Discover it® Cash Back
Why this is one of the best credit cards for young adults: The Discover it Cash Back offers 5% cash back each quarter in rotating categories, such as Amazon.com, grocery stores, restaurants, and gas stations, up to the quarterly maximum when you activate. All other purchases earn unlimited 1% cash back. There is no annual fee. Discover will match all the cash back you’ve earned at the end of your first year. See our full review.
Chase Freedom Unlimited®
Why this is one of the best credit cards for young adults: Chase Freedom Unlimited® charges a $0 annual fee. The card earns 5% cash back on travel purchased through Chase Ultimate Rewards, 3% cash back on dining (including takeout and delivery services) and drugstore purchases and 1.5% cash back on all purchases. Earn an extra 1.5% on everything you buy (on up to $20,000 spent in the first year) – worth up to $300 cash back. That’s 6.5% on travel purchased through Chase Ultimate Rewards®, 4.5% on dining and drugstores, and 3% on all other purchases. See our full review.
Discover it® Student Cash Back
Why this is one of the best credit cards for young adults: With the Discover it Student Cash Back Card, students have a chance to earn 5% cash back on everyday purchases at different places each quarter, like Amazon.com, grocery stores, restaurants, and gas stations, up to the quarterly maximum when you activate. The card offers unlimited 1% cash back on all other purchases. Discover will match all the cash back you’ve earned after your first year. There’s no annual fee and no late fee the first time you pay late. See our full review.
Discover it® chrome
Why this is one of the best credit cards for young adults: This card caters to consumers who want to earn cash back on gas and dining purchases. You’ll earn 2% cash back at gas stations and restaurants on up to the first $1,000 in combined purchases quarterly. After that, you’ll earn 1% back, along with unlimited 1% cash back on all other purchases. There’s no annual fee and rewards never expire. See our full review.
Blue Cash Everyday® Card from American Express
Why this is one of the best credit cards for young adults: The Blue Cash Everyday Card from American Express earns 3% cash back on up to $6,000 annually at U.S. supermarkets and then 1% back, 3% Cash Back at U.S. gas stations, on up to $6,000 per year, then 1%, and 3% Cash Back on U.S. online retail purchases, on up to $6,000 per year, then 1%. Cardholders also earn up to $250 – Here’s How: Earn up to $150 back when you shop with PayPal. Earn 20% back as a statement credit on purchases when you use your new Card to check out with PayPal at merchants in the first 6 months of Card Membership, up to $150 back. Plus, earn $100 back as a statement credit after you spend $2,000 in purchases on your new Card in the first 6 months of Card Membership. See our full review.
Chase Freedom Flex℠
Why this is one of the best credit cards for young adults: Chase Freedom Flex℠ has a $0 annual fee. The card earns 5% cash back on travel purchased through Chase Ultimate Rewards, 3% cash back on drugstore purchases and dining at restaurants, including takeout and eligible delivery service, and unlimited 1% cash back on all other purchases. If you get this card, you can earn a earn a $200 Bonus after you spend $500 on purchases in your first 3 months from account opening. See our full review.
Discover it® Student chrome
Why this is one of the best credit cards for young adults: This card caters to consumers who want to earn cash back on gas and dining purchases. You’ll earn 2% cash back at gas stations and restaurants on up to the first $1,000 in combined purchases quarterly. After that, you’ll earn 1% back, along with unlimited 1% cash back on all other purchases. There’s no annual fee, no late fee on first late payment, and no APR change for paying late. See our full review.
Capital One Quicksilver Student Cash Rewards Credit Card
Why this is one of the best credit cards for young adults: The Capital One Quicksilver Student Cash Rewards Credit Card earns 1.5% cash back on all purchases with no limit. Cardholders pay a $0 annual fee, and rewards won’t expire as long as the account is open. See our full review.
U.S. News Survey
U.S. News Survey: Americans Are Eager for Personal Finance Education – and They Need It
Americans are still struggling to practice good credit habits, even as they grasp the basics of credit and recognize the importance of educating teens about financial literacy, a new U.S. News survey finds. The key discrepancy: While 52% of respondents say they knew how credit cards worked when they opened their first cards, 58% are also under the impression that carrying a balance on their credit cards boosts their credit scores. This is incorrect; carrying a balance will likely lower your score.
An overwhelming majority of respondents say financial literacy is a key missing piece of high school education; two-thirds say it should be mandatory for all high school students to learn about personal finance, while another quarter say it should be an elective class.
Additional Survey Insights
More than half of respondents got their first credit card in college or right after high school.
A secured credit card is a common starter credit card and way to build credit, and more than half of respondents say they either have a secured card (34.3%) or used to have one (18.5%).
The two most common questions respondents have about credit are how to improve their credit scores and how long information stays on their credit reports.
Respondents understand credit well enough to know when they’ve made mistakes: 21.8% of respondents say paying a bill late was their single biggest credit mistake, and 21.7% say their biggest mistake was carrying too high of a balance.
Respondents also understand the importance of checking their credit reports regularly: 46.5% checked a free report within the last three months, and only 6% have never checked their credit.
Do Young Adults Need Credit Cards?
You can live without a credit card, but life may be easier if you have one. A credit card can help you manage your expenses more easily, earn rewards for everyday spending, build credit history, and obtain benefits and protections that debit cards don’t provide.
Credit cards have their drawbacks, of course. You risk piling up debt and owing interest charges if you don’t pay off your card balance.
Like a bank account, a credit card is a financial tool that young adults must learn to handle with care. Dipping your toes into the credit card pool as a young adult can help you establish good credit habits for a lifetime.
What Are the Pros and Cons of Credit Cards for Young Adults?
- Building credit. Every payment you make in full and on time will land on your credit report and help you build your credit score.
- Earning rewards. Put only essentials on the card, pay them off, and receive cash back rewards, points or miles. This can help you get rewards without blowing your budget. Many cards also offer sign-up bonuses, such as extra points, miles or cash back rewards, after you spend a certain amount within the first few months.
- Making large purchases. If you don’t have the cash for a large or unexpected expense, a credit card can be a backup. You can put a car repair or hefty medical bill on a card and pay for it over time, although you will owe interest.
- Paying more safely than with cash. Carry one card rather than bunches of bills, which is especially convenient when traveling or shopping. Also, credit cards limit your liability for unauthorized charges to $50 or may not hold you liable for anything. Liability with your debit card depends on quickly you report the loss.
- Learning how to manage money. You will see how an annual percentage rate works when you carry a balance, how to budget for a monthly payment and how to create a strategy for earning rewards. Your card will allow you to track spending in real time.
- Enjoying perks. Your card may come with perks such as price protection, extended warranty coverage, trip cancellation insurance and emergency travel assistance that can save you time and money.
- Potentially paying interest charges and fees. If you don’t pay off your card, you will owe interest, and a large balance can be difficult to clear with a high interest rate. Issuers also charge fees for late payments, balance transfers, foreign transactions and cash advances, among others. You could pay an annual fee just to use a card.
- Hurting your credit if you’re not careful. You will need to use credit cards responsibly to build your credit. Paying late or having a high card balance can damage your credit score. Set up autopay for your card’s minimum payment to avoid accidentally missing a payment and hurting your score.
- Managing the temptation to overspend. Create a budget and revisit it periodically to see where your money is going. Tracking your purchases is a good way to make sure you don’t use a card to spend beyond your means.
- Navigating the fine print. Trying to understand your card’s terms and conditions can be difficult. Contact the issuer for clarification if necessary.
Identify the most important features to you in a credit card to help you compare offers. You can narrow down your choices by asking yourself:
What are my approval odds? Know your credit score – some apps provide free scores – and stick to cards that fit your credit profile. Issuers may be able to preapprove or prequalify you online for a card with no harm to your credit, but these are not guaranteed credit offers.
What are your goals for the card? Knowing what you want to accomplish can help you settle on a type of card. Maybe you want to build or rebuild credit, earn rewards, or simply get more comfortable using a card.
What are my spending habits? Choose the card that best suits your needs. Consider rewards categories, bonus requirements and card fees as well as benefits. If you get a secured card, can you upgrade the card once you prove that you can manage credit?
Struggling to choose between similar cards? Look for rewards that don’t expire and no late fees or penalty APRs, plus an easily attainable bonus spending requirement. Apply for the card with the best overall package.
What Is the Easiest Credit Card to Get With No Credit?
Young adults with no credit have limited choices because many credit cards, especially ones with lots of perks, require good or excellent credit. Still, you have options:
- Secured credit cards. Secured cards are for consumers with no credit or limited credit history, or consumers looking to rebuild credit. You’ll pay a security deposit, typically $200 or more. Your deposit is often equal to your credit limit.
- Student credit cards. Young adults in college should consider student credit cards for building credit. This type of card often has no annual fee, may earn rewards and could offer free access to your credit score.
How Long Does Building Credit Take?
If you’re starting from scratch, you will need up to six months of payment history to build credit. Establishing strong credit requires paying back a loan or opening and using a credit account that reports your payments to at least one of the three major national credit bureaus.
For a FICO credit score, you will need at least one account open for six months or longer. A VantageScore takes one month of credit activity.
Paying your bills on time and using 30% or less of your credit limit can help you build a good credit history quickly. You can boost your score more quickly by using 10% or less of your credit limit.
The age of your accounts is also a factor in credit scoring – the older, the better. As a result, the first card you open is one you’ll want to keep for a long time.
Credit Card Tips for Beginners
Building credit and learning how to manage credit are helpful goals for most young adults using credit cards. Here are some ways to get off to a strong start:
Choose a credit card you can easily manage. Credit card offers can be attractive, with some touting tempting rewards and benefits. But high-value cards aren’t necessarily for beginners. For many young adults, a credit card with no annual fee and simple cash back rewards can be a good fit.
Pretend that your credit card is a debit card. Your credit limit shouldn’t be your spending limit. Set up a budget and track your purchases to know how much you can afford to spend each statement period. Interest charges can cause debt to pile up if you carry a balance.
Keep credit utilization low. Your credit utilization ratio, or the percentage of available credit you are using, should be 30% or less. On a credit card with a $500 limit, 30% is $150. If you need to spend more than 30% of your credit limit, ask your card issuer about raising your credit limit.
Use card rewards and benefits. You may be able to redeem rewards as cash back deposits in a bank account, or as gift cards or statement credits. Also, make sure you know your credit card’s benefits and use them for savings. For example, some credit cards provide rental car insurance, which means you may not need to pay extra for it when you travel.
Treat credit cards as a learning experience. You might make mistakes with credit cards, such as paying your bill late or blowing your budget, but you can bounce back. Learn from any missteps and resolve to improve your credit card habits as you get more practice using credit.
Best Credit Cards for Young Adults Methodology
Our team of experts uses a methodology to identify the credit cards most likely to fit your needs. We examine APRs, annual fees, issuer satisfaction ratings and other factors to determine what cards come out ahead. Learn more»