Q: What are the best credit cards for you if you’re in your 20s?
A: You might have heard from parents and peers alike that young people getting credit cards is a terrible idea.
Usually the real reason they feel that way is because they themselves used credit cards irresponsibly (or knew someone who did), so they assume you will do the same.
The reality is it’s completely unfair to stereotype all young people. In fact if you’re like me (a 20-something) it’s possible that you’re more fiscally responsible than your parents are. You did come of age during the Great Recession, after all.
My top recommendations
Which cards get the most respect on Credit Card Forum AND are relatively easy to qualify for someone newer to credit? Here are the top picks.
Discover It for Students (my personal favorite): This card is ideal for college students because it has no annual fee and offers up to 5 percent cash back in certain categories. It’s definitely the best choice for the 18-to-25 crowd. The only catch is that you have to be a student in order to apply. Barclaycard Rewards MasterCard: If you’re not a student, then this card should be high on your list. Why? I’ll give you 4 reasons (1) no annual fee (2) a good rewards program (3) it’s relatively easy to qualify for (unlike many other reward cards today) and (4) you will get a free FICO score on your billing statement each month, which can be very useful in monitoring your creditworthiness over time.
Capital One: They also have some of the best credit cards if you’re just starting out. Now make no mistake about it, not all of their cards are entry-level. However these cards from various issuers are designed for those with just starting out and only have fair credit. The bottom line is that getting a credit card isn’t all about rewards and extra spending power, especially when you’re just starting out your financial life. It’s primarily about establishing and building credit early and creating a solid foundation that will save you money and give you more options going forward. You will need good credit later if you want to finance a car, apply for a mortgage, or score better interest rates on your school loans. If you have enough discipline to use credit responsibly, a general use credit card can be an excellent tool for credit building. And if you pay your outstanding balances in full every month on or before the due date, you won’t have to pay a cent in interest. What’s not to like about a free loan?
What to look for?
- Annual Fee: Generally a no-annual-fee card is best, unless you want the premium benefits offered on a fee-based card. Those premium cards with high fees will likely be out of your reach though, if you’re just starting out credit-wise.
- Interest Rate: It’s strongly suggested to not carry a balance, however if you do, make sure you pay attention to the interest rate. A lower one will keep any balances from ballooning too much.
- Less-Strict Approval: Since you have little or no credit history, you’ll be limited in the number of cards you will actually qualify for. Fortunately for you, banks are more inclined to take a chance on someone with little to no credit history, versus someone who already has a bad credit history. When it comes to getting approved, the best credit cards for young adults are usually offers for college students (if you are one) or an entry-level credit card without any frills.
- Rewards: It’s nice to get a little something back on your spending. While it’s true most student cards tend to offer limited rewards, there are a couple that offer generous programs. In fact, Discover’s student cards have the same cash-back programs as their regular credit cards.
- Benefits: Depending on your lifestyle, benefits are something else to consider. Your card might get you free travel insurance, rental car coverage and extended warranties on purchases, for example.
Written or last updated March 2017