Taking out your first credit card can feel like a big step, but it can be a key tool that supports your financial future.

You may have heard mixed messages about credit cards – some focusing on the benefits, others on the risks. If you've always relied on a debit card or cash, the idea of borrowing through a card might feel like a big change.

But used carefully, a credit card is a practical tool that can help you manage spending and everyday costs. Importantly, it can also help you start building a positive credit history that can support your future plans, like getting a mortgage or a loan.

This guide is designed to give you the information you need to help you find the best first credit card for your needs. We'll explain how credit scores work, and show you exactly how to choose and manage your card.

What is a credit card?

A credit card is a way of borrowing money from a lender to make purchases or pay for services. You're spending up to an agreed credit limit set by the card provider (or lender). The lender pays the retailer on your behalf, and you repay what you've borrowed later. At the end of each statement period (usually a month after), you'll receive a bill showing how much you owe, the minimum payment required, and the date it's due.

Your first credit card might be your introduction to borrowing money and to how lenders assess you financially. Understanding how it differs from other payment methodsopens in a new tab and what lenders look for can help you apply with confidence.

Credit cards vs other card types

• Credit card: You spend the lender's money (borrowing). You build a credit history.

• Debit card: You spend your own money. It does not affect your credit history.

• Prepaid card: You spend money you loaded onto the card in advance. It does not affect your credit history.

If your aim is to build a positive credit history (like a public financial track record), using a credit card can help, as your activity is reported to the credit reference agencies.

Different credit card types and terms

The 'best' first credit card is the one you get accepted for and can manage responsibly. If you're applying for the first time, you should look for simplicity and any features that can make credit building easier.

Credit builder cards

When you choose your first credit card, you might find that the best option is a credit builder card. These are designed for people with no or limited credit history; using this type of card responsibly might have a positive impact on your credit score. Not using your card responsibly could harm your score, which might make it difficult to get credit in the future.

What is a credit score?

Before we look at the key features of a credit builder card, we need to understand what your credit score is. Your credit score is three or four digits – although this depends on the credit referencing agency – that shows how strong your personal credit file is. The score indicates how reliable you are when it comes to keeping up with repayments, based on your credit history.

The main credit referencing agencies – Experianopens in a new tab, Equifaxopens in a new tab and TransUnionopens in a new tab – calculate your score, and each agency does it slightly differently. So there's no specific number to aim for, but the consensus is that the higher your credit score, the more likely it is you'll be accepted for any credit applications you make.

The link between credit score and credit builder cards

A credit builder card can potentially help you improve your score if you use it correctly. You'll need to keep up with repayments and not exceed your credit limit.

However, there are some key considerations. To offset the increased risk the lender takes on for a new borrower, credit builder cards typically have two key differences from standard credit cards:

• Lower credit limits: This is a safety feature. It helps reduce the risk of you building up large balances that you can't pay back, and it makes your spending much easier to manage. Your first limit might be small – around £200 – but this is enough to begin building your credit history.

• Higher interest rates (APR): The rate tends to be higher than for other types of cards, which means you'll pay more in interest if you don't pay your balance in full every month. Keep reading for more info on APRs.

As this is your first time applying for a credit card, it's important that you research in full the types that are available to you before you apply.

Other types of credit cards for first-timers

While credit builder cards are a popular choice for anyone taking out a credit card for the first time, there are other types that might be suitable:

• Purchase offer cards

These come with an introductory offer – typically 0% or low interest for a limited period. After the offer ends you'll pay the full APR, so make sure you understand this before applying for one.

• Reward/cashback cards

These offer features such as points or discounts on spending. They're not ideal for a first card because you'll usually need a strong credit history to be eligible. They also often come with higher interest rates.

• Travel cards

A travel card is designed for spending abroad with lower or zero foreign transaction fees.

As with any card, you may not be eligible, so be sure to check your eligibility before you apply.

The features on these cards may also have specific conditions that need to be met to use them - make sure to check these with the provider.

Key considerations when comparing credit cards

Here are some key terms that are important to understand what you're committing to:

• Annual Percentage Rate (APR): The yearly cost of borrowing, including interestopens in a new tab and any charges. Lenders have to show you the APR before you sign a credit agreement. It's the most useful figure for comparing the potential cost of borrowing.

• Credit limit: The maximum amount you can borrow. For a first card, a lower limit could help to keep borrowing more manageable.

• Minimum repayment: The smallest amount you must pay monthly. You should always pay more than the minimum if you can afford to, as you'll clear your balance sooner and pay less interest in the long run.

• Fees and charges: These include annual fees, late payment fees, and fees for cash transactions, as a few examples.

Choosing your first credit card: read the small print

Beyond the headline rates, the full terms and conditions are a legally binding contract. You must check the following details:

• Cash advance classification: Some payments (especially utility or tax payments made via third parties) can be classified as a cash advance. Check the T&Cs to see if this is detailed, as cash advances incur immediate interest and higher fees.

• Default charges: It's important that you understand the exact penalty fees and the interest rate increase that will apply if you miss a payment.

• Credit limit increases: Check the process for how and when the lender might increase your limit, and whether you can opt out of unsolicited increases.

The benefits and risks: should you get a credit card?

Deciding whether to get a credit card is a personal choice. It depends on how you manage money, your financial goals, and whether you're comfortable with borrowing.

What are the benefits of taking out a credit card?

• Building a credit history and credit score: Using a card responsibly builds a strong payment history, which could help you achieve your financial goals in the future.

• Extra protection through Section 75: Under Section 75opens in a new tab of the Consumer Credit Act 1974, purchases on a credit card costing between £100 and £30,000 are legally protected. This means the card issuer is jointly liable with the retailer if something goes wrong with the goods or service you bought. This protection is a significant benefit over using a debit card.

• Flexibility and convenience: Credit cards are widely accepted for a range of services and purchases, from online shopping to travel bookings and paying certain utility billsopens in a new tab. They are a practical financial backup.

• Perks and rewards: While not the main reason to choose a first card, some offers include cashback or loyalty points, which can be a useful bonus if it's not outweighed by interest charges or fees.

• Spreading the cost of purchases: A card can help you spread the cost of an unexpected expense, but this should be managed carefully and paid off as quickly as you can afford to, to minimise interest costs.

What are the main considerations when taking out your first credit card?

• Interest and charges: If you don't repay your full balance by the due date, interest will be added, meaning you're paying more overall.

• Fees for specific transactions: Some cards charge fees for late payments, cash withdrawals, or transactions made abroad.

• Potential overspending: Because credit cards offer a line of credit, there is a temptation to overspend, making it easy to fall behind on payments if you don't stick to a budget.

• Negative impact on your credit score: Missing payments or using too much of your available credit limit can severely damage your credit file.

Is a credit card the right choice?

Once you've weighed up the pros and cons, it's worth taking the time to remind yourself about why you might want to take out your first credit card:

• A credit card is best suited for: Short-term borrowing and establishing a positive credit history.

• A credit card might not be the best choice for: Long-term, large, planned borrowing where you're not confident you'll be able to pay it back.

If you need to borrow a large, fixed amount of money that you plan to pay back over several years – for example, if you're buying a car or making some home improvements – a credit card might not be suitable. A personal loan could be a better option.

Getting approved: Understanding credit checks

Once you have selected the type of card you want, you'll need to make sure you understand the application process. Knowing what lenders look for is key to a successful first application.

Who can apply for a first credit card?

Most credit card providers require basic eligibility criteria. These are the factors that determine your eligibility for a first credit card:

• Be at least 18 years old

• Be a UK resident with a fixed address

• Have a UK bank or current account

• Provide accurate details about your income and outgoings (affordability assessment)

How is my credit history assessed?

Lenders check your credit report to assess your financial reliability. When applying for a first card, they are looking for evidence of responsibility. Your credit history is assessed by these factors:

Payment history

Lenders check if you have paid any existing commitments (like phone contracts) on time. A long, clean record of on-time payments is the single best way to prove you're a responsible borrower.

Length of credit history

While you might not have a long history yet, you can start to establish a responsible credit history now. Responsible use over many years can help build your credit score.

Stability and electoral roll registration

Lenders need to confirm who you are and where you live. Being on the electoral rollopens in a new tab is really helpful for new credit applicants as it helps to instantly confirm your identity and current address, demonstrating stability. Lenders also look for consistent address history over the last three to five years.

Hard enquiries

Lenders check how many full credit applications (hard searches) you have made recently. Too many in a short period – for example, more than three in six months – can signal a strong need for credit and cause lenders to decline your application.

Credit utilisation ratio

The credit utilisation ratio is the percentage of your total available credit you are using. Lenders generally prefer to see a lower level of credit utilisation. Keeping your balance well below your limit can help demonstrate responsible use.

This is calculated by dividing your current balance by your total credit limit. A high utilisation suggests you're highly reliant on credit, which increases risk in the eyes of a lender. Keeping it low shows you know how to manage your credit successfully.

What to check before applying for a first credit card

Taking these steps before you apply could help maximise your chances of being accepted for your first credit card and also reduce the impact on your credit score:

• Check your credit file: Use a free tool like CreditWiseopens in a new tab to view your report. It's wise to check your data held by Experian, Equifax and TransUnion to ensure all your details are accurate. Correct any mistakes, such as outdated addresses or incorrectly recorded payments, before applying.

• Use soft searches: Use eligibility checkers, like QuickCheckopens in a new tab, that perform a soft search. This gives you an indication of your acceptance chances without leaving a mark on your credit file.

• Check stability: Register on the electoral roll and ensure your address history is up to date with your bank and any creditors, such as your mobile phone provider.

How to responsibly manage your first credit card

Once you've been approved for your first card, you'll need to make sure you use it responsibly. Here are the key things to think about:

What happens if I don't repay the full balance?

If you don't pay your full statement balance by the due date, you'll usually be charged interest. Interest is then added to your remaining balance, in line with your card's terms, which can quickly increase the overall cost.

Also, if you only make the minimum repayment, the amount you owe will decrease slowly because interest is continually added to the principal balance. This can lead to years of high interest charges, so it's worth paying off more than the minimum to clear the balance, if you can afford to.

While carrying a balance itself doesn't damage your score (provided you are within your limit), failing to make at least the minimum payment will damage your credit history and stay on your file for up to six years.

What steps should I take to safely manage my card?

Follow this checklist to establish the best credit-building habits:

• Set up a Direct Debit: You can set it to pay the full statement balance from your bank account every month, or as much as you can afford to pay. This step helps make sure you don't miss a payment.

• Monitor utilisation: Consider keeping your spending a decent amount below your credit limit. If you use your card heavily mid-month, pay down the balance before your statement closing date. This reports a low utilisation figure to the credit agencies, which can help to improve your score.

• Review quarterly: Check your credit report every three months. This allows you to monitor the data held by the credit referencing agencies to ensure that all payments are reported correctly and your credit profile is improving.

Research Capital One cards today

A first credit card doesn't have to be daunting. With the right information and a responsible approach, it's an effective step towards building a strong, successful financial future.

Ready to look for your first credit card? Try QuickCheckopens in a new tab for free to see if you're likely to be accepted for a Capital One card.