When Should You Get a Credit Card?

Knowing when to open a credit card and how to use it responsibly will prepare you to take advantage of the many perks that credit cards can offer account holders (while avoiding the potential pitfalls). 

So, when should you get a credit card?

Short answer: when you’re over 18 and know you can use one responsibly.

Long answer: when you’re ready to start building credit, are looking for convenience and security in your finances, or want to get rewarded for purchases you know you’ll make anyway.

When Should I Open My First Credit Card?

Applying for your first credit card is a significant financial milestone. We’re talking major adult moment here!

It marks the beginning of your credit journey and helps you establish a credit history — an essential aspect of your financial profile that lenders use to evaluate your creditworthiness. And there are some other compelling reasons to consider getting your first credit card.

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Do you want to start building a credit history?

Establishing a credit history is crucial, especially if you plan to make major financial decisions in the future, such as buying a home or a car. The length of your credit history usually contributes to your credit score (credit length amounts to 15% of your FICO Score, which is the most commonly used credit scoring model), so the sooner you can start building a credit score, the better.

Put simply, to have a credit history, you need to use a credit product — a credit card can be a great first step. When used responsibly, can contribute positively to your credit score. By making timely payments (payment history is 35% of your FICO Score) and maintaining a low credit utilization (which accounts for 30%) you can demonstrate your ability to manage credit effectively. 

Ready for the good news? When you improve your credit score and strengthen your credit history, you make it easier to qualify for better interest rates, loan offers, and repayment terms in the future when you apply for other lending products. 

Some employers and landlords even take your credit score into account when reviewing your application. Having a bad credit score can even make the price of your insurance shoot up. Ouch!

Having trouble getting a credit card? Try a secured card which typically is available for all customers no matter their credit history. You'll just need to put down a refundable security deposit.

Related: Best Credit Cards to Build Credit

You’re ready to learn financial responsibility

A credit card provides an opportunity to learn financial discipline. It’s important to manage your spending and pay off your balance by the due date. If not, your balance will be subject to interest, meaning you’ll end up paying more for a purchase than you need to. 

Responsible money management is a skill that will serve you well throughout your life. The trick to getting the most out of your credit card is to educate yourself on how to use one responsibly before you open the account.

The biggest rule you need to master? Only charge purchases you can afford to pay off in full each month. That way you can avoid interest and fees while enjoying perks like cash back or travel rewards. 

You have an emergency or unexpected expense

Life is full of surprises, and some of them can be financially challenging. A credit card can serve as a safety net during emergencies or unexpected expenses. It provides you with immediate access to funds, offering peace of mind knowing that you have a financial resource to fall back on. If you’re in a place in your life where you’re expected to handle financial emergencies on your own, a credit card can really come in handy. 

Say your car breaks down and you don’t have a spare $1,000 to pay the repair bill. But you also can’t get to work without a car, so how are you going to get the money? This can easily turn into a vicious cycle.

Charging the bill to your credit card and paying it off over time is a great strategy to get through sticky circumstances like this. You can find a 0% APR card that charges no interest for an introductory period — as long as you pay it off before the end of the intro offer (often 15 to 18 months) you won’t have to pay interest. 

You can take advantage of introductory offers and rewards

Many credit cards come with introductory offers, such as 0% APR on purchases for a specified period. Let’s say you have a major expense coming up — like buying a laptop before the school year starts. You may want to charge that purchase and pay it off interest-free before that introductory period ends so you can start school on the right foot.

If you have other debts, balance transfer cards will have an introductory offer on balance transfers. Often offering a 0% APR on balance transfers for six months or more.

Another major perk for a lot of rewards credit cards is earning a lucrative welcome offer, providing a significant haul of points or cash back once you meet a spending requirement in the first few months. While it’s never a good idea to inflate your spending just to earn rewards or a welcome offer, a credit card with rewards that align with your spending habits will reward you for spending you were going to do anyway. 

Related: How to Maximize Credit Card Rewards

When to Apply for a New Credit Card

Once you have a solid credit history and know how to manage your credit card responsibly, you might consider applying for another credit card. It's important to approach this decision thoughtfully and do it for the right reasons. Here are some situations in which applying for a new credit card could be a great move.

You’re ready to expand your credit profile

Having multiple credit card accounts can benefit your credit score. You’ll have access to more available credit, which will in turn lower your credit utilization ratio, a major factor in your credit score. You’ll also positively impact your credit score with another opportunity to showcase your ability to manage various credit accounts and maintain a reliable payment history.

You want to optimize rewards

Different credit cards offer different rewards and benefits. If your lifestyle or spending habits have changed since you got your first credit card, a new card with specialized rewards might be more suitable. Evaluating your current priorities can help you identify a card that provides the perks you value most.

For example, if you’re a major homebody, you may want a credit card that provides more cash back on grocery purchases than one that focuses on extra points for dining out. Commuters might look for a new card that offers more cash back for gas purchases, whereas globetrotters could benefit more from credit card perks related to their favorite airline or hotel chain. 

Related: Erika's Favorite Credit Cards

You have access to better credit card offers or terms

A limited credit history may have narrowed your options for your first credit card. If you’ve spent the last six to twelve months building a good credit history with on-time payments and moderate credit utilization, your improved credit score opens the door to a whole slew of credit cards. Cards for those with a good or excellent credit score often have upgraded rewards and luxury perks, like generous welcome offers or airport lounge access..

A better credit score will likely also get you a lower APR on your new card, which may come in handy if you ever need to carry a balance. 

FAQs

What credit score do I need to get a credit card? 

It depends. The top rewards cards often require excellent credit, which is typically a score of 740 or above. But there are cards for all levels of credit, including secured cards which don’t require a credit score at all. 

Should I get a credit card as soon as I’m 18? 

It’s a good idea to start building credit as soon as possible, as long as you can responsibly handle it. That means paying your balance in full each month and not charging more than 30% of your credit limit each month. 

If you aren’t ready, then it’s better to wait. You don’t want to have to clean up poor credit later. 

How does a credit card help build credit?

Credit cards report your credit limit, balance, and payment history to the credit bureaus. This information is used to calculate your credit score. If you make on-time payments each month and keep your balance under 30% of your credit limit you should see positive changes to your credit score. 

Related: Best Credit Cards for Beginners

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