Getting your first credit card with confidence
Written by Robert Bester, Consumer Finance Expert Robert has been a writer for six years, specialising in consumer finance and the UK lending market. Concentrating on consumer credit products, Robert writes informative articles that help customers manage their personal finances efficiently.
18th January 2021
6 minute read
Applying for your first credit card can be tricky, especially with the huge amount of options available from different banks. That’s not to mention smaller providers, challenger banks and even supermarkets offering credit card options.
Whether you’re a young person with no credit history or have just never considered taking one out, it’s natural to be unsure about your first credit card.
Thankfully, the Guru is here to reassure you. Take a few deep breaths, clear your mind, and soon you will have a better idea of what credit card you should choose. Either that, or you’ll start having a strange and unexpected fondness for the colour purple. Perhaps both.
Before you start
Already decided on getting your first credit card? Hold your horses, unicorns and any other mythical beasts!*
Applying for a credit card without knowing if you’re eligible can damage your credit score. Chances are you will even need to build up your credit score using a credit builder card, before you can apply for any standard credit cards.
Try the following steps before you even thinking about clicking on that apply button:
- Check your eligibility – our moneymatcher comparison tool is a great early indicator of what cards might be ideal for you. It’s free, it won’t damage your credit score and it takes a very short time to complete
- Check your credit report – the next step is to check your credit report. This will give you a detailed description of how major lenders and card providers will view you when you make an application
The benefits of owning a credit card
It’s worth understanding all of the benefits of having a card before you dive in and apply, especially if you have never taken one out before.
This can help with your understanding of how a credit card works and also make sure you avoid any pitfalls in the future. Have a read below on how a credit card can be a benefit to you:
- Safety when making purchases – having a credit card means you can spend safely online or in shops, without worrying it might affect any money you might have in your current account. Under Section 75 of the Consumer Credit Act, the credit card company also takes responsibility for any problems with purchases between £100 and £30,000
- Grow your credit score – if you’ve just turned 18, or have previously avoided borrowing money, you might have a low credit score or no credit score at all. This can make you ineligible for things like personal loans or mortgages in the future. By having a credit card and paying it off each month, you will be seen as trustworthy by major lenders and your credit score will rise
- Learn to spend responsibly – if this is your first credit card, you might have a small credit limit to spend, but this doesn’t mean you should spend it all at once. Spending responsibly is always a good behaviour to encourage, as this will help you when it comes to borrowing in the future, which might be for a lot more money (especially for mortgages)
- Claim rewards or incentives – there are often rewards that you can claim with a credit card, ranging from membership points from a specific supermarket to air miles that you can use to get money off travelling abroad
- Take advantage of limited offers – there are sometimes offers such 0% purchases or cashback that you can make the most of during a certain initial period. This means you can avoid paying for interest for a limited time or earn money back just for spending
Questions you should be asking about credit cards
When applying for your first credit card, there are a few important things to watch out for that will allow you to judge if it is a good deal or not. The following questions will give you the right information you need to decide if you’re happy with a certain credit card deal:
- How big or small is the interest rate? – the representative APR will indicate how much you might expect to pay on top of your balance every year, unless there is a 0% interest period. Find out more about interest rates here
- How long does the 0% interest period last for? – many credit cards will have an introductory 0% interest period depending on the type of card you choose. This can apply to balance transfers and purchases, allowing you to figure out whether the period is long enough for you
- Do you need to have a good credit rating to apply? – the credit card should indicate how good your credit score has to be, though it’s always worth checking through an eligibility tool just in case
- Is there an annual fee? – sometimes you might find there is an annual fee with certain rewards credit cards or even gold & premium cards. You need to weigh up whether the perks of the card outweigh the fee, and whether it’s worth it for you
- Are there any other fees or charges? – the summary box document should indicate if there are any further charges for withdrawing cash, spending abroad or failing to pay the minimum amount each month
To find out more information on a particular credit card, the summary box document should give you all the specific rates, along with any terms and conditions you will need to know about. Find out how to read a summary box document here.
What credit card should I choose?
There are many different types of credit card available, with the most common being balance transfer and purchase cards. Have a look at the following information below to see which one might be the right type for you:
- Balance transfer – unless you have an existing balance you need to transfer, these cards might not be suitable
- Purchase – this type of card can be suitable, as long as you have a good credit rating and are looking to spend without accumulating interest
- Rewards – this might also be suitable, though many of the rewards require consistent spending every month, which might not be the right way to go if you just want your first credit card
- Credit Builder – a credit builder card is probably the most suitable, since it only requires a low credit rating, has a low credit limit and will help boost your credit score too
- Gold & Premium – these cards require an excellent credit score in order to apply, which might be difficult if you haven’t had a credit card or other financial products before
- Low rate – these cards also require an excellent credit score, so you might not be eligible to get it as your first credit card if you’ve never taken out a financial product
- Cashback – you will require a good credit rating to apply, but will only be a good idea if you plan on spending a lot in the first few months of owning it
Will I be accepted for a credit card?
It can be difficult to predict whether you will be accepted for a credit card without checking your eligibility or your credit report, but you should always start with the basics to prove to card providers that you can be trusted.
Ask yourself the following questions:
- Are you over 18? – you will need to be over 18 to be eligible for a credit card
- Are you employed? – this is to prove that you have a regular income and can afford to repay the credit card
- Do you have a bank account? - if you haven’t opened a current account yet, it might be a good place to start. As you start to set up direct debits and manage your personal finances, you will start to build your credit score too
- Are you a homeowner? – you are much more likely to be accepted for a credit card as a homeowner as you will seem more trustworthy
- Are you registered to vote? - joining the electoral roll is a good way to boost your trustworthiness in the eyes of major lenders, and therefore, boost your credit score
- Do you have any penalties on your credit file? – if you have any CCJ’s or have ever been bankrupt, this will normally impact your credit score, reducing your chances of being accepted for a credit card
If you have a limited credit history, chances are you will have a lower credit score as you’ve not had a chance to build it up. If you can fulfil at least some of the above points you will increase the likelihood of being accepted.
On the other hand, if you have a poor credit history but would still like to apply for a credit card, you will need to improve your credit score before you apply. Read our article - taking steps to improve your credit score.
Choosing a credit card that’s right for you
Ultimately, it’s up to you to make the decision based on all of the information above. Using an eligibility checker will certainly point you in the right direction, but then it’s up to you. Use the link below to start comparing credit cards and searching for the right one for you. Good luck!
*That isn’t to say unicorns are mythical too. On the contrary, everyone knows that unicorns are actually quietly hiding in stables up and down the country pretending to be fabulous horses with party hats on. If it makes you feel better that they are mythical – then please ignore this footnote and go about your business of getting your first credit card through moneymatcher.