4 Key Features to Look for in Your First Credit Card

When you're new to credit, one of the best steps you can take is opening your first credit card. If you use a credit card and always pay the bill on time, it can help you build your credit score.

Ideally, your first credit card will be one you hang on to, because keeping your first card open is good for your credit history. Below, you'll find the key features that can help you pick a great starter credit card.

1. No annual fee

There's no reason to pay an annual fee for your first credit card. It shouldn't cost you money to build your credit, and there are plenty of no annual fee cards available for consumers who haven't established credit yet.

Some credit cards with annual fees have enough benefits to make those fees worth it. But cards like these are normally only available to consumers with good credit. Starter credit cards that anyone can get usually don't have enough perks to justify an annual fee.

Just so you know, some starter cards are secured credit cards. These require a refundable security deposit to open. Paying a security deposit for your first credit card is fine. You can get your deposit back when you either upgrade or close the card. Upgrading is better, so if you decide to get a secured card, look for one that gives you that option.

2. Credit score monitoring

Everyone should keep an eye on their credit score, and it's especially important when you're building credit.

Make sure to pick a credit card that offers free credit score monitoring. This way, you can check that your credit score is going up from month to month. Credit score tools also show you the factors that are currently affecting your credit score, so you can see if there's anything you need to fix.

3. Cash back or rewards points

Credit card rewards have gotten a lot better over the years. Even though the best rewards cards are for consumers with good credit, there are also a growing number of rewards cards you can get with no credit history.

While this isn't an absolute must-have, see if you can get a card that earns rewards. Cash back cards are a good choice because they're easy to use. They generally earn 1% or more on purchases. If you spend $20,000 a year on a card that earns 1% cash back, that's an extra $200 you can send to your bank account.

4. A quality card issuer

Lots of people don't worry too much about customer service when getting a credit card. But it's not something to overlook, especially when you're new to credit and may want to contact your card issuer with questions or concerns.

For customer satisfaction, Discover consistently does well in J.D. Power's rankings. Bank of America has also scored highly; it tied for second in J.D. Power's 2023 satisfaction survey, behind American Express (which doesn't currently have cards for those who are new to credit). Discover and Bank of America both have excellent starter credit cards, including student credit cards and secured credit cards.

To sum it up, your first credit card should have no annual fee, credit monitoring, and be issued by a card issuer with quality customer service. If you can also get cash back or rewards points, that's the cherry on top. The good news is that there are many cards with all these features, so with a little shopping around, you should be able to find one you like.