First Time Credit Cards

First Time Credit Cards – Which Type Should You Choose?

Chances are if this is your first time credit card, you are either a student or have just moved out on your own. It’s great to be able to finally get your own card, but now that the time is here, it can be confusing. Since there are many different types of credit cards, which one should you choose? In this article, we will cover the four main types of cards so you can make the best choice for your situation.

The first type of card is the standard credit card. This is the card you are used to seeing and that your parents probably have. A typical card is issued by the major companies like Visa, Mastercard, Capital One, and Discover. Getting one of these cards is like getting a small loan. When you charge an item to your card, you are borrowing money and paying the interest on it until you pay the item off. These cards are good if you are responsible and don’t charge more than you can pay off. If you choose one of these for your first time credit card, you can use it to build a good credit history if you use it correctly.

The next most often used card is a debit card. This card is tied to your checking account and you can only use the amount of money that you have in your checking account. This is a good card to have if you have the habit of mismanaging your money or have trouble keeping up with making payments on time. The drawback to this card is that it doesn’t do anything to help you build a credit history.

Secured credit cards are a good choice for people who have a bad credit history since these are often times the only card they can get. These cards are called “secure” because you secure them by making a payment and your credit limit is the same as the amount you deposited. The good thing about a secure card is that you can use them to rebuild your credit history.

A pre-paid credit card is the same as a secured card but you can only spend the amount that you have paid toward the card. The good thing is that you can’t overspend and you can't hurt your credit rating with these cards. These are good for teenagers to have so they have the freedom of a card but not all the responsibility.

Choosing your first time credit card should be easier now that you know the difference between the different cards available. Just remember to choose the card that is best for you since you know your level of responsibility and spending habits.