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How to Choose a Credit Card

(Be Picky)

Learning to use a credit card responsibly is a crash course in adulting. You have to manage your credit limit and resist the temptation to spend more than you can pay back. And you have to balance the value of rewards against the cost of using the card. It’s a lot to take in, but using credit can give you the peace of mind of knowing that you could cover a big, sudden expense if you had to.


Start small and use your network. If your parents are willing to co-sign, you might piggyback on one of their cards just until you get the hang of it. Or do a search for student credit cards, which tend to be easier to qualify for.

Secured credit cards require you to put down a deposit, usually between $200 and $500, but you can get one even if you have no credit or poor credit. Show good behavior on a secured card by paying off your balance on time each month and keeping your usage steady, but low, and you likely will see your credit score raise quickly.

Pro tip: Look for cards with no annual fee and the lowest annual percentage rate (APR) possible. Your first card should be no-frills and carry very little risk. Make sure that your secured card reports your usage to the credit bureaus. If you’re not sure, call the credit card company and ask.

Young man considers what credit card to choose.
Young adults browse the internet looking for the best credit card.


If you’re planning to use your card to cover daily expenses such as gas, groceries and general shopping, then a rewards card that offers discounts at certain retailers or cashback on purchases could be a good investment. Just be sure you’re not spending more than you can afford or carrying a large balance on your card, which ends up losing you money in interest paid back to the credit card company.

Pro tip: Using your credit card for daily expenses can be a great strategy to build good credit, but you must pay off your balance in full each month. If you carry a balance, the APR on rewards cards can be very high. If you pay off your balance each month and get the rewards, then you’re winning!


It might seem like when you get a travel rewards card you’re suddenly whisked away to circle the globe, but if you’re not already spending money on travel, the rewards can be hard to cash in and the cards can be expensive to own.

Most travel rewards cards have annual fees that you must pay even if you don’t use the card. The better the rewards, the higher the fees. In order to find out if a travel card is worth the cost, ask:

  • How hard is it to cash in rewards? Are there blackout dates for travel? Spending caps? Limited availability? Loyalty tier programs? If the travel rewards are too hard to use, then you might be better off with a cashback card.
  • When do you start earning rewards? Do you have to spend a certain minimum amount before rewards kick in? Do the rewards expire?
  • Is this the right carrier for you? Sometimes you just love a certain airline. If this is the case, a branded card could be a good fit. Before committing to a specific airline’s card, just be sure they fly to destinations you want to visit. And double-check how hard it is to actually book a rewards flight.

Pro tip: Travel cards can work if you have a specific trip in mind and a plan for how to earn the right awards. Otherwise, you could be throwing money away on high APRs and annual fees.


Once you open a credit card account, it becomes part of your overall credit history. The longer you have credit accounts open, the better it looks. You almost never want to close credit accounts, even if you’re not using them, because it lowers your overall credit available. So, once you choose a credit card, it’s likely going to be with you for a long time.


Before you apply for any credit card, pull your credit report from (the only site authorized by the federal government to supply free credit reports from all three credit bureaus). You can pull your report once every four months from a different bureau.

There are many credit card websites on the internet that help you compare cards and see what you qualify for based on your credit score. Don’t feel pressured to apply right away and check out a few of these sites to see shop around.

You also can search major credit card company websites on your own. Call and ask them questions. Search their FAQs. Read customer reviews. The more you know what’s out there, the more you can trust you’re getting the best deal.


Applying for too much new credit at once makes you look bad to lenders because it seems like you’re desperate. Do your research, but don’t press “Apply now!” on every offer. Find out as much as you can without actually applying and then only apply to the offers that you’re likely to get based on your credit score and history.

The main theme is, the more a credit card offers, the more you will pay to use the card. Get real with yourself and ask whether you really need all the bells and whistles. If your goal is just to build good credit, look for a card with no annual fee and the lowest possible APR. There will be plenty of time to be a credit card heavyweight later on.

As always, we’ve got your back. — The On Your Own Team End of article insignia

Young millennial ponders how to choose a credit card.

[Any reference to a specific company, commercial product, process or service does not constitute or imply an endorsement or recommendation by On Your Own, the National Endowment for Financial Education or any of its affiliate programs.]