As a young adult or first-time credit card user, you have a lot of different cards to choose from. And as such, it can be difficult to determine which one is right for you. So, which credit card rate is the highest for your needs?
Both Discover and Capital One have excellent offerings for young adults and first-time users, including the Discover it Student Cash Back card and the Capital One VentureOne Rewards Credit Card.
These aren't the only credit cards for your consideration. Read on to learn about additional cards we found and what kind of benefits they offer.
Best Credit Cards for Young Adults
You may be wondering what credit cards you should get when you're young and new to the game. It can seem like a daunting task with all of the different, confusing offers out there. But don't worry. We're going to make your search a lot easier. In this guide, you will find our top picks for young adults and first-time credit users.
First, let's start with the best credit cards for young adults. Whether you're a student or a hardworking member of the workforce, these picks are sure to serve you well as you start your foray into the world of credit.
1. Discover it Student Cash Back
The primary appeal of this card is its matching feature. By the end of your first year of having the card, any money you earn from it is matched by Discover. You won't find a lot of rewards options with the Student Cash Back card, but the cashback match is certainly appealing to young adults.
What's more, you can see your credit score free of charge every month via this card. There are also some nice security features included, such as zero fraud liability, Social Security Number (SSN) monitoring, and you won't be charged a late fee the first time you have a late payment.
Additional reading: What To Know About The Bed Bath & Beyond Credit Card
2. Discover it Student Chrome
As a first-time cardmember, you will enjoy low-interest benefits. Although it's only for a limited time, you're treated to no interest on your purchases during the first six months of use. There are also decent rewards offered through the Student Chrome card, such as 2% cashback on purchases made at restaurants and gas stations (up to $1,000 per quarter).
3. Capital One Platinum Credit Card
With good standing after six months, you can get approved for a higher line of credit with the Capital One Platinum Credit Card. Aside from that, this card is very basic, as there are no rewards or bonuses. But it's a solid choice for young adults with average credit who want to improve their rating.
4. Petal 2 "Cash Back, No Fees" Visa Credit Card
What are supposed to do when you don't have any credit? The Petal 2 Visa card has the answer. You get a minimum credit line of $500, so there's not a whole lot of money you need to manage. And during your first year using the card, you get a flat rate of 1% on all of your purchases.
If you continue to make timely payments over a 12-month period, you get bumped up to 1.5% cashback. What's more, there are no late fees if you fall behind on your payments, nor are there any annual fees.
What Young Adults Should Look For in a Credit Card
When applying for a credit card, it's important to know what to look for. What are the benefits of the card? What are the fees? How is it different from other cards? All these questions need answering before you sign up. To assist you, we've compiled a list of things you should be looking for when applying for a credit card.
- Check the APR rates and find out if there is an annual fee.
- Find out how long it will take until your rewards points or cashback are available.
- Know if there is an over-limit fee and how much it will cost.
- Find out if there is any balance transfer fee or purchase interest rate increase.
- Learn more about their financial literacy program and see if they offer any educational tools online.
As a first-time credit card user, that last point can come in really handy. While not directly beneficial to the card, you can learn essential tips and information about using credit cards to ensure that you spend wisely and pay off debt on time.
One of the most common mistakes that young people make when they're new to credit is going for a card with a high-interest rate. That's because their reasoning is that they want a card that will help them build their credit and not worry about interest rates.
However, the truth of the matter is that a card with a high APR can be more expensive in the long run. Paying off your debt might seem manageable at first, but it will add to your monthly bill every month until you've paid it off. Let's take a moment to look further into the points above to give you a better understanding of their importance.
Related post: The Four C's of Credit [ANSWERED]
APR Rates and Annual Fees
The APR rates are the annual percentage rate that you are being charged for your credit card. When applying for a credit card, find out if there is an annual fee associated with it. You should also find out if there are any other fees associated with the card that will need to be paid each year.
Rewards Points and Cash Back Availability
You don't want to sign up for a card that doesn't offer cash back or rewards points and then realize that not only were there hidden fees, but the points you earned will be on their way to you in six months.
Many cards offer an introductory period where you're eligible for certain benefits like 0% APR on balance transfers and new purchases. But with most cards, the introductory period only lasts one year.
Over-Limit Fee and Cost
One thing you'll want to consider is the over-limit fee and how much it will cost. Some cards charge a fee for going over your credit limit. These fees vary in price, so make sure you know what to expect when applying for a card in case this happens in the future.
If this is something that would be an issue for you, find out the prices before applying for a credit card. It can save money and time later on if you apply for a card with no over-limit fees or interest rate increases.
Balance Transfer Fee or Purchase Interest Rate Increase
Always pay close attention when selecting a credit card, and be sure to read all the fine print before applying. It's important to know what you are getting into before you apply for a credit card. Read reviews about cards before choosing one, so you know which features are best suited for your lifestyle.
Keep reading: Airbnb Credit Cards: Which Cards Are Best For Airbnb?
Financial Literacy Program and Educational Tools
This may come as a surprise, but one of the most important things to look for when applying for a credit card is their financial literacy program. These programs typically offer interactive tools, helpful tips, and educational materials to help you manage your finances.
As such, they can teach you how to avoid debt, create a budget, set up an emergency fund, and other valuable skills. Many of these programs are also free.
Best Credit Cards for Young Adults No Annual Fee
No annual fee means you don't have to pay anything at the end of the year. There are many credit cards that offer this perk, but here are some of our favorites:
1. Capital One VentureOne Rewards Credit Card
If you travel often, the Capital One VentureOne Rewards Credit Card may be the best card for your needs. You get 1.25x miles with every purchase, allowing you to compound these rewards in your travels. This card is reserved for those with good credit.
2. Citi Double Cash Card
With 2% cashback on your purchases, the Citi Double Cash Card offers some of the best cashback rewards for first-time credit card users. And with no annual fees and an easy-to-understand bonus structure, this card is ideal for those just getting started in credit. You'll need good to excellent credit to get approved.
3. Discover it Cash Back
When you spend up to $1,500 each quarter, you get an impressive 5% cashback. Not only that, but Discover will match your earnings at the end of your first year of using the card. Cashback rewards are limited to the grocery store and fitness/gym expenses, and you'll need good to excellent credit.
It's helpful to consider your lifestyle and spending habits before settling on your first credit card. If you don't have much credit or average credit, get a card that helps you build credit quickly. Above all else, always pay your balance off when you can, and strive not to miss any payments. This will help you work toward a higher credit rating.
Shawn Manaher is a former financial advisor, has founded 5 online businesses, and is a coach, speaker, podcast host, and author. He's been featured on Forbes, The Consults Corner on TAE Radio, The Writing Biz, What's Your Story, and more.