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Why Your First Credit Card Shouldn't Have An Annual Fee

Next to payment history and your credit utilization ratio, "length of credit history" is the most important factor in determining your FICO credit scores.  In fact, it accounts for approximately 15% of your overall credit score, so it's definitely something you can't ignore. So what does this have to do with choosing your first credit card?  A lot!   You see, your length of credit history is primarily determined by the amount of time that's passed since your first credit card was opened, which means you want to keep your very first credit card open for as long as possible.

That may sound easy in theory, but it's actually quite difficult for many credit card users.

As you might imagine, after you've upgraded and moved onto a bigger and better rewards credit card, it can be really annoying to continue getting slapped with a fat annual fee each year for your old card that never sees the light of day.  

That's why it's very important to only compare credit cards with no annual fee when you're beginning the search for your first credit card. Whatever card you do choose, you want it to be one you can hold on to forever. Once you've upgraded to a better credit card, which will surely happen at some point, you simply don't want to ever worry about paying an annual fee just to keep your first card open and active.

Unfortunately, when faced with this frustrating situation, the first thing many consumers will do is close their oldest credit card account because they don't plan on using it anymore and they simply can't justify paying another annual fee. Then, the next time they check their credit scores they realize that they've unintentionally hurt their scores by reducing the overall length of their credit history. Total bummer! And there's no going back.

On the other hand, if the first card you place in your wallet is a no annual fee credit card, you'll be free to keep it open as long as possible without having to worry about paying unnecessary annual fees. And in addition to maintaining your length of credit history, you'll also be able to maintain your credit utilization ratio by holding on to all of your available credit. For students looking to land their first no annual fee credit card, I highly recommend checking out the Capital One Journey Card as an option.

Not only does it have no annual fee, but you can also earn 1.25% cash back on all your purchases by paying your monthly bills on time. Kudos to Capital One for rewarding responsible credit card behavior! And 1.25% cash back really is a stellar offer for a student credit card with no annual fee, so check out our complete review for all the details and consider applying for your own Capital One Journey Card today.

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Joshua Heckathorn's picture

Joshua Heckathorn was the President and owner of Creditnet.com. He shared his unique insights about credit cards, credit scores, investments, and all aspects of personal finance on Creditnet's blog, Credit¢ents. Joshua received a Bachelor of Science in Management (Finance) from Brigham Young University's Marriott School of Business and earned his Master of Business Administration from Seattle University in 2009.

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