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If you’ve just gotten a new credit card, or you’re thinking about getting one, you’re probably excited about the prospect. A new credit card opens up a lot of possibilities, but it also involves a great deal of responsibility. It’s easy to fall into the habit of using your card carelessly. This can wreck your credit and sink you deep enough into debt that it takes years to get back out again. When used correctly, a new credit card can be a solid foundation for building credit.

Understanding Credit Card Terms

Choosing the right credit card for you means understanding the terms that apply. The credit company bills you on a monthly basis for any charges that you make on your card. If you carry a balance on your card from one month to another, you will pay a certain percentage of the principal in interest. The term for this is the annual percentage rate. The lower the APR, the less interest you have to pay on any balance that you carry on your card.

The APR can be either fixed or variable. A fixed APR never changes, meaning that you pay the same amount in interest from month to month. It’s rare to find a credit card with a fixed APR. Most cards only offer variable APRs, meaning that your interest rate can go up or down.

There are credit cards that offer an introductory APR for the first year or so that you have your card. The introductory APR may be as low as 0%. This rate goes up when the promotional period expires. You need to be aware of when the introductory rate ends and what the APR will be when it does. Understanding the APR will help you to decide on the right credit card for you in the event that you do have to carry a balance on your card. If you pay off your credit card bill in full every month, the APR doesn’t apply

Certain cards also include an annual fee. An annual fee is an automatic charge assessed during a calendar year for the privilege of owning a card. Not all credit cards charge an annual fee. Those that do will charge it regardless of whether you use your card during the year. A credit card company charges an annual fee as compensation for the benefits you receive as a cardholder. The annual fee may apply once a year or in monthly increments. It can range from $25 to $500 per year. The more benefits you get from your card, the higher your annual fee is likely to be.

Choosing the Right Credit Card for You

Now that you understand interest payments, APR, and annual fees, it is time to apply. Credit card companies have eligibility requirements that you have to meet before they approve you for a card. These requirements typically pertain to your income, debt level, and credit rating.

You should ensure that you meet the eligibility requirements before applying for a card for two reasons. First, if you meet the requirements, you’re likely to get approval more quickly and receive your card sooner. Second, more than one denied application means many hard credit inquiries. These could hurt your credit score and make it more difficult to get a card.

Some credit cards offer features that are especially good for people who have never had a credit card before. Some cards that are good for new credit card holders waive late fees for the first late payment, have a lower APR, or don’t come with annual fees. Below are some of our favorite credit cards for new cardholders.

1. Capital One® Quicksilver® Cash Rewards Credit Card

Introductory APR of 0%for the first 15 months on purchases. Ongoing variable APR of 16.24% - 26.24% (Variable). The card comes with unlimited 1.5% cash back on all purchases and has a sign-up bonus of $150 after spending $500 within the first three months.

2. Chase Freedom Unlimited® Card

Chase Freedom Unlimited®

Apply Now
on Chase's secure website
Card Details
Intro Apr:
0% for 15 months on purchases

Ongoing Apr:
17.24% - 25.99% Variable

Balance Transfer:
Intro: 0% for 15 months

Annual Fee:
$0

Credit Needed:
Excellent-Good
Snapshot of Card Features
  • 0% Intro APR for 15 months from account opening on purchases and balance transfers, then a variable APR of 17.24-25.99%. Balance transfer fee is 3% of the amount transferred, $5 minimum
  • Unlimited 1.5% cash back on every purchase - it's automatic
  • Earn a $150 Bonus after you spend $500 on purchases in your first 3 months from account opening
  • No minimum to redeem for cash back
  • Cash Back rewards do not expire as long as your account is open
  • Free credit score, updated weekly with Credit Journey℠
  • No annual fee

Card Details +

Ongoing variable APR of 17.24% - 25.99% Variable. Introductory APR of 0% on purchases for the first 15 months. Similar to the Capital One Quicksilver card, Chase Freedom Unlimited comes with unlimited 1.5% cash back on all purchases. New cardholders can also earn a $150 bonus after spending $500 within the first three months of the account opening.

3. HSBC Cash Rewards MasterCard® Credit Card

HSBC Cash Rewards Mastercard® credit card

Apply Now
on HSBC's secure website
Card Details
Intro Apr:
N/A

Ongoing Apr:
15.24%, 19.24% or 25.24% Variable

Balance Transfer:
0% Intro APR for 15 months on balance transfers, then a 15.24%, 19.24% or 25.24% variable APR.

Annual Fee:
$0

Credit Needed:
Excellent-Good
Snapshot of Card Features
  • Earn unlimited 1.5% cash rewards on all purchases.
  • Earn a $150 cash rewards intro bonus after spending $2,500 in the first 3 months.
  • 10% Anniversary Bonus on all Cash Rewards earned once a year.
  • No Annual Fee.
  • 0% Intro APR for 15 months on balance transfers, then a 15.24%, 19.24% or 25.24% variable APR.
  • No Foreign Transaction Fees.
  • $0 liability for unauthorized purchases.
  • Terms Apply.

Card Details +

Ongoing variable APR of 15.24%, 19.24% or 25.24% Variable. 0% introductory APR for 15 months on balance transfers. The card also comes with 1.5% cash back on purchases and a $150 sign up bonus after spending $2,500 within the first three months. Plus, cardholders also earn a 10% Anniversary Bonus on all cash rewards each year.Learning What to Do When Your Card Arrives

Learning What to Do When Your Card Arrives

Once your credit card application is approved, it takes about 7–10 business days for your card to arrive in the mail. Once it arrives, there are steps you need to take before you can use it.

1. Read the Terms

The terms go over information about pricing features of your card, including interest rates and fees. The law requires issuers to include the most important of these details on a single sheet of paper with your card. Be sure you read these. The terms and conditions are lengthy, and you may not want to read them in a single sitting, but file them in a safe place for future reference.

2. Activate Your Credit Card

Once you understand the terms and pricing features, you can activate your card. Then it will be available when you’re ready to use it. This is a relatively simple matter. There is usually a sticker on the front of your card that gives you a phone number to call and/or a website to visit. Follow the automated prompts or on-screen directions to activate your card. It should take only a few minutes.

3. Register Your Account Online

Activating your card online and creating an online account are not the same thing. Creating and registering your online account allows you to access it through the internet. Then you can track your account activity and make payments from a website. There are other tasks you can accomplish online as well. Major issuers let you register your account online. Being able to access it from the internet makes your life much easier.

Making Payments to Your Account

Once you start using your credit card to make purchases, you’ll receive a bill from your issuer once a month. The bill contains the following important information:

  • The total balance on your card
  • The minimum payment due
  • The payment due date

The minimum payment is the smallest amount you can pay without penalty. If you make less than the required minimum payment, your interest rate may go up. Each card issuer has its own formula for calculating the minimum payment. It’s usually about 1%t of your balance plus new interest charges. The exact formula appears on your bill.

There is also a penalty for making your payment after the due date. It usually takes the form of a late fee that shows up on your next bill. If you mail your payment, be sure that you budget enough time so that it will get there before the due date to avoid late fees. Online payments usually apply automatically.

Whenever possible, it’s best to pay off the balance on your credit card every month. That will save you from paying interest. Three things happen when you only make the minimum payment on your credit card balance:

  • You will pay more in interest
  • The balance takes longer to pay off
  • Carrying a balance can negatively affect your credit score

Even if you can’t pay off the entire balance, you should try to make more than the minimum payment. This adds less interest and helps pay off your balance more quickly.

With so many options available, picking a credit card can be difficult. Credit.com makes it easier with tools to help you find a card and tips to choose the right one.

 

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