A Beginner’s Guide to Using Your First Credit Card

November 2, 2021

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I'm Tori!

After successfully saving $100,000 at age 25, I quit my corporate job in marketing to fight for your financial rights. I’ve helped over three million badass women make more, spend less, and feel financially confident.


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Choosing Your First Credit Card

When they hand you your college or high school diploma with a smile, you never really expect the bucket of ice that is the real world to follow. After years of schooling and controlled situations, you’re thrust into #adulting, and it’s happening around you whether you’re ready or not.

An area that’s particularly difficult to adjust to is personal finances. Even if you worked through school and handled your own bills, there’s something different about being out on your own and making a plan for yourself.

Read more: A Beginner’s Guide to Finance for College Students

Besides budgeting, the #1 question I get from the 18-24 age group is about building credit. Some of you were lucky enough to have a card right when you turned 18 through your local bank or credit union –– one you may or may not have used well. For others, credit cards are a mystery and a necessary one at that.

Credit cards are like any other tool –– use it right, and you’ll be golden. Misuse it, and you end up in the ER with a sliced hand (metaphorically, of course). If you’re reading, I’m assuming you’ve either just started utilizing credit or are looking to open your first credit card to start building towards that elusive “excellent” credit score.

Don’t worry –– I’m here to guide you through it.

Emergency fund first

Before we get started, I strongly recommend that you build at least a 3-month emergency fund before you even consider opening a credit card. Six months is even better if you can.

This three-month emergency fund should cover all of your necessary expenses like rent, food, clothing, utilities, and other things you couldn’t live without. We build an emergency fund because it’s SO easy to reach for your credit card when something pops up –– which is one of the many ways I see younger people get themselves into a debt hole that keeps getting deeper. 

Start with at least three months in an HYSA (High-Yield Savings Account) before you go any further.

Breaking down the lingo

Now that you’re covered in case of emergencies –– what should you look for in terms of a credit card? The good news is there are tons of credit cards out there for students and first-timers specifically geared towards helping you build credit.

These cards usually don’t come with extra perks like my favorite travel and business cards might, but they are a great stepping stone to one. 

Student and/or first-time cards will usually come with:

  • Smaller balance limits (which can be a good thing when you’re starting out)

  • No annual fees

  • Some rewards (either points or cashback)

This isn’t true of every card, but it’s common! It’s essential to pay attention to these factors when you’re looking for your first card to make sure you understand the best ways to use it. Here are a few terms to look for and what they mean:

Annual Fees: Fees charged annually to be a cardholder. Usually, only show up in higher tier cards –– but make sure to read the fine print! Some cards start with no annual fees for the first year and then tack it on after.

APR (Annual Percentage Return): This is the amount of interest you will be charged on your purchases yearly. This is usually what gets people in trouble when they start spending without a plan. The goal is never to let that interest accrue in the first place. More on that later.

Some cards also offer 0% APR on your first year, and the interest begins to accrue after 12 months on your purchases.

Rewards: Usually given either as a percentage of cashback (i.e., 1% cashback on all purchases) or as a point value to be redeemed for cash or physical rewards like flights, gift cards, hotels, etc. Make sure to see if these rewards ever expire, so you know how to utilize them best! I get free flights and stays all the time because of the way I utilize my rewards.

When you’re getting your first card, make sure to read through all of the fine print, so you know exactly what you’re looking at. 

See all of my credit card recommendations here: Money Tools –– Credit Cards

Rules to follow

Alright, alright, I’ve technically already done a whole ass blog post on how I don’t have a debit card and only use credit cards. You may not be fully ready to jump into this lifestyle, and that’s OK. To pull this off (and reap the benefits), I have a few rules that are non-negotiable for me when it comes to spending with a credit card.

1. Never spend more than you can afford to pay in cash

Yes, that even means that new couch that would make your first apartment so damn cozy. This rule is there to protect you, not put a damper on your spending goals. Whenever you shop with a credit card, purchase only what you can already afford in cash. Even if you have 0% APR for the first few months (or year), I caution you to take advantage of it to make a big purchase unless you know 5,000% with absolutely no doubt that you can pay it off before the bill comes due.

2. Always pay off your card on time and IN FULL

This is what I meant above by never letting interest accrue on your balances. I spend throughout the month on my card and make a payment for the FULL balance (not just the minimum payment) by or before the due date. This means I never pay interest but get to take advantage of all the perks like bonus points and cashback.

Circling back –– this is why it’s so crucial to have that emergency fund in place first. So many of my coaching clients admit that they only got a credit card because they heard they were supposed to and then just used it with no plan or whenever they had a flat tire.

Credit card debt piles on fast and can grow like weeds –– but if you use credit cards with a plan, you won’t have to worry.

Why you need a credit score

If you grew up with Dave Ramsey or any other anti-credit card financial advice, it might take a while for you to shake the shame of that advice off your shoulders. I certainly do not think you should go into credit card debt, but the reality is that you need a credit score for a multitude of reasons: home loans, better auto rates, utilities, apartments, just to name a few.

Listen now: Increase Your Credit Score

The idea with your first credit card is to start small and get used to following best practices. If we go back to the whole “toolbox” analogy, your first credit card is a hammer –– easy to use (but still dangerous) and good for beginners. As you get more comfortable with your finances, you’ll start moving up into better cards for your particular lifestyles, like travel rewards cards and business credit cards.

There’s an old saying that applies here: how you spend when you have little is how you spend when you have a lot. So start building healthy spending habits ASAP, and you’ll be off to a great start to a bright financial future.

Did you find this article helpful? Have questions about credit cards? Let us know in the comments below!

More resources: 

Read my book: Financial Feminist: Overcome the Patriarchy’s Bullsh*t to Master Your Money and Build a Life You Love

Free Course: Curb Emotional Spending

Free College Budget Spreadsheet

I get asked all the time: what are your favorite money management tools?

Treasury: We’re building a one-of-a-kind, non-judgemental community where you can learn exactly how to invest, build wealth, and receive exclusive access to Her First $100K.

Juno: Overwhelmed by your student loans? Juno uses the power of group buying to negotiate with banks to get members better deals on their student loans. You can join Juno for free today to access their deals and find out how much money you could save. Rates for refinancing start at 2.25% fixed, with up to $1,000 cashback.

Personal Capital: The tool I check daily, Personal Capital is the best tool for tracking your net worth and your progress towards goals like saving, debt payoff, and (yes!) $100K. 

The $100K Club Facebook Group: Need some honest money conversations in your life? Join my free community to get your burning questions answered.

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