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Laura Lee got her first credit card during the freshman Welcome Week at Central Michigan University.

“[Representatives] sat at a long table in the Student’s Union just outside the large conference room with displays from all the on-campus student organizations,” she tells MainStreet. “[I could] sign up for a Sears card, get a $5 gift certificate and a tote bag full of gifts.”

The opportunities to take on credit didn’t end there, however. Weeks later, applications from Citibank, Discover Card, J.C. Penney and Chase started appearing in her dorm room mailbox. By the holiday season, Lee’s wallet was bulging with plastic.  

“They all welcomed this 18-year-old consumer with open arms,” she says.

Of course, credit issuers aren’t giving out cards quite so readily these days. Under the CARD Act, companies are now prohibited from issuing credit to anyone under 21 unless the applicant has a stable source of income or a willing co-signer. But college freshmen aren’t the only ones faced with roadblocks when trying to establish credit.

“If you’re older, outside college age, and don’t have credit history, it can be surprisingly tough to get a card,” Gerri Detweiler of points out. 

Regardless of these difficulties, credit virgins aren’t forced to live a life of celibacy. They just have to shop around.

Prospective first-timers have two basic options when it comes to pursuing a creditor. They can use a co-signer to obtain a prime line of credit, or they can individually obtain a secured credit card, which requires customers to put down a sum of money upfront that will match their line of credit and subsequently minimize default risks. (Check out this MainStreet article for more information on secured cards and other options for building/rebuilding your credit line.)
Whichever option you chose, Bruce McClary, Media Relations Coordinator for ClearPoint Credit Counseling Solutions, suggests that all first-time cardholders consider the following when applying for a card:

  • Interest rates or Annual Percentage Rates. The average annual interest rate for cardholders is 14.1%, but, according to Detweiler, they typically range from 11.24% to 19.8%, depending on the issuer. While first-time cardholders typically end up with a credit line that carries an interest rate on the higher end of this spectrum, they should comparison shop before blindly accepting a line of credit.
  • Annual fees. Many secured cards carry a lot of annual, maintenance and user fees with them since the creditor is taking on a consumer considered to be a higher risk. Ideally, those shopping for credit should opt for a card that’s as light on these fees as possible. Prospective cardholders should read through the terms and conditions carefully to make sure that their cards aren’t frontloaded with unnecessary fees.
  • Your ability to build credit. First-time cardholders need to verify that their new credit card is being reported to all three major credit bureaus (Experian, Equifax and TransUnion) before signing up for a card. Major banks and well-known creditors are guaranteed to do so, but many subprime lenders may not, McClary says. If the issuer doesn’t give a cardholder’s info to these bureaus, the cardholder can’t establish a credit history. “You’d be better off not even having the card,” McClary advises.

Since we know your first time can be daunting, MainStreet found some cards worth considering.

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TheStreet Recommends

Public Savings Secured Visa Credit Card’s “Expert pick” for secured cards, the Public Savings card, carries a low interest rate of 11.24% and has an 18% APR on cash advances. Cardholders are charged a one-time $75 sign-up fee, but aside from that, no other annual fees apply.  There is a $20 penalty for late payments and a $20 overlimit fee, and it should be noted that no rewards are offered. Customers will need to put down, at a minimum, a $300 security deposit; Your credit limit will be equal to the amount of your deposit. Public Savings reports to all three major credit bureaus.  According to Detweiler, Public Savings cards are also regularly issued to new American citizens with green cards who may have trouble getting credit elsewhere.
Orchard Bank Classic MasterCards

According to Detweiler, the Orchard Bank card is a popular choice for those with little to no credit since it allows users to try for an unsecured card, but provides them with a back-up if they are denied the higher line of credit. Prospective cardholders fill out an online application that tells them almost immediately if they qualify for any of three Mastercards backed by HSBC. Interest rates, admittedly, can be high (between 7.9% and 28.9%), but the card does offer some rewards for booking travel online. Annual fees, which range between $0 and $74, are determined by how bad your credit currently is. Customers need to put down at minimum of a $300 security deposit for the secured card; your credit limit will be equal to the amount of your deposit. The Orchard Bank also reports to all three credit bureaus monthly.

Discover Student Card

Voted the number one card for students by both and, the Discover Student Card offers APRs between 13.99% and 23.99% and charges no annual fees. But the real draw is Discover’s Cashback Bonus program, which offers cash rewards of up to 5% on purchases including gas stations, restaurants and travel. Other purchases earn up to 1% back. Specifically designed for full-time students at four-year colleges and universities, Discover often makes exceptions for community colleges and trade schools.

Capital One Secured MasterCard

This card carries a high interest rate of 19.8% and charges an annual fee of $24, but Detweiler recommends it because of its reputation for helping cardholders build credit quickly. In fact, your credit line increases every time you pay your bill on time. Cardholders can track their credit with enrollment in CreditInform, a service that provides you access to your credit score as well as other credit-managing tools and information for no additional charge. Customers need to put down at least a $200 security deposit. Capital One charges $19 for late payments, but there are no overlimit charges.
American Express Green Charge Card

If you have a willing co-signer, you should look into getting an American Express Green Charge Card. As a charge card holder, you are required to pay your full balance every month. There’s no pre-set spending limit and purchases are approved based upon your spending and payment history, your credit record and your financial resources. American Express also allows parents who add a card to their account for their teen to set the credit limit. As such, the Green Charge Card has become popular among parents trying to help their kids establish a credit history.

“I can give [my daughter] a $300 limit, or if she's going to buy a new bed for her dorm room, I can go online and set the limits to $600 (or whatever amount the bed costs) and then go back and lower the limits again,” California resident Ellie Kay tells MainStreet. The card has a $95 annual fee associated with it, but cards added on to existing accounts cost only $30.

Once you’ve established a good line of credit, you can shop around for a credit card that offers the best rewards. Fortunately, MainStreet has rounded up the best travels rewards credit cards. We’ve also got a list of the worst of them!

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