Disclosure: Some posts contain referral links (much love if you use them!). Opinions expressed here are the author's alone and have not been reviewed, approved, or endorsed by any entities.
If you are reading this post, you may or may not have read all the previous posts I’ve written about credit and credit cards and be asking yourself “Jeez man, where do I start!?”. Well, that is what this post is for – to help you get started.
Picking out your first credit card is incredibly important. I don’t feel like I can emphasize this enough. You want to pick out your first credit card like you pick out your significant other – because best case scenario, you are going to be in each other’s lives for a loooong time. I discussed this in previous posts, but I’ll do a quick recap here.
Opening your first credit card is the same as you starting an Instagram and posting for the first time ever. As long as you keep that first card open, your credit history (one of the factors that goes into your credit score) keeps growing and growing as time goes by. But if you cancel that card, your credit score immediately shrinks. So, to put it in Instagram terms, if you had Instagram for 5 years, but delete all your old posts up until 1 month ago, anyone who looked at your feed could assume you are new to the platform. Same thing with credit cards – the minute you delete that first card, those months and months (potentially years) of credit history tied to that card goes down the drain. Hopefully, that illustrates for you the importance of picking a good credit card as your first card, because ideally, you’ll never close it.
Let’s talk details
So, what makes a good first card? Well, for starters, it should have no annual fee. There are a lot of killer credit cards out there, but the best ones have annual fees, and that is a big no-no for your first credit card. The reason is that you want to keep it forever, and if you have a pesky annual fee, that will start to add up over the years. Side note: Annual fees are sometimes worth it, but usually cards with annual fees don’t stick around in my wallet for more than a year or two once their benefits (usually the big sign-up bonus) have run their course. Once you chop the annual fee cards off your potential list, it gets way smaller. What’s left on the list are cards that are decent, but not the best – hear me when I say that is so OK for your first card.
The second thing that I think goes into a great first credit card is narrowing it down further to cash back cards. Miles and points are great – trust me there – but your rewards needs will change over time, and one thing that will never change is the fact that you will always benefit from cash back cards. Cash back cards are what they sound like – you get a percentage of cash back to your account every statement, based on your spending.
FYI – I use my credit card like a debit card and it works out great!
The third thing that factors into a great first credit card will only apply to some of you. If you are a student, finding a bank with a student card can be a gamechanger. I got my first card when I was in University and over the years I demonstrated to the bank that I was a reliable lendee. Once I graduated, I contacted the bank and they upgraded me from a student card to a regular card. There weren’t a ton of benefit changes, but I was able to keep my oldest card open and upgrade it to a regular card. Even today, this is the card I have kept open the longest and is the one I recommend to anyone who is starting out on their credit journey. From my friends to my brothers – this is hands down what I consider to be the best card to date and marry. And guess what? I’m going to recommend it to you now.
What’s the verdict?
Drumroll please… the Discover It credit card is, in my opinion, the best starter card for anyone who is just jumping into credit cards. It comes at you hot as a no annual fee cash back card with a student option and rotating 5% cash back categories. The categories are relevant (gas stations + wholesale clubs, grocery stores, restaurants, Amazon + wholesale clubs) and the benefits are great.
Discover is a little bit of a quirky bank in that they don’t have a ton of card options, unlike Amex or Chase. Their best card is their flagship It card, and they pack in the perks to make it a very solid, no fee card. I have had it for years and it is still my foundation card, a.k.a. the card I use when I’m not trying to hit a minimum spend on another card. And the categories are always relevant to me – gas, Amazon, groceries, Costco, and restaurants cover a pretty wide spectrum.
Some of the perks include 100% US-based customer service if you ever have an issue and cashback that can be applied to your balance or directly towards purchases at merchants like Amazon. They also provide your FICO credit score for free and they have a shopping portal with exclusive discounts from select merchants. Trust me when I say that what Discover does, they do well.
I cannot recommend this card highly enough – OH – and by the way, if you use my referral link right here, we both get $50! Plus, your first year of cashback rewards will be doubled once your year is up – so if you earn $200 over your first year, you’ll snag another sweet $200 at the end of the year.
If anyone is a student, follow my link here for your $50 referral. As an added perk for you, Discover will give you an extra $20 in cash back each year that your GPA is over 3.0. Get studying!
The Simple Summary
I hope that post served as a practical “This is my advice” post for you after the first couple months of (probably) slogging through a lot of theoretical, background and foundational information. A Discover It card is where I would recommend starting from and keeping forever – it’s what I did, and I have no regrets.