The best first credit card for young adults

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In a Nutshell

Looking to build and establish your credit? Find out the best first credit card for young adults with no credit, bad credit and good credit.

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It can be difficult to pinpoint the best first credit card for young adults, as many aren’t even sure which credit card they might be approved for.

A 2016 credit score survey conducted by the Consumer Federation of America and VantageScore Solutions, LLC, revealed that only 42 percent of millennials (18–34 years of age) feel confident in their knowledge of credit scores. Without that knowledge, the idea of building credit and applying for a credit card can seem downright scary.

Though you might be tempted to avoid credit altogether, there are advantages to building credit at a young age. After all, your credit score may determine whether you get approved for things such as an apartment rental or an auto loan. Also, the length of your credit history contributes to your credit score, so starting early can give you the benefit of time (assuming your credit history is not full of missed payments and derogatory marks).

Keep reading: 5 credit card mistakes students should avoid

One way you can start building credit is to get a credit card and use it responsibly, which generally means making payments on time and trying not to max out your card. If you’re just starting out and wondering which credit cards might be a good choice, we’ve pinpointed three options to consider depending on your credit history.

At a glance: Credit cards for young adults

Annual Fee We recommend it for
Journey® Student Rewards from Capital One® $0 Students with a limited credit history
Discover it® Secured Credit Card $0 Young adults with no credit history or looking to rebuild credit
Chase Freedom® $0 Recent graduates with good or excellent credit

 


1. Journey® Student Rewards from Capital One®

From our partner
See Details, Rates & Fees

Recommended for: Students with an average or limited credit history.

If you have limited credit history, you may find it difficult to get approved for a credit card — let alone a rewards credit card.

“Getting your first credit card can be difficult because you typically don’t have a credit history yet,” says Brandon Yahn, founder of the website StudentLoansGuy.com and former Credit Karma employee. “Having a high score isn’t as important for these cards, but you may have to meet other qualifications.”

If you’re looking to build your credit, Yahn recommends Journey® Student Rewards from Capital One®, a rewards credit card that offers up to 1 percent cash back on all purchases and an extra 0.25 percent (for a total of 1.25 percent) in each billing cycle you pay on time – all for no annual fee.

According to Capital One®, consumers looking to apply for this card generally need “average credit.” To Capital One®, this means you may be approved for the card even if you’ve defaulted on a loan in the past five years or have limited credit history (i.e., had your own credit for less than 3 years). Many young adults likely claim the latter, making Journey® Student Rewards from Capital One® a potentially great starter credit card.

Pros:

  • No annual fee.
  • 1 percent cash back on all purchases.
  • Rewards on-time payments by boosting cash back to 1.25 percent for that month.
  • Available to applicants with limited or average credit history.
  • No foreign transaction fees.

Cons:

  • High variable APR for purchases and balance transfers of 24.99 percent.
  • The rewards have a flat rate — meaning no bonus categories for food, travel, etc.
  • Based on your credit profile, you may start off with a credit limit as low as $300.

2. Discover it® Secured Credit Card

Recommended for: Young adults with no credit or looking to build credit.

It can be frustrating trying to build credit when you have no credit history. Luckily, the Discover it® Secured Credit Card is designed to help you build credit even when you have no credit or credit that needs work. That makes it one of the best credit cards for young adults just starting out on their credit journey.

A secured credit card differs from a traditional credit card in one key way. With a secured credit card, you must put down a cash security deposit in an amount that typically determines your credit line for the card.

If approved for the Discover it® Secured Credit Card, your credit line will equal the amount of the deposit, so a $200 deposit means a $200 credit line, a $500 deposit means a $500 credit line and so on. Your maximum credit limit (up to $2500) will be determined by your income and ability to pay. A secured card is not a prepaid card or debit card, and you must pay your credit card back on time in order to effectively build credit and avoid interest. If you don’t, your credit score may drop and you may not get your deposit back.

The Discover it® Secured Credit Card offers many benefits you’d be lucky to find in a regular rewards credit card. But people with no credit or credit that needs work are eligible, making this one a serious option for young adults to consider.

Pros:

  • No annual fee.
  • 2 percent cash back for gas and restaurant purchases (up to $1,000 total each quarter), 1 percent cash back on all other purchases.
  • Discover will match the cash back you’ve earned at the end of your first year.
  • Choose your security deposit amount (minimum $200).
  • Reports credit history to all three major credit bureaus.

Cons:

  • High variable purchase APR of 23.74 percent.
  • It can take at least seven months to “graduate” to an unsecured credit card without a security deposit.

3. Chase Freedom®

From our partner

Chase Freedom®

From cardholders in the last year

See Details, Rates & Fees

Recommended for: New graduates, someone with good or excellent credit.

Whether you’ve recently graduated college with student loans or have been in the workforce for a few years now, managing your day-to-day responsibilities is a juggling act, and you want a card that can offer something in return. If you have good or excellent credit (which might be the case if you’ve been paying your student loans on time), Chase Freedom® could be a good fit for you.

Chase Freedom® has no annual fee and a 0 percent intro APR for the first 15 months on purchases and balance transfers (then a variable APR of 15.99 to 24.74 percent), plus some potentially lucrative cash back rewards in certain bonus categories. You may need to have a good to excellent credit score — typically 700 or above— to get approved.

Pros:

  • No annual fee.
  • 5 percent cash back on up to $1,500 in combined purchases in rotating bonus categories each quarter you activate, 1 percent cash back on all other purchases.
  • 0 percent intro APR for the first 15 months on purchases and balance transfers.
  • $150 bonus after spending $500 on purchases in your first three months from account opening.

Cons:

  • After 0 percent intro period, variable APR will be 15.99 to 24.74 percent, which could be on the higher end for a rewards card.
  • 3 percent foreign transaction fee.
  • If you’re a big spender in only one area, the quarterly bonus categories may limit your rewards.
  • You must activate the bonus categories each quarter to get the 5 percent cash back.

Bottom line

As a young adult, you’re still at the beginning of your credit journey. Whether you’re just starting out with credit or trying to recover from some bad decisions, there’s a credit card that can help you get on track.

 


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