What is the Best Credit Card for Beginners?

“Which credit card should I get 1st?”

This article is for those of you who are new to the credit card game and want to know where to start. You want a set of easy-to-understand principles that you can use to build your credit card base, at a pace you feel comfortable with.

We’ll cover the 5 main points that beginner card users should focus on. We’ll highlight examples of cards that meet each of these criteria, and ones that fail miserably. Any of these 5 cards are great choices for your 1st or 2nd card.

Let’s get started.

1. Easy to Earn Points

My recommendation is to start with a credit card that earns easy points. It might not earn the most points, but that’s okay when you’re new. Jumping into some of the cards with more complicated earnings schemes can cause more harm than good.

My winner for this category is the Citi Double Cash Card.

  • You earn 1% on everything you purchase (no need to track categories), and
  • Another 1% when you pay your credit card bill (which you should do every month).

So you essentially get 2% back on every purchase. Easy as cake.

My loser for this category is the American Express Platinum Card. Not that it’s a bad card, it’s just bad for beginners.

It earns a lot of points, but is pretty restrictive on how you earn those points.

  • 5x points on hotels, but only if booked through Amex portal.
  • 5x points on airlines, but only if booked directly with the airline or through Amex portal.
  • Only 1x on everything else

The card also comes with a lot of credits. But don’t let the face value fool you. The credits are also pretty confusing.

  • $200 annual Uber credit (but only $15/month, plus bonus $20 in December)
  • $200 annual airline credit (but only on incidentals, not the flights themselves)
  • $100 annual Saks 5th credit (but only $50 each 6 months, enrollment required)

When you’re new, don’t get a card that makes you keep track of so many rules just to earn rewards.

2. Easy to Spend Points

After you earn the points, you still have to redeem them. Again, some cards make this far easier than others.

My winner for this category is the Chase Freedom Unlimited® Credit Card. The points it earns are pretty much the most flexible around. They can be redeemed for

  • Statement credits
  • Cash direct to your bank account
  • Travel
  • Gift cards

You’ll never need to worry about earning points that you can’t actually benefit from.

My loser for this category is any store-specific card, for example the Abercrombie & Fitch Credit Card or Old Navy Credit Card. The points you earn from cards like this can usually only be redeemed at their specific store. If your tastes change, and you no longer shop at that store, too bad.

When you’re new, flexibility is key. Don’t pigeonhole yourself.

3. No Annual Fee (Or At Least Has a Clear Downgrade Path)

Keeping your oldest cards open boosts your credit by increasing the your length of credit history. This means that newbies want to open credit cards they plan on keeping forever. For this reason, choosing cards with no annual fees is usually a good way to go.

However, there is an exception to this rule, and that’s if, and only if, the credit card has an easy downgrade option. I talk more about this here, but the short version is this:

Some cards have annual fees, but allow you to downgrade the card later to a no-fee card, while still maintaining your credit history. Those are okay.

My winner for this category is the Citi Prestige® Credit Card. This article discusses how I earned over $1,100 from this credit card. However, the fee on this card is $495! Luckily, I downgraded this card to the Citi Double Cash Card I mentioned earlier, which has no annual fee.

My loser for this category is the Southwest Rapid Reward® Plus Credit Card. I learned this one the hard way. I applied for this card back in college, but after moving from CA to NY, I no longer fly Southwest very often. Unfortunately, the card does not have a downgrade option. Now I was stuck in a position where I could either:

  • Pay a $69 annual fee for a card I no longer use.
  • Cancel the card and hurt my credit score.

Ultimately I chose to cancel the card. But had I known about this when I was younger, I would not have applied for this card.

The lesson here: start with no-fee credit cards, or cards that allow downgrades.

4. Start with Strict Issuers First

Some credit card issuers are getting more picky about who they accept and who they deny. Mainly, they are cracking down on people who open a lot of cards.

For that reason, you should start with the more strict companies. After that, you can move on to the less strict ones, that don’t really care how many cards you have recently applied for.

My winner for this category is the Chase Sapphire Reserve® Credit Card. I talk more about why I love this card so much in this article, but the reason I recommend starting here is because Chase is the most strict company out there when it comes to accepting your application.

Ask Sebby explains the “Chase 5/24 Rule” in depth here, but it essentially means Chase “will automatically deny your application if you have opened more than 5 credit cards or charge cards from any credit issuer in the past 24 months.

That’s why I recommend you stack up on Chase cards 1st, and then move on to your other cards.

My loser for this category is the Barclays Uber Credit Card. Barclays, from what I’ve seen, doesn’t have any strict rules on how many cards you have opened recently. They still check your credit score, but they won’t deny you simply because you have 5 recent hard inquiries on your credit report.

Start strict, then work your way down to other companies.

5. Bonus Perks

The last category you should focus on when choosing a card are what I call miscellaneous bonus perks. These are things like no foreign transaction fees and free credit monitoring.

These often get overlooked by new card users, but they will certainly come in handy.

My winner for this category is the USAA Preferred Cash Rewards Credit Card. This is my oldest credit card. Even though I don’t use it very often anymore, choosing this as my first card was one of the best decisions I made. It has no foreign transaction fees, free credit monitoring, and easy-to-use automatic payments (something I always recommend turning on).

My loser for this category is the Golden 1 Platinum Rewards Credit Card. This card has a foreign transaction fee of up to 1%, no signup bonus, and from what I can see, does not provide free credit monitoring. There are just so many other better options out there.

Wrapping It All Up

In conclusion, these 5 areas are extremely important to new credit card users. And any of these 5 cards would be a great 1st choice.

The overall theme is that you want to build a base of simple, cheap, useful cards that you will never need to worry about cancelling. Even if these cards are no longer useful for you, you can keep them in your nightstand where they will still count towards your credit history, and thus still help your credit score.

Now you tell me. What was your first credit card? And what is 1 tip you would give to someone just starting out?

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