At 18 you are allowed to vote, get a tattoo, be selected for jury duty AND apply for a credit card.  It is like a right of passage into adulthood.  But just because you are old enough to get one doesn’t mean you should.  Credit cards are a great source of funds, especially in an emergency, but they also bring a lot of responsibility.  So before you get one because all of your friends now have one, ask yourself these questions first:  Can you afford it?  Do you really need one at the moment? Are you responsible enough to handle a credit card?  So we at The Passport Collective have brought you some of the basics you should at least know while shopping for your first credit card.

How does a credit card work?

Unlike a debit card, instead of taking money directly out of your bank account, with a credit card, you are simply getting a short-term loan from the card issuer.  The agreement is that any amount charged on the card will be paid back in full every month, or you will be charged interest.  There is a spending limit, anywhere from a couple hundred to thousands of dollars.  First-time cardholders will most likely be approved for a smaller amount.  Credit cards can be great help in building credit, which is helpful when buying a house, getting an apartment or even getting a job.

Types of Credit Cards

There are hundreds of credit cards offered by many different issuers.  The types of cards range from plain, no-frills credit cards, balance transfer credit cards, student cards, rewards cards, charge cards, secured etc.  The best credit cards for first-timers have minimal credit requirements while giving you access to free credit scores, low APR, and some rewards.  For example, the Discover it Miles is one of the best starter credit cards.  Choosing the right one will depend on things like your budget and needs.

But first, do you really need a credit card?

If you have decided that you do, then you must ask if you can afford it.  Credit cards are convenient but can also be very costly.  Unless you can pay your balance in full each month, you will be paying interest on interest until the full balance is paid off.  Bad credit card habits to avoid, such as making late payments, can ruin your credit.

Building credit or re-building?

Whether you are building or re-building credit, there can be limited options.  Student credit cards are perfect for college students because issuers know young adults often have very limited or no credit history.  Some might even have extra perks like rewards.  When looking to re-build credit, secured cards might be your best option of coming back from bad credit.  The credit limit is equal to however much you deposit on the card.

Applying for a credit card

Check your credit report and score

The first step before applying for any credit is to check your credit report and scores. will provide you with a free weekly report from all 3 credit bureaus until 2021.  Alternately, you can also check to see if you pre-qualify for most credit cards.  A credit card pre-qualification simply means you have met the initial criteria to get the card.  It can save you the trouble of applying for a credit card you might not qualify for.  In addition, it prevents a hard inquiry (a factor in credit score calculation) from being added to your credit report.

Getting the credit card

Read the fine print before you apply.  Check out the card’s interest rates, fees, balance transfers, penalties etc.  Once you pull the plug whether online or over the phone, most decisions will be made in a matter of seconds.


Once your card comes in the mail, make sure you read and understand your credit card agreement.  It might be long and complex, but you need to know what you’re getting yourself into when you use the credit card.  At the very least, your card agreement will outline:

  • Annual Percentage Rate (APR) – the cost of borrowing with your card.  Agreement will list APR for each type of balance: purchases, balance transfers, and cash advances and/or penalty rate
  • The index rate to which a variable rate is tied
  • Grace period – time between end of billing cycle and when the bill is due
  • How your minimum payment is calculated
  • Credit card fees you can incur and when you will be charged
  • Other information such as credit limits, transactions that can be made, using your card outside the country, changes the card issuer can make to your account, etc.


There are a number of reasons you can be denied.  Your credit card application can be denied if you don’t have enough income for that particular card or any at all.  Moreover, a thin credit file can be another reason.  In order to have a credit score, you must have at least one account on your report for at least 6 months.  Without a score, the card issuer cannot gauge your creditworthiness.  Finally, other reasons include being under 18 years of age or not properly filing out your application.

Improve your credit 

If denied, you will most likely be given instructions on ordering a FREE credit report.  Check for errors and dispute any.  However, if the reason is a bad score, there are steps to take to improve your credit scores.