Credit Card Andy

Teaching the Basics of Personal Finance

Credit Cards Part 6: How I Picked My First Credit Card

Before applying for my first credit card about two years ago, I spent several weeks browsing and comparing all the credit cards out there. There may be a different selection of credit cards offered today, but I hope that my thoughts on picking credit cards can help you choose your first card.


To maximize my rewards. I will never carry balance month-to-month.

Where do I start?

Check out some of the websites of the credit card companies you may already be familiar with and see what they have to offer. Remember those credit card ads you’ve seen on TV? Go see what they’re all about. You just want to get a feel for what’s out there to make an informed decision. You wouldn’t want to pick a credit card only to find out there was a much better one you could have gotten instead. To speed up your research efforts, check out websites such as or Both give you a comparison of many credit cards across different issuers. This frequently updated forum post also has a nice list of current offerings.

What you’ll find

Look at what the different credit cards offer and you’ll start to notice some trends. Some charge an annual fee (like some American Express cards) and others offer do not. I made sure to pick one with no fee. If you remember back in an earlier post regarding your credit score, the length of your credit history matters. If in the future I find myself not using this credit card I’m about to apply for, I will want to hold onto this card and throw it in a drawer. If I were to cancel the card, I would immediately lose the history I have with the card, negatively affecting my credit score. Without a fee, I can safely put the card away, not use it, and not worry about paying just to keep it around.

Speaking of American Express, there are 4 major payment networks. Visa, MasterCard, American Express, and Discover. Just keep in mind that Visa and MasterCard are accepted in more locations than the other two. If you went with an American Express or Discover card, you may find that some retailers or restaurants do not accept your card.

Many cards offer bonuses for certain categories of purchases. For example, a card may give you more points or cash back for using your card on groceries. Some popular cards, including the Chase Freedom, have rotating bonus categories. Every 3 months, the card chooses 3 new categories that earn you bonus points.

Narrowing it down

When you start looking more closely at cards, you’ll notice some have credit requirements. Here’s how I would approach it with your first credit card when you may not know what sort of credit score you have. Pretend you have a good credit score and look at all credit cards. If you apply to one that requires an excellent credit score and you get denied, go down a level. If you get denied once or twice, you should be safe in applying for student credit cards. These are more slightly more lenient in their requirements.

I definitely preferred Visa and MasterCard to American Express and Discover. I only wanted to deal with one credit card that I could use almost anywhere while I was still learning.

The Basic Strategy

Find a couple of cards that seem like potential fits. Learn all about them, read the fine print of the card offerings, and check out what others have to say about it on the internet.

An Example of My Thought Process

Cash back cards were high up on my list. The idea of getting money for spending money I was going to spend one way or another was appealing. It seemed like the most you could get was a flat 2% cash back on every purchase. That’s pretty cool in my opinion. That’s like a getting a 2% off coupon on every purchase you make. Unfortunately, the king of all cash back cards, the Schwab 2% cash back card, was replaced recently to many people’s dismay.

I used the 2% cash back as my bench mark. If I could earn more money back with points, then I would go with a points credit card.

I found a couple of credit cards that seemed like they might give me the most rewards. I am not a big fan of the rotating categories. I don’t like the unpredictability of the points, and I think it incentivises people to make unnecessary purchases.

The Citi Forward piqued my interest. It offered bonus points on restaurants, bookstores, music stores, video rental stores and movie theaters. This fit my college lifestyle well because I mainly spent money on food and books (also it turns out all Amazon purchases are categorized as bookstore purchases!).

I did some digging around on one of my favorite credit card forums FatWallet’s Finance section. I looked up what sort of redemption rates Citi offers with its points. They didn’t offer a very good redemption rate for cash, but pretty good rates for gift cards. They offered popular $100 gift for 10,000 points. With the Citi Forward card, I receive 5 points on the aforementioned bonus categories and 1 point on every other purchase.

So I thought about a typical semester and made a conservative estimate of my expenses (3 months long).

  • $300 in textbooks
  • $300 in restaurants
  • $400 in flights
  • $200 miscellaneous
    With the Citi Forward card, I accumulated 5 points for buying textbooks and restaurants. And 1 point for every dollar in flights and miscellaneous. This amounts to 3,600 points. If I used the rate of $100 gift card for 10,000 points (or $1 for every 100 points), I could theoretically cash my 3,600 points in for a $36 dollar gift card. So I spent $1,200 and received a reward of $36. That is a 3% reward rate. That is a whole percent better than the cash back! If my spending leaned even more towards just restaurants (fast food included) and textbooks (Amazon included), that rate would be even better.

Don’t Worry

Lastly, don’t worry too much about making your first credit card your perfect credit card. Find something that fits well and stick with it for a while as you learn the reins. Chances are your finances may change (especially when you make the transition from school to the “real world”) and you may find a different credit card that is better for your spending habits.

It’s actually advantageous for your to have a couple of credit cards open because your credit score takes into account the credit limit of all your credit cards and adds them together. At the same time, you don’t want to open so many credit cards you can’t keep track of them all.

Don’t worry if you’re denied from a credit card when applying for your first. You probably don’t have much of a credit history for credit card companies to work with. Also, be aware that each time you apply for a credit card, the company does a hard pull on your credit. It has a slight negative effect on your credit score temporarily, but when you’re trying to get your first credit card the effect is negligible. In summary, don’t worry about applying to a few credit cards if you get denied the first couple times. Just don’t apply for like 10 cards. Take it one a time.

Focus on building great credit history early and the benefits you receive from having a good credit score will outweigh a percentage point here or there.

Be sure to read the related posts on credit cards before applying!