Money

Here's how to get your first credit card

Photo by Britt Erlanson via Getty Images

The right time to apply for your first card is whenever you can handle one without overspending wildly or missing payments.

That could be when you're still a student — in fact, while you're a student may be the optimal time, Jill Gonzalez, an analyst at WalletHub, tells CNBC Make It (though if you're under 18 years of age, you legally need a co-signer). Or the right moment might be shortly after you graduate but while you're still in your early 20s.

Regardless, it's good to get started pretty early laying the groundwork for the rest of your financial life. "If you're using cards responsibly, it can be possible to build up great credit in two to four years," John Ganotis, founder of CreditCardInsider.com, tells CNBC Make It. "The only way to really maximize scores is time."

If you wait too long to get your first card, you can run into trouble, since establishing credit early on ensures that, in the future when you borrow money for a mortgage or auto loan, you can qualify for a good rate and save thousands on interest payments. And getting that first card later on can be a little tricky since, with limited credit history, credit card companies have little reason to trust you.

Whatever your age, when you're applying for your first card, you won't qualify for the options that offer the best rewards and highest returns. Those typically require applicants to already have good to excellent credit scores (ones that exceed 700). There are options out there, though — even some that will not only help you build credit but earn you rewards, too.

Here are three ways to get your first card.

1. Become an authorized user on a parent's card

"Consider becoming an authorized user on a responsible parent's credit card as an easy way to get a first card," says Ganotis. This option is especially common among teens, but you can do it after you've left the nest.

Your actions still matter, of course. "If the primary cardholder fails to pay on time or is otherwise irresponsible with the card, though, that negative item can also show up on the authorized user's credit reports," Ganotis adds. "Conversely, the primary cardholder is responsible for any debt incurred by authorized users, so this only makes sense when there is mutual trust between the primary cardholder and authorized user."

This is a great way to go, Ganotis notes, because it can help you build up your credit history without a hard credit inquiry. Too many hard inquiries can negatively impact your credit score, which is also why it's important to avoid applying for a lot of cards and/or ones you don't qualify for.

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2. Get a student card

If you want your own card, there are plenty specifically designed for people with limited or no credit history. Many call themselves student cards but usually you don't need to be a student to qualify. That's the case with the Capital One Journey, recommended by Ganotis on account of its lack of annual fee and decent rewards. It offers 1 percent cash back on all your purchases, or 1.25 percent if you pay off your balance in full each month.

It does come with a 24.74 percent variable APR, however, so be sure to pay off your balance in full to avoid that high interest rate. Or, if you expect to carry a balance, look for a similar card with a lower interest rate.

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3. Get a secured card

Secured cards can be a good option for newcomers, or those with low credit scores, because they require a deposit that typically matches the line of credit. According to Greg McBride, chief financial analyst at Bankrate.com, that limits the risk for the issuer while helping users learn how to handle credit, since you still have to make monthly payments.

Secured cards are not ideal, though, because they require those security deposits and limit your spending. If you make a deposit of $1,000, for instance, you may not be able to spend more than that per month. (Experts also recommend you cap your spending at a third of your total limit, since a low utilization ratio can improve your credit score.)

As an option, secured cards are "probably not necessary unless you've already done damage to your credit history in the past or can't get approved for any unsecured cards designed for people who don't have much credit established," Ganotis says.

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Photo by Britt Erlanson via Getty Images
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