You might want to compare the benefits and drawbacks of each type of credit card when you apply for your first one. Consider the annual fee and credit limit as well as co-signer options. You will need to consider your personal circumstances and goals when deciding which option is right for you.
Low or no annual fees
No-fee credit cards are a great way start building your credit record, even if credit isn't perfect. No-fee cards are especially helpful for people who have no credit history or have recently established a small credit score. They can help you build a credit history that will allow you to obtain a better mortgage or car loan.
Many starter credit cards are free of annual fees and easy to obtain. These cards offer a variety of perks and rewards depending on the terms. While some cards have no annual fees, others may charge a higher interest rate.
To determine whether you are eligible for a no-fee credit line, your credit report must be checked before you apply for your first card. Information on your credit history and student loans will be included in your report. This information will be used to determine your credit score. Financial institutions will use this number when making loan decisions.
Low credit limit
When applying for your first credit card, it is not uncommon to receive a low credit limit. It is due to many factors. The credit limit you receive will depend on your age, income, and credit score. The typical credit limit of the first credit card you apply to is between $500 and $1,000. You may have higher limits if your credit score is good.
It is important you know that credit limits vary from one person to another and that yours may increase with time. You should not exceed your credit limit as it can lead to negative consequences. There are a few strategies you can use to get a higher limit for your first credit card.
Before you apply for a credit card, first make sure to check your credit score. A high score means that the issuers trust you and will increase your limit. Pay your balances promptly, second. If you are unable to pay your bills on time, you can apply for another card that offers a higher limit.
Option of co-signer
While you may be tempted to get a joint credit card from a friend or family member, co-signing with a joint account can have serious drawbacks for both parties. A joint account may have a lower credit limit and not all banks report activity. The co-signer can view the statement of the cardholder and is responsible for any missed payments. Late payments can affect the credit score of the cosigner.
You should ensure your friend/family member is financially sound and responsible when you apply for your first card. You may not be approved for a credit card if your credit score is poor. But if you have someone with good credit and who is responsible, it will help you get approved.