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Your First Credit Card: How To Choose and What To Look For

Young woman using a credit card for an online purchase

More than 8 in 10 U.S. consumers own a credit card, and for good reason. Credit cards offer convenience, extra purchasing power, built-in security features, and the chance to earn rewards and perks. With regular, on-time payments, they can also help new cardholders build good credit and experienced users boost their credit scores.

When choosing your first credit card, look for features that fit your financial goals: low interest rates, minimal fees, and perks that match your interests. Finding the right card from the start can help you maximize benefits and avoid unnecessary costs.

4 Tips for Choosing the Best Credit Card for You

To find the best credit card for yourself, start by identifying options that support your financial goals, then choose a card with good terms and attractive perks. Here are four steps to help you narrow your options:

1. Consider Your Goals and Habits

Before beginning your search, think about how you plan to use your credit card, whether you’ll pay off the balance each month, and what features and perks you value. The answers to these questions will help you know what to look for in a credit card.

  • If you plan to use a credit card only for emergency spending, the credit limit and annual fees should be top factors in your decision-making.
  • If you expect you’ll sometimes need to carry a balance from month to month, look for a card with a low interest rate.
  • If you’re confident you can pay your balance in full each month, a low interest rate is less critical—focus instead on cards with attractive perks and rewards.

2. Look for a Low Interest Rate

A credit card’s interest rate is conveyed as an annual percentage rate (APR). This figure reflects the yearly cost of borrowing for any balance that is carried from one billing cycle to the next, expressed as a percentage of the balance. Interest rates can vary greatly between credit cards, with recent averages exceeding 20%. Finding a low APR can bring big savings, especially for cardholders who expect to leave parts of their balances unpaid from month to month.

3. Avoid Excessive Fees

Many credit cards charge annual fees to cardholders, while others offer a $0 annual fee. Other potential fees and penalties to look for when choosing a credit card include:

  • Foreign transaction fees
  • Balance transfer fees
  • Cash advance fees
  • Returned check charges

If you know your financial habits make you susceptible to specific types of fees, try to find a credit card with low or no fees in this particular area.

4. Find Card Perks That Fit Your Spending Style

Credit card reward programs offer a wide range of perks and bonuses to cardholders. If considering a rewards card, look for one that delivers a fit with your spending habits and preferred type of perks:

  • Cash Back on Purchases: Reward percentages vary depending on the purchase category, such as travel, entertainment, gas, or general spending.
  • Travel Rewards: Cardholders can redeem accrued points or miles for flights, hotel rooms, or rental cars.
  • Points-Based Reward Programs: Cardholders trade collected points for merchandise, services, or gift cards.

4 Tips for Getting Your First Credit Card

For first-time cardholders, finding and choosing the right credit card can put you on the path to a strong payment history and good credit score. Before diving in, it’s important to take steps to prepare.

1. Know the Requirements

In the United States, you must be at least 18 years old to open a credit card account.

Most card issuers also require additional information during the application process:

  • Your contact information, for communications purposes
  • Your Social Security number, to confirm your identity and evaluate your creditworthiness
  • A mailing address for sending your physical card, monthly statements, and other account-related documents
  • Income details, to determine your card’s credit limit

2. Find a Card Built for Beginners

In most cases, the best credit card for beginners is one that offers opportunities to start building good credit from scratch (or close to it). Key features to look for include:

  • Low minimum opening lines, so you can qualify more easily
  • Grace periods, which let you avoid interest if you pay your balance in full by the due date
  • Digital account management tools that make it easier to monitor your balance and pay on time

3. Consider a Low Credit Limit

For many beginners, a good credit card to start with is one with a low credit limit. This can help you avoid overspending and prevent a situation where you can’t pay your full balance each billing cycle, causing you to start accruing interest on your debt.

4. Seek Out Monthly Credit Bureau Reports

First-time cardholders trying to establish or build good credit should look for a card that issues regular reports (at least monthly) to all three major credit bureaus—Equifax, Experian, and TransUnion. These organizations track your personal payment history and credit activity, which are major components of your credit report and, subsequently, your credit score. By choosing a card that reports to all three bureaus, you can expedite the credit-building process and reap the full benefits of your efforts.

Proudly serving South Carolina since 1933, Arthur State Bank offers accounts and services to meet a variety of financial needs. To help you achieve all your financial goals, the bank offers in-person service as well as a range of convenient digital solutions. To learn how Arthur State Bank can help you with banking needs ranging from credit cards, checking, and savings to retirement accounts, mortgages, other personal loans, and more, visit arthurstatebank.com.

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AnnualCreditReport.com is the only source for free credit reports authorized by the federal government. Every 12 months, you can get a free copy of your credit report from each agency.

Your credit report has your credit history for all of your credit accounts as well as any credit inquiries and public record court information such as collections. In addition, the report provides personally identifiable information such as your name, address, and employment.

Be sure to carefully review all three reports to identify any problem areas that you may need to clean up prior to applying for a mortgage. If there is any incorrect information, follow the reporting agency’s rules to correct it or add a notation to the report to explain the situation.

Your FICO Score is a score combines data from several areas include payment history, the amount owed, length of credit history, new accounts. Many lenders use this score as a guide. This score is not provided as part of the free annual credit report.

Learn more about how your credit score impacts your ability to secure a loan.

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Couple looking over finances

Primary considerations for setting your housing budget require an assessment of your income, debt and current savings for the down payment on the home. The following are generally recommended guidelines; however, you should meet with an Arthur State Bank lender to get personalized mortgage information.

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Couple meeting with lender

The pre-qualification/pre-approval letter is included with any offer you make on a house to inform the seller that you have met with a mortgage lender and you are prepared to make an offer. The letter states that based on certain assumptions, the bank is prepared to lend you up to a specified amount of money for a home mortgage.

When choosing a loan officer, we recommend going local to work with someone who understands your community’s real estate market. This blog on first-time home purchases includes questions to ask your lender that may be helpful when preparing for your meeting.

Helpful Resources:

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Realtor shaking hands with a client

When a house is sold, the seller typically pays real estate commission to both the listing agent and the selling agent. It is extremely beneficial for the buyer to use their own real estate agent. Loan officers can often recommend selling agents in the area; ask your officer about realtor referrals when discussing your loan.

A good realtor will know the local market and can help you find an ideal home based on your budget, location and desired features. During your search, understand that you will most likely need to compromise on some items, so it’s important to identify your critical needs versus your wants.

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Couple searching online for a home

Additionally, when you start with the house search and work backwards, homes can often go off the market while you’re completing steps 1-4. While browsing homes immediately can be tempting, we recommend following these steps in order so that, once you find your dream home, you’ll be well-positioned to take action immediately.

When you find the home you want and you think you are ready to put an offer on it, you will want to make sure you have all the information you need to make a solid offer.

  • Evaluate the neighborhood.
  • Drive by the house at different times of the day.
  • Examine how other houses in the neighborhood are maintained.
  • Consider any potential traffic or other disruptive noise.
  • Is there ample parking for you and visitors?
  • Read the details in any Homeowner Association agreements (HOA fees and rules).

Make sure to do a preliminary check of house details:

  • Check the water:
  • Does it have good pressure?
  • How long does it take to get the water hot?
  • Is it well water or city water?
  • Turn light switches on and off.
  • Open and close doors and windows to make sure they work properly.
  • Review previous utility bill expenses.
  • Consider the property tax bill.

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Family meeting with realtor at new house

When writing an offer contract, be sure to pay attention to all of the details.

Offer Price:

Your agent should do a market analysis that pulls data on recently sold comparable houses. The best comparisons will come from the same neighborhood.

If you are asking for the seller to pay some of the closing costs, remember that this cost plus the sales commission determines the net amount you are offering the seller for the house.

Work with your agent on your negotiation strategy. There are many things to consider, such as how badly you want this particular house, whether it is a buyer’s or seller’s market and an assessment of the seller’s motivation to get the property sold.

There isn’t one best strategy.

Be sure to document in writing everything you want included with the house, such as appliances, etc. Your agent should guide you through the contract step-by-step.

Contingencies:

  • Home inspection.
  • Mortgage.
  • Final walk through (24 hours prior to closing).

Proposed closing date. Typically, this is 30-45 days from an accepted offer.

A good-faith deposit is required for the offer. This is typically between 1-10% of the purchase price of the house. The deposit is kept in escrow until closing and the money is applied to the purchase price of the house at closing. If the house does not close due to one of the contingency clauses, the buyer receives their money back. However, if the buyer decides not to close on the property, the seller may get the deposit money.

Attach your pre-approval letter to the offer.

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Two people in professional meeting

The clock starts ticking for everything documented in the contract, including mortgage application, inspections and closing date.

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Woman advising other woman on mortgage application

You will need to decide which mortgage to select prior to the application.

Plan for the following potential fees:

  • Application fee (many banks and mortgage companies charge an application fee; however, there is not an application fee at Arthur State Bank).
  • Credit check.
  • Appraisal (may be paid at closing).
  • Loan origination fee (paid at closing).

Once you have approval for your loan, make sure you don’t change anything that will impact the status of your mortgage. Banks do a final check on credit and jobs just prior to closing, so now is not the time to change jobs or make another purchase on credit such as a car or furniture.

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Home inspector going over findings with home owner

Depending on the size of the house, an inspection can cost on average between $300 to $1000.

Many real estate contracts specify how problems uncovered in the inspection will be resolved, up to a certain dollar amount. Should necessary repairs exceed that amount, the buyer has the option to cancel the contract without penalty and receive their deposit money back. Another option is for the buyer and seller to renegotiate who will pay for additional repairs.

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Woman happily holding keys to her new home
  • Homeowner’s insurance is required by the lender prior to closing on the loan.
  • Turn on utilities in your name, effective the closing date.
  • Change your address with the U.S. Postal Service.
    • Make moving arrangements.

Three days prior to closing:

  • You should receive your final Closing Disclosure from the closing agency. The final Closing Disclosure shows a column for the seller and a column for the buyer. All closing charges and credits for both the seller and the buyer are documented in the closing statement.
  • Review the closing statement for accuracy prior to coming to closing.
  • The final amount in the buyer’s column shows you the amount of money you need to pay at closing.

The closing office will provide specific payment instructions. Closing funds have become recent targets for cybercriminals. If you are asked to use a wire transfer, call the office and ask to speak to someone you have been working with to double-check the instructions.

Closing day:

In South Carolina, the closing will usually take place at the attorney’s office. Everyone signing for the mortgage must be present to sign the closing paperwork. Make sure you bring the following:

  • Cashier’s check or proof of payment for wire transfer.
  • Driver’s license.
  • Checkbook, just in case there are any additional items that were not on the closing statement.

Be sure to understand this information:

  • How and when you will pay:
  • Your mortgage.
  • Your property taxes.
  • Your homeowner’s insurance.
  • Any HOA dues.
  • Who to call with any questions.

The best practice is to go through the homebuyer’s roadmap in this sequence. However, if you jumped ahead early in your journey, just circle back to address the steps you missed.

Arthur State Bank’s loan officers are closely tapped into local real estate markets and experts at helping clients get what they need on terms that work for them. We also offer mortgage specials for first-time homebuyers.

To start planning your journey to your dream home, try out our mortgage calculator. If you’re ready to talk to a loan officer, contact Arthur State Bank to request personalized mortgage information today. Don’t forget to ask about our first-time homebuyer offer.

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