The ease of obtaining a first credit card will be determined by ones credit history. Although credit cards are one of the best ways of establishing credit it may well be that an applicant has already established a credit history by some other means. Student loans, car loans or store credit cards can all hep to estabish a credit reputation. When this is the case the card issuer will look favourably on applicants who have already demonstrated responsible use of credit. Those who have handled student loan repayments well or car loans, should encounter no problem when applying for their first credit card.
There are many instances though when first time credit card applicants simply have no established credit. This is problematic to lenders as they have no way of assessing how responsible a person will be with credit. Proof of a good income in no way equates to responsible use of credit, thus advancing credit to a first time user poses an unqualified risk to the card issuer. When there is no established credit history it may be problematic for first credit cards to be obtained.
Students may be eligible for credit cards if they meet certain criteria. They will need to show proof of a regular income or have a willing co-signer who is prepared to assume any resultant debt. Unless either of these two options is satisfied, secured credit cards are the most likely solution, not only for students but for many first time card users.
Secured credit cards are issued primarily for two purposes. One is to enable credit to be established as a stepping stone to unsecured credit. The other is to rebuild credit history for those with poor credit. When secured cards are required to establish credit it is best to seek one from a mainstream lender and avoid sub prime lenders that specialize in this area.
Using secured cards actually has advantages for the first time credit user. As the credit line is secured by a deposit held by the issuer, card holders tend to adopt more prudent financial habits which can stand them in good stead later on. As secured card users ultimately aspire to use unsecured credit they will most likely develop good credit practices such as paying on time, remaining within 30 percent of their credit utilization ratio and paying off their balance in full to avoid unnecessary interest charges.
The drawback of secured cards is often the high interest rates levied, but this can be seen as a positive if card holders appreciate the cost of carrying a balance and educate themselves to never do so. The other drawback is the annual fee imposed, but again those who use the cards astutely should be able to move onto unsecured credit before the anniversary of the first annual fee becomes due. It is important to comparison shop to avoid high fees. Currently Wells Fargo and Capital One both offer secured cards with manageable fees of under $25 per annum.
The other most viable method of obtaining a first time credit card is to approach ones own bank. If a checking account is already established and handled well the bank may consider issuing a credit card. This is particularly viable if one banks at an institution where business is conducted within the branch. It is also an option for those who bank with credit unions.
The actual process of application is simple once a card has been selected. A simple online application or in branch application should be completed, and in the case of a secured card a deposit check equal to the required line of credit needs to be presented.