Ask the Expert: 4 First-Time Credit Card Mistakes

 Jason Steele is a freelance writer and an expert on the credit card industry. His work frequently appears in MSN Money, Yahoo! Finance, and Business Insider

Jason Steele is a freelance writer and an expert on the credit card industry. His work frequently appears in MSN Money, Yahoo! Finance, and Business Insider

Young adults face particular challenges when looking for their first credit cards. Most have limited credit histories and will not qualify for the most competitive offers. Therefore, many first-time cardholders are limited to student credit cards with higher interest rates and fewer rewards and benefits. Furthermore, young adults often are more prone to making mistakes, such as submitting late payments or carrying too much debt, when handling their credit card accounts.

Many young cardholders find their first credit cards by talking to their parents and asking their current banks. For 24-year-old Kelsey Rogut, who works in human resources in Atlanta, Ga., choosing her first credit card was a simple decision.

"My parents and I have always had an account at our local bank, so when I graduated from college, I applied for that bank's credit card in order to earn cash rewards," says Rogut.

For Claire Johnson, 23, a director of communications for a nonprofit organization in Charleston, S.C., the process of applying for her first credit card has been more of a challenge. Johnson was an authorized user on her parents’ account until she graduated from college at age 21; that’s when Johnson applied for her own card and, to her surprise, her application was turned down. Johnson later found out that one of the major credit agencies had numerous errors in her credit history. Now that she has corrected those errors, she plans to apply for a credit card again.

“I'll probably start by asking my bank,” says Johnson. “Or I will ask my parents and friends for advice, since they all use credit cards.”

When she applies for her first credit card, Johnson says she will look for a card with a low interest rate that offers travel rewards.

4 Common First-Time Credit Card Mistakes

Unlike other first-time purchases, you can't walk into a credit card store and solicit advice on the best card for your needs. This leaves many first-time credit card applicants struggling to figure out which product is right for them. Here are a few common mistakes to avoid when choosing your first credit card:

  1. Applying for a card you won't qualify for. A credit card is essentially an unsecured loan, and card issuers require applicants to have a certain credit score for each product. Student cards typically require a "fair" or "average" credit score of 650 or higher, while many cards offered to those with "good" credit require a score of 700 or more. The high-end reward cards typically require "excellent" credit of 740 or higher.
    Unless you already have held a variety of other loans, it is unlikely that you will have more than a fair or average credit score when you apply for your first card. Consider using a free service such as to find out your credit score. You also will want to get copies of your credit reports to ensure that there are no errors dragging down your score. currently is the only website where the three major credit reporting agencies offer free credit reports, as required by federal law.
  2. Selecting a subprime offer. Although there are some great student credit cards offered to applicants with limited credit histories, there are some terrible cards targeted at applicants with poor or rebuilding credit. Always make sure that any credit card you apply for has a grace period, which allows you to pay your balance in full to avoid interest. Also, be wary of cards that have an application fee or a monthly or annual fee (most student cards will not have an annual fee).
  3. Chasing rewards. The credit card industry loves to advertise rewards such as a free flight or cash back, but these offers are not right for first-time credit card users. First, they usually require a significant credit history and an excellent credit score. In addition, these cards typically have higher interest rates and less forgiving terms than similar nonreward credit cards. Finally, being rewarded for spending more is not the kind of incentive that first-time credit card users need.
  4. Falling for an in-person pitch. You may be offered credit cards at retail stores, sporting events, and even on airplanes. But no matter how attractive the pitch (or the person making it) may be, don't be pressured to apply for a card in person. Opening a credit card account is an important decision that you should make only after you have had time to read the terms and conditions and weigh competing offers. If the offer sounds really good, just ask for an application to fill out at home. That way, you can find out more details before applying.
[Any reference to a specific company, commercial product, process, or service does not constitute or imply an endorsement or recommendation by the National Endowment for Financial Education.]