The best first-time credit cards can help provide the early financial literacy your child needs. Proper money management is a vital skill for every adult. Your kid will eventually grow up and take charge of their finances.
That’s why you should teach these crucial life lessons early. What’s more, let them handle their bit of money, so they could understand and apply them properly. Also, they must learn about credit and how it will affect them. You may give them specialized credit cards, so they could see how credit works. The best first-time credit cards offer favorable terms and conditions. They provide great benefits today and help your kid build credit early.
What Is Credit and Why Is It Important?
Credit is another term for debt, and they use it to access necessities and luxuries. It comes in the form of deferred payments of borrowed funds. Banks and other credit institutions provide these. They monitor each client’s credit history, then relays the information to the major credit bureaus.
These establishments compile this information into credit reports with corresponding credit scores. These ratings gauge how likely a person will repay debts on time. Consequently, people need good credit to pass credit approval and receive favorable terms and conditions. Although, most of the best first-time credit cards don’t require credit checks.
Furthermore, employers require applicants to have a good credit rating. If your children don’t learn how to sustain good credit, they may struggle to find employment as an adult. Worse, they may find it challenging to provide for their basic needs. As we’ve mentioned, good credit allows access to essentials such as housing.
Children need to learn financial literacy so they develop as responsible and capable adults. Allow them to apply personal finance skills on their own money and credit card.
Best First-Time Credit Cards for Young Adults
Choose the best first-time credit cards to prepare your kids for their financial future. You may either choose student credit cards or secured credit cards. The former has more lenient requirements for kids still in school. They usually require little to no credit history and offer exclusive benefits.
Although, this doesn’t mean your child can apply for a credit card alone. The Credit CARD Act of 2009 requires people aged below 21 to have a cosigner or a job for credit card applications. Before heading to the bank, discuss with your children the basics of credit scores and their effects. Explain why you’ll give them a credit card, and stress the responsibilities it entails.
Afterward, you and your children may choose from the best first-time credit cards. Check each of their terms, such as rewards rates and interest rates. After weighing their pros and cons, decide which one your kids will have.
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Deserve EDU Mastercard For Students
- Receive 1 year of Amazon Prime Student after spending $500 in the first 3 billing cycles
- 1% cash-back on all purchases
- No foreign transaction fees
- No deposit requirement
- No yearly fees
Why It’s Great
For students starting to build credit, it’s one of the best first-time credit cards. It’s available for students with no credit history and even international students. What’s more, it doesn’t require a cosigner nor social security numbers. The Deserve EDU may be a compelling option for first-time cardholders since it doesn’t require a deposit. Even better, it doesn’t have annual fees nor international transaction fees.
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Journey Student Rewards From Capital One
- 1% cash-back on every purchase
- Cash-back increases to 1.25% after the cardholder pays their bill on time
- After 6 on-time monthly payments, the cardholder may raise their credit limit
- The cardholder may automatically be eligible for a higher line of credit
- No international transaction fees nor annual fees
Why It’s Great
Capital One’s Student Rewards reinforces good credit management with its rewards. As your child pays their bills on time, they earn better rewards. As a result, they’re more likely to learn and follow proper financial management. Moreover, it’s one of the best first-time credit cards that helps your kid build credit early. It may increase his credit limit, reducing his credit utilization. In turn, this could raise their credit rating.
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Best Credit Cards for First-Timers
On the other hand, your child may apply for a secured credit card. It requires a deposit that serves as their credit limit, unlike unsecured cards. Although, they’re available for people with no credit history. As one of the best first-time credit cards, it provides generous rewards like cash-back on eligible purchases. Even better, some have no annual fees nor international fees.
Discover It Secured Credit Card
- Unlimited Cashback Match for all cash-back earned at the end of the first year, with no minimum spending or maximum rewards
- Earn 2% cash-back at gas stations and restaurants on combined purchases worth $1,000.
- Permanently earn unlimited 1% cash-back on other purchases.
- Requires approximately $200 for refundable security deposit after approval
Why It’s Great
It’s one of the few secured credit cards that allow cash-back rewards. What’s more, it has no penalty APR nor foreign transaction fee. The Discover It lets users check their FICO credit score online for free. Consequently, it’s one of the best first-time credit cards for building credit.
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First Progress Platinum Elite Mastercard Secured Credit Card
- Fast and complete online application
- Provides users with 24/7 access to their account
- Lets users apply quickly without hurting their credit scores
- Reports to the three major bureaus every month
Why It’s Great
Monthly reporting to the credit bureaus ensures your credit rating is up-to-date. It’s especially important if you’re trying to build good credit. First Progress ensures updates to your credit report are sent to the bureaus every month. This makes it one of the best first-time credit cards for establishing credit.
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OpenSky Secured Visa Credit Card
- Provides a dedicated credit education page and credit tips
- Claims 99% of their cardholders who have no credit ratings built a score in six months
- It doesn’t negatively impact client credit scores during their application
- Offers 0% APR for the first 6 months after account opening
- 17% APR, one of the lowest from a secured credit card
Why It’s Great
It’s one of the few secured credit cards that allow rewards. What’s more, it has no penalty APR nor foreign transaction fee. The Discover It lets users check their FICO credit score online for free. Consequently, it’s one of the best first-time credit cards for building credit.
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Why Getting A Credit Card Is Important
Credit cards allow people to build good credit. As we’ve mentioned, credit scores determine a person’s access to their needs and desires. It will also determine your child’s employment prospects. Your child will eventually need to handle credit as an adult properly. Early education regarding credit cards and money will prepare them for their later years.
Building Credit
Aside from the best first-time credit cards, there are other ways to build credit. Paying your bill on time is the most important credit building method. After all, credit cards penalize late payments with hefty fees.
Also, remind your child to minimize using their credit cards. This keeps their credit utilization low, one of the most important credit rating factors. You may include your kid as an authorized user for one of your credit cards. If you have good credit, this could help increase your child’s credit score. Lastly, your child should often check his credit report for errors. His score may improve after correcting them. Similar to the best first-time credit cards, this doesn’t hurt credit scores.
Summary
Early financial literacy helps your child succeed later as an adult. Teach them personal finance skills, then provide ways to apply those skills. Let them use the skills on their allowance and credit card. The best first-time credit cards serve as effective financial learning tools. They allow your child to apply what they’ve learned with minimal consequences. Nevertheless, they should understand their credit card’s terms and conditions. For example, they should be aware of the extra interest charged if they carry a balance past the due date.
For more financial tips for children, click here.
