smart about my finances: I am living at home and working a good bit to put myself through college without loans, and I use a debit card for nearly all of my transactions at the moment. I simply believe that building credit and getting a few benefits with a credit card (cash back, a reward program, extended warranties on products I buy, etc) would be wonderful, especially if it means saving me money in the long run.

I know some of the basics of a credit card are simply to pay your bill off in full each month, watch out for fraudulent activity, and things like that, but I have absolutely no clue how to pick a credit card that would suit a student like me without becoming a nightmare in the long run. Would it be possible to create a how-to on what a credit card virgin should look at or do before furiously digging through the stacks of applications (that companies hand out like candy to us students..) and randomly applying for one? I don’t want to fall prey to buying myself into future financial slavery like so many of my peers do at this age.

If it’s a possibility, it’d be much appreciated. I’m in over my head with these things, and I don’t feel like getting shafted later on down the line because I was too quick to read what I wanted to read, instead of getting all the facts and making a good decision.

P.S.: (What do you think about AMEX Blue?)


Travis

Psst, to answer your P.S. Travis, AMEX Blue seems like a fine deal, but keep in mind that comparatively few establishments accept American Express. This is more annoying than you might think.