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How to Get Your First Credit Card

By U.S. News & World Report

Getting your first credit card can unveil the ultimate catch-22: Without a credit history, it’s nearly impossible to score a good card. But without a credit card, it can be tough to build a credit history.

So, where do you start when looking to secure that first piece of plastic? There are lots of places to kick off your journey, some better than others. And a few traps to watch out for. Here’s what to know.

[See: 12 Habits to Help You Take Control of Your Credit.]

Consider the timing. Before you even apply for that first credit card, consider whether you’re ready to handle the responsibility.

For some credit-card newbies, that right time might be the last year of high school, where they can experiment with credit cards under the watchful eyes of their parents. For others, the best time might be during college when having credit is a stepping-stone to a new level of financial independence. Other would-be debtors may wait until they score that first job — and first paycheck — to submit their first credit card application. The right time is up to you — and potentially your parents if they’re helping you out.

Here’s the hurdle. Your chief struggle will be landing a credit card — especially one with attractive features and rewards — with a limited or nonexistent credit history.

Get a sense of where you stand by checking your credit report. You can secure one for free from each of the three credit bureaus — Experian, Equifax and TransUnion — per year at annualcreditreport.com.

You might be surprised to find that your student loans or on-time bill payments have armed you with a fairly robust credit history. Or you might discover that you have no credit history — not even a credit report — at all.

If you’ve got a robust credit history, then congratulations. You’ll potentially be able to qualify for a traditional credit card that carries pretty good terms and low interest rates.

If you’ve got no credit history, then you’ll have to work harder to score that first credit card. Take heart, experts say. “The first thing you should try to do is to get a ‘regular credit card,'” says Bill Hardekopf, CEO of the credit card-comparison website LowCards.com. “But there are certainly categories of cards or classes of cards that are marketed specifically for people with limited or no credit history.”

[See: 12 Simple Ways to Raise Your Credit Score.]

Where to start. You might begin your hunt for a traditional credit card online, comparing rates and features on a card-comparison website … or several. “Credit card-comparison sites are very good for getting information and comparing,” says Beverly Harzog, credit card expert and author of “The Debt Escape Plan: How to Free Yourself from Credit Card Balances, Boost Your Credit Score, and Live Debt-Free.” “Pick about three or four [sites], and you’re going to get different options because they don’t all carry the same card, and keep in mind they have affiliate relationships with these issuers.”

Beyond scouring the web, you may also want to head to your family bank. “You might have a slightly better chance of getting a credit card from the bank that you’ve dealt with, or your mom and dad have done business with for years,” Hardekopf says. “But that’s not to say it’s the best credit card you can find.”

From there, you may be able to qualify for your first credit card. If you’re still not able to qualify, then you may want to check out secured cards or retail cards. These credit tools tend to be easier to qualify for than a “regular credit card.” But they come with their own set of risks and downsides.

A secured card is a powerful tool … when used correctly. A secured credit card works this way: You deposit your own cash with the card issuer, reducing the lender’s risk. If the issuer reports your activity to the credit bureaus — and you should choose a lender who does — then you’ll be able to build your credit score from scratch. You’ll find that secured cards, however, may charge high fees (including annual fees, maintenance fees and monthly fees) and higher-than-typical interest rates. So, you’ll shell out serious cash if you can’t pay your balance in full — or miss payments — each month.

Store credit cards, such as Target’s REDCard, can also be another way to build credit history. For a retail card, select a store you frequent and research its card ahead of time, Harzog says. Then, choose one that offers low fees and reasonable flexibility. You may find it easier to qualify for a store card than a regular credit card, but it could come with high interest charges, fees and may only be usable in one store.

[See: Dear Younger Me: 12 Financial Truths We Wish We Knew Earlier.]

Why it’s important. How you handle your first credit card will dictate your credit health for years to come, experts say. If you handle it responsibly — making on-time payments and keeping your credit utilization rate low — you’ll be able to graduate to a “real credit card” or more competitive credit card in the future.

But if you miss payments, max out your limit and rack up fees, then you’ll find yourself cycling further down into low-credit-score purgatory. “The bad things that you do [don’t] get wiped off the slate immediately,” Hardekopf says. So, treat this first card as a barometer for the rest of your financial life. It’s just that important.

More from U.S. News

10 Completely Careless Credit Card Mistakes You’re Making

What to Do If You’ve Fallen (Way) Behind on Your Credit Card Payments

Basic Money Lessons You (Probably) Missed in High School

How to Get Your First Credit Card originally appeared on usnews.com

Don’t Settle for Student Loans to Pay for Online Education

By WTOP Staff
Online college programs are becoming a more popular choice for prospective students, with one study finding that more than 6 million students enrolled in at least one online course in fall 2015. The popularity of these courses can be attributed in part to their flexibility with working adults' schedules, students' ability to progress more quickly through online programs and, oftentimes, cheaper tuition. [See 10 low-cost online bachelor's programs for out-of-state students.]Online degrees can be beneficial to many college students, but some studies have shown online learners complete their programs at lower rates than students at traditional brick-and-mortar campuses. Individuals with student loans but no degree comprise two-thirds of defaulted borrowers. Though these numbers are not encouraging, just like for traditional programs, there are ways to reduce how much you'll need to borrow for an online program to ensure you won't become one of these statistics. Don't just settle on borrowing student loans to cover the whole cost of your program and living expenses. Instead, start thinking about how to cut costs and cover your balance in different ways, such as the following. -- Grants and scholarships: Even though you are taking an online course, you can still apply and receive grants and scholarships. But your first step should be to complete the Free Application for Federal Student Aid, commonly referred to as the FAFSA, which will allow you to receive a Pell Grant if your expected family contribution is low enough. The EFC criteria and award amounts are adjusted annually, but the 2017-2018 academic year awards range from $606 to $5,920, which could significantly lower the amount you borrow annually. Your next step is to apply for scholarships. You can start by checking online scholarship search engines, such as the Salt Scholarship Search, College Board's BigFuture and Peterson's. But don't forget to take advantage of local organizations and your school's financial aid office. Both may offer scholarships that you can't find with a national scholarship search. [Review these 10 sites to kick off your scholarship search.]For instance, organizations like the Elks Club, Knights of Columbus or the Rotary Club typically offer scholarships annually to local students. Just because you're going to school online doesn't mean you're ineligible. Visit your local library for scholarship listings, and ask around town. You might be surprised how many local organizations offer scholarships. While these scholarships typically aren't large, every little bit counts. Each dollar you receive in a scholarship is a dollar you don't have to borrow and pay interest on. -- Work-study: Another option for online students may be work-study awards. Not all students enrolled in online programs are eligible, but students at some schools -- including, for example, SUNY Empire State College and Liberty University -- are. Work-study awards are not given upfront like scholarships and grants. In most cases, they are an offer to earn up to the awarded amount if you secure an eligible work-study job. While there is a misconception that all work-study jobs must be on campus, students can work for off-campus, nonprofit or public employers as long as the work is in the public's interest. You may be able to work for a for-profit employer if the job is relevant to your course of study. No matter who the outside employer is, it will need to have an established agreement with your college for you to receive work-study funds. Remember, to be eligible for federal financial aid, you must be enrolled and pursuing a degree or certificate. If you're not working toward a credential, Pell Grants and work-study won't be option, but you may still be able to take advantage of private scholarships -- just be sure to read the eligibility criteria carefully. [Explore what to know about financial aid in online programs.]-- Pay as you go: One of the great benefits to enrolling online is the flexible schedule, which can allow you to complete your college coursework around your responsibilities. But prospective students often overlook using their part- or full-time job earnings as an option for paying for college. Almost 80 percent of college students in 2015 worked at least part time while attending classes, according to the National Center for Education Statistics. By budgeting and thinking strategically about your college costs, you can likely reduce your dependence on student loans by paying a portion out of pocket. Many -- but not all -- online programs are less expensive than traditional programs and often have shorter payment periods. Six, eight or 10 weeks are common course durations. Because of the frequency of payments in an online setting, you may be well-placed to pay as you go and possibly avoid borrowing altogether. Attending college online and avoiding student loans may be challenging, but if you are willing to put in the effort, you can limit the amount you need to borrow. More from U.S. News Q&A: Understanding Student Loan Discharge Eligibility Student Loan Refinancing Isn't Right for All Borrowers
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