Your first credit card
Make the most of your first credit card by finding a card that suits your needs and won’t push you into unmanageable debt
Key takeaways
Credit cards allow you to make a purchase now but pay at a later date
Credit cards can help you spread your payments, protect your purchases, earn cashback and rewards and improve your credit score
If you don't use your credit card responsibly you risk getting into credit card debt and making borrowing more difficult in the future
A credit card can be a useful money management tool - according to our data on young people and credit cards, 59% of 18-24 year olds in the UK have a credit card.
When choosing your first credit card, the best way to find one that suits you is to ask yourself what exactly you need a credit card for.
Once you’ve figured out the type of card you want, MoneySuperMarket can help you compare deals, see which cards you’re eligible for and help you apply.
This video information is available as a Text Transcript
Which type of credit card should I get?
There are different types of credit cards to choose from. Finding the best first credit card for you will depend on how you plan to use it.
Credit-builder cards allow you to build up your credit history and are aimed at those who have no credit history or a poor credit history, because they've previously struggled with debts.
They come with low credit limits, typically up to just a few hundred pounds, and higher than standard interest rates.
Credit-builder cards can be easier to get than standard cards, which is one reason they are the most popular choice among 18–24-year-olds, according to MoneySuperMarket data.
If you’re at college or university, a student credit card can make a good first credit card.
You’ll usually need a student bank account with the card provider to qualify, but you may be offered a range of benefits, including interest-free purchases for a limited time.
As with standard cards, you’ll pay interest if you don’t clear your balance in full each month (outside of any interest-free offer periods).
Missed repayments, or failing to meet the minimum monthly repayment, is likely to have a negative impact on your credit score.
Purchase cards give a low or 0% interest rate for an introductory period, which can help spread the cost of making purchases by giving you longer to pay it off.
This can be particularly useful for one-off expensive purchases, such as a new washing machine or boiler, for example, but the money will need to be paid back eventually.
Reward cards offer incentives such as cashback, shopping points, or air miles when you use the card, so make sure the rewards are going to be useful for you when you sign up.
Also, take note of the terms of conditions. Interest rates can be high if you don’t clear your balance and missed payments could result in heavy penalties. Certain rewards cards can sometimes come with a monthly fee too.
Balance transfer cards allow you to transfer existing debt onto a new card offering a lower or zero interest rate for a limited time.
There is usually a one-off fee for moving the debt, but the savings you make from reduced interest payments often make it worthwhile.
As with all credit cards, it’s important to keep up with minimum repayments and understand when the interest-free period expires and a higher interest rate kicks in.
Foreign transaction fees and exchange rates on purchases can quickly add up, but travel credit cards can help you keep down the cost of spending abroad by offering features such as fee-free purchases and more favourable exchange rates.
Interest rates can be higher if you don’t clear your balance in full, so it’s important to use the card responsibly.
I want to build my credit score
I want a credit card to help as I study
I need to make a big purchase
I want to earn rewards when I spend
I want to pay less interest on my debt
I want a credit card for travelling
What to consider before getting your first credit card?
Credit cards can be handy, but can lead to debt problems if misused, which could make it difficult to borrow in the future. Before applying for your first credit card, you should think about:
Interest rate
The higher it is the more you’ll owe if you don’t clear your balance in full each month. Providers only have to offer the advertised interest rate – or representative APR – to 51% of successful applicants, so the rate offered will depend on your financial situation.
Introductory interest rate
Some credit cards offer a low or 0% rate to attract new customers. However, these interest rates don’t last forever – once the introductory period is over, you’ll be charged interest at the standard rate, which will be substantially higher.
Credit limit
Your credit limit will depend on your financial situation and credit history and you won’t usually know what it is until you receive your new card. While you can’t choose your credit limit, you need to be aware of it so you don’t break it and incur a fee.
Credit utilisation ratio
Refers to the amount of credit you've used in relation to how much you have available. If you want to improve your credit score it’s generally advisable to keep your credit utilisation at 25% or lower. This suggests your finances are not being stretched to the limit.
Minimum repayments
If you can’t pay off your entire balance each month, aim to pay at least the minimum monthly repayment. Failing to do so will damage your credit score and could spell the end of any benefits – including low or 0% interest rate periods.
Fees and charges
If you miss a payment or exceed your credit limit, you’ll probably face penalty fees and charges. Cash withdrawals from an ATM using a credit card will also typically incur fees and immediate interest, while overseas purchases may trigger separate charges – which can be high.
What are the pros and cons of getting a credit card?
Advantages
Breathing space: One of the main benefits of having a credit card is it allows you to make a big purchase and spread the payments out, or delay them, until a later date
Improve your credit rating: If you make your credit card payments on time then you could boost your credit score, helping you borrow more, and at better rates, in the future
Cashback and rewards: A rewards credit card can come with benefits when you make a purchase such as cashback, air miles or points that can be redeemed for vouchers
Disadvantages
Lower your credit score: If you fail to keep up with your credit card payments you run the risk of damaging your credit rating. A poor credit score will make it harder to borrow in the future
Debt: If you’re unable to pay back what you’ve borrowed then you could get into debt. If you have bad credit, you’ll face high-interest rates which can make your debt even more expensive
‘Hidden’ fees: You might be charged for using your credit card to withdraw cash or making purchases abroad
How to apply for a credit card for the first time?
Applying for your first credit card can seem daunting. Here, MoneySuperMarket breaks down the application process for you:
Explain why you want a credit card: You’ll usually be asked what you’ll want a credit card for and how it’ll be used
Provide information: Generally, lenders will ask you for some personal details such as your salary and proof of ID
Eligibility: When you compare cards with MoneySuperMarket, we’ll run a soft credit check to show you deals you’re likely to get before you apply
Compare available deals: Check through the key features and card’s terms and conditions before making your decision
Click through to apply: It’s straightforward to apply for your chosen card with the provider. Lenders will offer different deals and interest rates, depending on your financial circumstances
Getting the card: Once your application is accepted, you’ll be given your credit limit and receive your card to activate and start using
Am I eligible for a credit card?
Whether or not you can take out a credit card will depend on a number of factors, including:
Your age: Most providers will want you to be at least 18
Your income: Some credit cards will require you to earn a certain amount or be in full-time employment
Your finances: Any county court judgements or bankruptcies can put banks and building societies off giving you credit
Your credit score: Generally, the higher your credit score the easier it’ll be for you to be accepted for credit. You may have a low credit score for various reasons; not having borrowed before or missing credit card payments. Bad credit can make it harder to borrow, but you could borrow from a bad credit specialist lender
You can avoid being rejected for a credit card – which can damage your credit score - by finding out which cards you’re likely to be offered before you apply using MoneySuperMarket’s free eligibility checker.
We can show you what cards you’re most like to be accepted for without harming your score.
Our expert says...
Personal Finance Expert
Our expert says...
"There are many benefits to having a credit card, from being able to spread the cost of a big payment such as a holiday, to earning cashback or rewards on your spending.
"They're also a good backup in case you lose your debit card or for emergency spending.
"However, if you don’t use a credit card properly and make payments on time, you’ll end up paying interest on the money you borrow and could risk damaging your ability to get credit in the future."
Other useful guides
It can be tricky choosing a credit card for the first time. If you need more information to decide, we have a wide range of credit card guides to help, such as:
Compare credit cards with MoneySuperMarket
It’s quick and easy to apply for your first credit card Just tell us a little about yourself and your finances, including your income, employment status, and what you want to use the card for, and we’ll give you a list of options tailored to your needs.
Our free eligibility checker will show you how likely you are to be accepted if you apply for a particular deal. Then all you have to do is pick the card you want and click through to the provider to finalise your application.
If it’s accepted, your provider will send your card through the post for you to activate.
MoneySuperMarket is a credit broker – this means we’ll show you products offered by lenders. We never take a fee from customers for this broking service. Instead we are usually paid a fee by the lenders – though the size of that payment doesn’t affect how we show products to customers.
