Best Credit Cards for Young Adults
Young people often struggle to access credit when they don’t have established credit histories and do have substantial student debt. Fortunately, there are cards that specifically cater to young adults. Here’s what to look for in a card and how to use credit responsibly.
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Accessing credit can sometimes feel like a catch-22. You need a strong credit history to access a line of credit, but you can’t build a credit history without accessing credit in the first place.
Young people, especially, are at a disadvantage. Unless a parent or loved one adds you as an authorized user, you can’t get your own card until you’re 18. And even after that, thin credit reports and student loan debt may still stand in the way.
The good news is, just because you’re young doesn’t mean you can’t get a credit card. In fact, there are cards built specifically with young adults and students in mind, and finding the right one is important for beginning the journey toward good credit. Here are a few credit cards for young adults we think are worth checking out.
On this page:
- The 5 Best Credit Cards for Young Adults
- Things Young Adults Should Look for in a Credit Card
- Benefits of a Credit Card for Young Adults
- Risks of a Credit Card for Young Adults
The 5 Best Credit Cards for Young Adults
The best credit cards for young adults are cards that are easy to qualify for without a long credit history — and that charge minimal or no fees in the process. Some cards offer rewards, sign-up bonuses, and other perks, but keeping costs down and making full payments are more important for most young people.
The types of cards you’ll be eligible for will vary depending upon your situation. Some cards cater specifically to students, while others are available to anybody new to credit — especially if they’re willing to put down a deposit to secure their line of credit.
LendEDU’s Best Credit Cards for Young Adults:
- Capital One Platinum Card
- Capital One Journey Student Rewards Card
- Discover it Secured Card
- Discover it Chrome for Students
- Petal Visa Credit Card
Capital One® Platinum Credit Card
The Capital One Platinum Card is an ideal card for young adults because:
- Qualifying is easy. The card is available even to borrowers with average credit.
- There’s no annual fee.
- CreditWise from Capital One provides unlimited access to your credit score and tools that help you monitor your efforts to build credit.
- You’ll receive a credit line increase after making your first five monthly payments on time.
The only downsides of this card are that it’s got a 26.99% APR on purchases and balance transfers, with no promotional rate, and the card doesn’t offer any rewards. But the help you get in building credit (including the automatic credit line increase) is very valuable for young borrowers.
Journey® Student Rewards from Capital One®
- Annual Fee: $0
- APR: 26.99%
- Benefits: 1% cash back on all purchases, and paying on time boosts cash back to 1.25% for that month
- Category: Student Credit Card
The Capital One Journey Student Rewards Card is an ideal choice for students because:
- You can qualify with limited credit since the card is intended to help students build credit for the first time.
- There’s no annual fee and no foreign transaction fees.
- You’ll be eligible for a credit line increase after you’ve made your first five monthly payments.
- Access to CreditWise is free and allows you to track your credit building efforts.
- You’ll earn 1% cash back on purchases, or 1.25% cash back each month in which you pay your bill on time.
Like the Capital One Platinum Card, the Journey’s big downside is its 26.99% APR, but this is only a problem if you don’t pay your bill in full each month. If you can qualify for this card, it may be a better choice than the Platinum Card since you’ll be able to earn rewards for your spending.
Discover it Secured Card
- Annual Fee: $0
- APR: 25.24%
- Benefits: 2% cash back at gas stations and restaurants up to $1,000 in combined purchases each quarter, 1% cash back unlimited on all other purchases
- Category: Secured Credit Card
- Qualifying is very easy because the card is secured. This means you make a refundable security deposit, which will also act as your credit limit. Almost anyone can get approved because the security deposit eliminates any risk the lender might face.
- There’s no annual fee for the card.
- By using the card responsibly over time, you can become eligible to get your security deposit back and be upgraded to an unsecured credit card.
- You’ll have free access to your FICO score and Discover will report your payment history to the major credit bureaus, helping too boost your score.
- You can earn 2% cash back at restaurants and gas stations on up to $1,000 in combined purchases per quarter and 1% cash back on all everything else with no limit. Also, Discover automatically matches all cash back earned at the end of the first year.
Discover it has a slightly lower standard APR than the Capital One cards, at 25.24%. The big downside of this card is that you have to make a security deposit equal to your credit limit.
Discover it Chrome for Students
- Annual Fee: $0
- APR: 0% for first 6 months; 13.99% – 22.99% variable APR after that
- Benefits: 5% cash back on dining and gas
- Category: Student Credit Card
This student credit card is a better option than the Discover it Secured card if you can qualify. Some of the reasons the Discover it Chrome for Students is a great card for young adults include the following:
- Qualifying without a strong credit history is easy because the card is meant for students.
- You’ll earn a $20 statement credit for each school year your GPA is at least 3.0. This credit can be earned for up to five years.
- There’s no annual fee and no foreign transaction fees charged.
- You can earn 2% cash back at gas stations and restaurants on your first $1,000 in combined purchases each quarter and unlimited cash back on all other purchases automatically.
- Discover matches your cash back at the end of the first year.
- You get free access to your FICO score.
- There’s a 0% APR on purchases for your first six months after account opening.
The generous rewards, 0% introductory APR, potentially low standard APR, and statement credit for students with good grades make this card an ideal choice for those who can qualify. Just make sure you don’t get caught with a balance after the card’s intro APR expires.
The Petal Visa Credit Card
- Annual Fee: $0
- APR: Not provided
- Benefits: 1% cash back depending on the number of on-time payments made
- Category: Rewards Credit Card
The Petal Visa is a great card for young adults because:
- Approval isn’t just based on your credit score. The company uses an algorithm that analyzes linked bank accounts and other financial factors to make credit more accessible to people with no credit.
- You can get pre-approved in seconds without impacting your credit score.
- You’ll be eligible for a credit limit between $500 and $10,000.
- You can earn 1.5% cash back on all purchases
- Visa reports to the major credit reporting agencies, so you can build your credit with responsible payments.
- The card charges absolutely no fees — no late fees, overdraft fees, annual fees, or foreign transaction fees.
The complete lack of any fees makes it a good choice for money-conscious young people who don’t want to pay if they’re accidentally late or if they travel aboard. And to incentivize cardholders who are trying to improve their credit, Petal offers a tiered rewards program based on your payments.
Things Young Adults Should Look for in a Credit Card
Whether you’re comparing these options or exploring other credit card offers to see which card is right for you, there are a few key things that you should look for when you’re shopping for your first credit card.
Easy Qualifying Process
Many credit card companies require you to have a good credit score before you’re able to qualify for a credit card. Unfortunately, you must have a history of on time payments to establish a good credit score — and many young people haven’t yet had time to establish a strong credit history. So, you’ll need to find a credit card company that is willing to take a chance on a younger, more unknown credit risk. Many card companies specifically cater to young people, while others allow anyone to get a card even without perfect credit if they’re willing to put down collateral. Look for a card that makes it easy for you to qualify so you don’t get denied when you apply.
No Annual Fee
Some credit cards come with hefty annual fees. While these big annual fees can mean more rewards or better perks, young adults rarely spend enough money for those added rewards to offset the cost of the fee. So, if you’re trying to spend responsibly and build your credit, look for a no annual fee credit card.
No Foreign Transaction Fees
Chances are good you’ll want to do some traveling when you’re young. And if you do, you don’t want to waste money on fees when you use your card abroad. If you plan to visit any foreign countries and you plan to use your credit card while you’re there, ensure your card doesn’t have any foreign transaction fees.
A Low APR
Carrying a balance on a credit card is a bad idea. But there may be times when you can’t pay off your bill in full, especially if you’re focused on paying down existing debt.
If you ever expect to carry a balance, a low APR is one of the single most important features to look for in a credit card. Credit card interest rates are usually very high, and the interest you’d be charged if you carried a balance would dwarf any rewards points you might earn — even on the most generous rewards card. So, looking for the lowest possible interest rate should always be your top priority.
If you know you’ll be making big purchases and carrying a balance shortly after you get your card, you may also want to look for a card with a 0% intro APR offer for the first few months. This can give you time to repay the expense without added interest.
No Balance Transfer Fees and a Low Balance Transfer APR
Some people have existing debts with high interest rates, and they want to transfer that debt to a new card with lower rates. If you expect to transfer a balance, look for a card that has a 0% promotional APR for several months on balance transfers.
The best balance transfer credit cards don’t even charge a fee to transfer a balance, but most charge a 3% to 5% balance transfer fee, so keep that added cost in mind before you initiate the transfer.
Reporting to the Major Credit Reporting Agencies
You want to use your responsible behavior with your credit card to build or improve bad credit, so make sure that the credit card company you’re working with reports your payments and credit history to the three major credit bureaus (Equifax, Experian, and TransUnion). Most major credit cards will do this for sure — but if you’re getting a secured card, just confirm that they do report your credit history.
Rewards and Bonus Perks
While other factors such as low fees can be more important for a first card, there’s no reason not to look for a rewards credit card that also offers at least some cash back or travel rewards for spending.
Try to find a card that offers extra rewards for the spending you do most often, such as dining out, gas, or groceries. Some cards also offer sign-up bonuses, such as $150 if you spend $1,000 in the first six months. If you’re looking for a generous sign-up bonus, make sure you can meet the qualifying requirements without going into debt. You’d be better off with a lower bonus amount you have to spend less to get if you don’t think you’ll be charging a lot on your card, or if you won’t be able to pay off the balance when it comes due.
Benefits of a Credit Card for Young Adults
Some young adults are intimidated by credit cards, but they come with a lot of benefits. These include:
Building Your Credit Score
You need good credit not just to be approved for loans, but also so landlords will be willing to rent to you and other companies — like cell phone and utility companies — will be willing to do business with you without huge deposits.
Getting a credit card is an important way to build credit because your payment history and credit utilization ratio (the amount of available credit you use) are two of the most important factors in determining your credit score. If you get a credit card ASAP and start working to build credit when you’re young, you should have a good score and be able to qualify for competitive rates on a mortgage or auto loan when you’re ready to buy your own house or vehicle. The length of your credit history is also a factor in determining your score, so don’t wait to get credit.
Better Cashflow Management
If you look at your credit card as a charge card that has to be paid in full each month, using your card can be an effective way to manage cashflow. Your credit card statement will be a record of your purchases from the past month, which you can use when budgeting and looking for ways to cut spending. Just make sure you don’t let the plastic lure you into spending money you don’t have.
Protection From Loss
Credit cards provide protection against fraud. If someone steals your wallet and uses your card without your authorization, you can report the theft to your credit card company and you shouldn’t be responsible for any losses.
If someone steals your cash, on the other hand, then you don’t have any recourse or any way to recover it. Many credit cards also provide purchase protections, extended warranties, and return guarantees. And, if a merchant charges you but doesn’t provide the service, you can dispute the charges and your creditor will help you try to recover the lost funds.
Many credit cards provide trip interruption insurance, protection for lost or damaged luggage, medical coverage while abroad, roadside assistance, car rental insurance, and other important forms of travel insurance. Check the terms of your card to see if these protections are available to you.
You should ideally have an emergency fund to cover unexpected expenses. But if you don’t and you need cash right away, using your credit card can be much less costly than alternatives such as payday loans.
Rewards and cash back
You can earn rewards and cash back for everyday spending and purchases you would have made anyway. These rewards can reduce the cost of purchases or provide valuable perks.
Risks of a Credit Card for Young Adults
Of course, there are also some big potential downsides to getting a credit card, which have to be considered.
It Can Be Hard to Qualify for a Good Card
The Credit Card Accountability Responsibility and Disclosure Act of 2009 made it harder for anyone under the age of 21 to obtain a credit card. When you don’t have many options for cards as a young adult, you may not be able to find a card with favorable terms — and you don’t want to be forced into signing up for a card with high fees. Fortunately, the cards on this page are all good options.
Credit Cards Put You at Risk of Getting Into Debt
If you can’t manage your spending responsibly and you charge more than you can afford to pay back at the end of the month, you’ll have to pay interest on your purchases. This makes it harder to pay off the total amount you owe and makes all your purchases more expensive due to the added interest expense. And if you keep running up a balance month after month, eventually you may end up with thousands of dollars in credit card debt that will take you years to pay off. If you already have student loan debt, it can be especially scary to risk getting even deeper into debt.
You Could Damage Your Credit
Applying for too many credit cards all at one time can hurt your credit score. Each time you apply for credit, an inquiry is put on your credit report — and too many inquiries raise red flags to lenders. Plus, if you end up missing payments on your card or charging too much on your card, you could hurt your credit utilization ratio or your payment history.
Credit utilization ratio, or the amount of available credit you’ve used, accounts for 30% of your credit history — and your score will be lowered if your utilization ratio rises above 30%. Meanwhile, your payment history accounts for 35% of your credit score and a single late payment could drop a good score by more than 100 points. If you’re not 100% confident you can be responsible with the way you use your credit card, you should not apply for a card.
You Could End Up Spending More
Studies have shown that credit card users often end up spending more than people who use cash. Swiping your card is easier and less painful than actually seeing cash go out of your wallet, especially as there is a gap between the time when you use your card and when you actually have to spend the money.
Of course, you can avoid many of these downsides by making sure you are always responsible with how you use your cards. The downsides shouldn’t prevent you from getting your first card, as long as you can qualify and you have the willpower to ensure you don’t get into credit trouble.
Bottom Line: It’s Important to Find the Right Credit Cards for Young Adults
As a young adult, you should have a credit card. You need one to help you build your credit and to take advantage of all of the other perks that come with being a cardholder — such as rewards points or cash back for spending. But it’s important to find the right card, which means knowing what to look for when choosing a card issuer. If you follow the tips in this article to find the right credit card, and if you make sure you use the card responsibly and pay it off in full each month, you can set yourself up for a stronger financial future.
Author: Christy Rakoczy
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