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This article was last updated Nov 06, 2019. Terms and conditions may have changed. For the most accurate information, please consult the issuer website.
Because we are dependent upon credit for so many of life’s major events — buying a home, purchasing a car and even (at times) getting a job — it is crucial to establish good credit history at an early age.
Signing up for a credit card — and using it responsibly — is a great way for young adults to build their credit profile. But before deciding which card is the best fit, you need to consider how you plan to use the card and what you want to get out of it. For example, do you dine out frequently and want to earn cash back on those purchases? Are you a student who plans to travel abroad? Or are you a graduate who want to earn rewards when paying down your student loans?
We breakdown the pros and cons of several credit cards to help you determine which one is best for you as a young adult.
In this post:
- Best for building credit
- Best for everyday purchases
- Best for dining out
- Best for students
- Best for paying down student loans
- The bottom line
Best for building credit: Discover it® Secured
2% cash back at Gas Stations and Restaurants on up to $1,000 in combined purchases each quarter. 1% unlimited cash back on all other purchases - automatically
Credit line will equal your security deposit of $200 or more*
No annual fee, no late fee on your first late payment. No penalty APR*
- No Annual Fee, earn cash back, and build your credit with responsible use.
- It's a real credit card. You can build a credit history with the three major credit bureaus. Generally, debit and prepaid cards can't help you build a credit history.
- Establish your credit line by providing a refundable security deposit of at least $200 after being approved. Bank information must be provided when submitting your deposit.
- Automatic reviews starting at 8 months to see if we can transition you to an unsecured line of credit and return your deposit.
- Earn 2% cash back at Gas Stations and Restaurants on up to $1,000 in combined purchases each quarter. Plus, earn unlimited 1% cash back on all other purchases – automatically.
- Get 100% U.S. based customer service & get your free Credit Scorecard with your FICO® Credit Score
- INTRO OFFER: Unlimited Cashback Match – only from Discover. Discover will automatically match all the cash back you’ve earned at the end of your first year! There’s no minimum spending or maximum rewards. Just a dollar-for-dollar match.
- Get an alert if we find your Social Security number on any of thousands of Dark Web sites.* Activate for free.
- See Rates & Fees
See additional details for Discover it® Secured
If you haven’t yet established credit, or if you’re credit is in poor condition, you’ll want a card to help build or rebuild your credit, like the Discover it® Secured card. The Discover it® Secured card reports to the three major credit bureaus and gives you the option to convert to an unsecured card once you’ve demonstrated responsible card usage.
What else we like. Unlike most secured credit cards, the Discover it® Secured card offers a rewards program. Cardholders earn 2% cash back at Gas Stations and Restaurants on up to $1,000 in combined purchases each quarter. 1% unlimited cash back on all other purchases - automatically Plus, for new card members, Unlimited Cashback Match – only from Discover. Discover will automatically match all the cash back you’ve earned at the end of your first year! There’s no minimum spending or maximum rewards. Just a dollar-for-dollar match.
What to look out for. While the Discover it® Secured card doesn’t charge an annual fee, it does require a security deposit, which will serve as your line of credit.
The security deposit will range from $200 to $2,500, depending on your income and ability to pay. However, starting at eight months, Discover will automatically review your account to see if you qualify to receive your security deposit back and convert you to an unsecured card.
Best for everyday purchases — Citi® Double Cash Card – 18 month BT offer
If you want to earn a solid cashback rewards rate on every purchase — from gas and take out to school books and furniture, the Citi® Double Cash Card – 18 month BT offer is a good option. The card lets you earn 2% on every purchase with unlimited 1% cash back when you buy, plus an additional 1% as you pay for those purchases. This straightforward approach saves you the hassle of keeping track of rewards categories and spending caps.
Additionally, the card comes with a $0 annual fee.
Note, however, that to qualify for the Citi® Double Cash Card – 18 month BT offer, you’ll need to have good to excellent credit. A good credit score typically ranges from 670 to 739 points, and a very good to excellent score ranges from 740 to 850 points.
What else we like. If you have a significant amount of debt that you want to transfer from one credit card to another, and escape from high interest charges, you’re in luck with the Citi® Double Cash Card – 18 month BT offer. The card offers an extremely long introductory APR on balance transfers – 0% for 18 months on Balance Transfers (then a regular APR of 13.99% – 23.99% (variable)).
What to look out for. Although the card comes with a 0% intro APR on balance transfers, it does charge a balance transfer fee of 3% of each balance transfer; $5 minimum.
Best for dining purchases — Capital One® Savor® Cash Rewards Credit Card
If you eat out or order in frequently, you can earn a generous cash back rate on those purchases with the Capital One® Savor® Cash Rewards Credit Card. The card offers unlimited 4% cash back on dining; 4% cash back on entertainment; 2% cash back at grocery stores; 1% cash back on all other purchases. plus, earn 8% cash back on tickets at vivid seats through jan 2022.
The Capital One® Savor® Cash Rewards Credit Card requires excellent credit to qualify.
What else we like. The Capital One® Savor® Cash Rewards Credit Card lets cardholders earn a one-time $300 cash bonus after you spend $3000 on purchases within the first 3 months from account opening, as well as 8% cash back on tickets purchased at Vivid Seats using their card through May 2020.
What to look out for. You will be responsible for paying an annual fee after the first year of card membership. The Capital One® Savor® Cash Rewards Credit Card charges an annual fee of $0 intro for first year; $95 after that.
If you want to earn cash back on dining purchases, but don’t want to pay an annual fee, you may want to consider the Capital One® SavorOne® Cash Rewards Credit Card instead. The card comes with a $0 annual fee and offers 3% cash back on dining; 3% cash back on entertainment; 2% cash back at grocery stores; 1% cash back on all other purchases. Plus, cardholders earn a one-time $150 cash bonus after you spend $500 on purchases within the first 3 months from account opening.
Best for students — Journey® Student Rewards from Capital One®
The Journey® Student Rewards from Capital One® is ideal for college students who want a simple approach to earning rewards. Cardholders earn 1% cash back on all purchases; 0.25% cash back bonus on the cash back you earn each month you pay on time. That’s a possible total of 1.25% cash back for that month. The $0 annual fee card also lets you access a higher credit line when you make your first five monthly payments on time.
Because the Journey® Student Rewards from Capital One® requires average credit, it’s easier to qualify for than the Citi® Double Cash Card – 18 month BT offer or the Capital One® Savor® Cash Rewards Credit Card.
What else we like. The Journey® Student Rewards from Capital One® does not charge foreign transaction fees — making it a good choice if you plan to vacation or study abroad.
What to look out for: Because the Journey® Student Rewards from Capital One® does not offer an introductory APR on purchases, it’s important that your balance is paid in full each month. Otherwise, you will incur high interest charges at an APR of 26.99% (Variable).
Best to pay down student loans — Sallie Mae Accelerate℠
If you’re a recent grad who’s in the process of paying down student loan debt, you can earn additional cash back for doing so with the Sallie Mae Accelerate℠ card. The card offers Unlimited 1.25% cash back on every purchase, and a 25% bonus on your cash back rewards used to pay down your student loans
What else we like. The Sallie Mae Accelerate℠ card offers a 0% Introductory APR for purchases for 12 months, then an APR of 14.74% to 24.74% variable. This extended 0% intro APR period can help if you want to break down payments over time for a large purchase, such as a new computer or apartment furniture.
What to look out for. The ability to earn extra cash back when using your rewards to pay down student loan debt is a great bonus. However, there are cards available that offer 1.5% cash back on every purchase, as well as a sign-up bonus, like the Capital One® Quicksilver® Cash Rewards Credit Card.
The Capital One® Quicksilver® Cash Rewards Credit Card offers unlimited 1.5% cash back on every purchase, every day, as well as a one-time $150 cash bonus after you spend $500 on purchases within 3 months from account opening.
The bottom line
Opening a credit card in your 20s can be a smart move. Along with helping you establish and build your credit, you can earn rewards on every purchase. But keep in mind that it is extremely important that you practice responsible card usage, which includes paying your bill on time and in full each month — and when that’s not possible, paying at least the minimum amount due.
Also, be sure to keep your credit utilization rate low — preferably below 30%. This means that if your credit limit is $2,000, you should keep your card balance under $600 at all times. However, the best way to avoid sinking into credit card debt is to always pay off what you charge every month.