First Credit-Card Challenge

It's a lot tougher to get a credit card these days, especially if you're going for your first one. Consumer Reports has advice on how young people can get a card without paying hefty fees.

College student Daniel Lehrman was rejected for the first two credit cards he applied for.

Lehrman says, "They said I didn't have enough credit history at all, and they couldn't back me for a card."

Consumer Reports' money experts say that even if you are able to get a credit card when you have little or no credit history, the cards are often a bad deal.

Mandy Walker of Consumer Reports says, "These can have huge start-up costs, big maintenance fees, and giant interest rates."

Take the Matrix Card by Discover from Continental Finance. It has a 75-dollar annual fee, plus a 12-dollar monthly fee that kicks in after the first year.

And the First Premier Bank Card has a super-high APR-a whopping 36 percent!

Walker says, "One of the best options for a first-time cardholder is to get a secured card. It'll require a security deposit that's generally equal to your credit limit."

The Capital One Secured MasterCard is better than many. It has an annual fee of 29 dollars and its APR is currently 22.9 percent. And it has a low late fee of no more than 19 dollars.

Walker says, "If you get a card and establish a good payment history for a year to a year and a half, you can then ask for another one with better terms."

Daniel was finally accepted for a credit card and knows he has to use it carefully.

Consumer Reports says developing good habits with your first credit card can spare you a lifetime of financial grief.

Make a point of paying off the balance every month. That way you won't get buried in debt and end up paying oodles of money in interest charges.

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