Looking to apply for your first credit card? It is an exciting way to build trust with banks and to gain financial freedom. At the same time, you are on your way to building a secure future. The first question that comes to first-time credit card users: how to build credit with your first credit card?

Learning how to build credit with your first credit card is the foundation of financial security and independence. By building on disciplined practices, you can use a good credit score to get a loan for a new house, to fund an education or for emergency funds.

Important terms for choosing your first credit card:

●     Annual Percentage Rate: This is the interest rate charged on the money borrowed by the credit card user.

●     Annual Fee: This is the yearly maintenance fee, similar to the annual charges put against most debit cards.

Getting an unsecured credit card for the first time is tough if you have no credit history. Many get pre-approved credit cards from banks. For first-time use, get a secured credit card backed by liquid funds, such as a fixed deposit.

Read More: How Can I Build Credit History For The First Time?

How to build credit with your first credit card

Starting your journey as a new credit card user should begin with learning the basics of ‘how to build credit'. Credit is important for a credit evaluation profile and to get loans for future use. Keep in mind some practices and questions if you want to learn how to build credit with your first credit card. Once you have mastered your credit card usage, you are set for some amazing perks and rewards. Credit cards are also much safer and fraud-protected than other cards.

Which Card Is Best for You?

This is the first step towards learning how to build credit with your first credit card. Credit cards are not physical products with fixed features to choose from; it is usually the other way around. Every credit card is different depending on its user’s eligibility, risk profile and income.

Such factors are less important for secured credit cards, which makes it ideal for new-to-credit. After building enough credit, apply for an unsecured credit card for more benefits.

Some premium cards offer greater perks, some are free, whereas some have various annual charges. Consider your lifestyle and spending habits. If you are a frequent hotel-seeker, find your first credit card which offers perks on hotel-lounge stays. For shoppers, cards with cashbacks and reward programs are suitable. Also look into the card's annual charges and interest rates.

Make Timely Payments

Remember to set reminders or auto-debit for your new credit card. Manage your revolving credit by consistently paying on time and demonstrating repayment discipline.

Instead of making minimum monthly payments, try to pay as much as you can towards full repayment. Not only does it build credit fast, but it also saves you money towards interest. Most cards keep a 30- to 40-day repayment period free of interest.

Maintain CUR

Demonstrate responsible behaviour towards credit management. Only use credit when you need it and remember the ultimate 30% rule. Maintain limited credit usage, preferably lower than 30% of your credit limit. Maintaining this usage rule is a very important step in ‘how to build credit with your first credit card '.

Avoid Frequent Applications

Making too many credit card or loan applications can attract hard inquiries on your credit profile. These hard inquiries hurt your credit score by dropping a few points, as it shows desperation for credit. Having fewer credit cards or a natural use of credit is optimal.

Track Your Account Age

Account age makes up 15% of your credit score. It demonstrates your experience and credit management behaviour over a longer term. Even if you started using new accounts and cards, your older history and credit cards will always be a part of your total credit history and score.

Monitor Your Credit Report

Monitoring your credit report helps you understand how factors and elements are affecting your overall credit score. A clear picture is important to learn how to build credit with your first credit card.

You can plan improvements for credit score growth, or identify factors that are hurting your score while there is still time. This way, not only can you track your report but also control your credit management habits.

Make it a note to watch out for any errors or suspicious information, as you can file a dispute with the credit bureau. Such mistakes can hurt your score, and rectifying those will increase your credit score.

How much time does it take to build credit with my first credit card?

It may take up to 6 months of consistent and responsible credit behaviour to see results of learning how to build credit with your first credit card. This period is used to evaluate your consistency and diversity of borrowing to establish creditworthiness over a longer term. Don't worry, that doesn't mean that the first months are not being reported to the CICs. These behaviours are sent to the bureaus to establish patterns and trust in your repayment behaviours.

Changes are sent to bureaus on a monthly cycle, so new information can take up to 45 days to appear on your report.

Best Credit Cards For New Users

Now you know how to build credit with your first credit card. However, this is hardly the last step. It is understandable to be confused while choosing your first credit card. This is because of the diversity of premium and free credit card options available. Below are the best curated options, including both premium and free credit cards.

Read More: Best Credit Cards for No Credit History

Amazon Pay ICICI Credit Card

It is a lifetime free credit card with cashbacks sent directly to your Amazon Pay balance. It offers unlimited rewards not only on Amazon but also 1% unlimited rewards on other online shopping sites.

HDFC Infinia Credit Card

This is the ultra-premium credit card with which you can redeem up to 2 lakh reward points in a billing cycle. One point is equal to one rupee in Tanishq vouchers bought via SmartBuy. You get welcome benefits of 12500 reward points. It gives unlimited airport lounge access and a three-night stay at ITC hotels at the price of two. Like any premium credit card, it has a joining fee of ₹12500 and an annual fee of ₹12500.

Flipkart Axis Bank Credit Card

This is a popular credit card that gives up to 7.5% cashback on Myntra. The cashback structure is also applied to other spends like Flipkart. Users can convert purchases to EMIs and get an instant loan on the credit card. It has a waivable ₹500 joining and annual fee.

IDFC First Millenia Credit Card

This is an economical credit card that offers low interest rates and rewards points on everyday spending. It is a lifetime free credit card with dining discounts, interest-free ATM withdrawals and railway lounge access.

Cashback SBI Credit Card

This credit card has an annual and joining fee of ₹999 plus taxes. It offers 5% cashback on online transactions, and 1% cashback for offline purchases. The credit card also offers a fuel surcharge waiver and auto-credited cashback.

HDFC Regalia Gold Credit Card

This is another premium credit card with welcome and milestone benefits. Users receive ₹5000 flight vouchers on a 5 lakh spending milestone. It has a boarding edge program, Swiggy One membership and other benefits.

Axis Bank Select Credit Card

This credit card is the ultimate choice for those who do not want to be exclusively on one side of the credit card experience. It gives both the premium and everyday economic spending experience.

It comes with ‘buy 1 get 1 free’ on District for movie ticket booking, flat discounts on Swiggy, airport lounge access and much more. The Burgudy upgrade waives the ₹3000 annual fee and ₹3000 joining fee for eligible users.

Conclusion

Using a credit card for the first time sounds like a fun lifestyle upgrade. Using informed practices with your first credit card is crucial for the best and smoothest experience. There are plenty of credit card options to choose from, ranging from lifetime free to premium lifestyle cards.

By improving your practical knowledge about how to build credit with your first credit card, you can master your credit and financial management skills. This is an opportunity to improve credit score with credit card. Such effective practices give you a fulfilling credit card experience. As a new credit card user, make timely payments, set reminders, lower your credit use, and monitor your credit report.

FAQs

1. Which credit card features are beginner-friendly?

A beginner-friendly credit card offers lifetime free service, online cashbacks and a simple-to-redeem reward system. For those who don't have a credit history or a pre-approved card, a secured credit card is the go-to option, like IDFC First WOW!

2. How to build credit with your first credit card?

Make timely payments, make small purchases, lower your CUR to 30% and keep older accounts open as you upgrade to a new card. Avoid paying monthly minimums and making multiple credit or loan applications.

3. How long will it take to build a credit history after getting your first credit card?

It can take up to 3 to 6 months for your first credit score to appear. Your data is recorded and sent to the bureaus each month before they generate the first-ever report.

4. How can I get my first-ever credit card?

If you don't have an existing credit profile from other financial products like loans, check for pre-approved credit card offers. If not, get a secured credit card backed by a fixed deposit.

5. How much should I spend on my first credit card?

It is ideal to start with smaller purchases and keep the CUR below 30%. Avoid making the minimum payments on due dates and stick to affordable daily purchases.