Securing a credit card as a new graduate can be a crucial step in building a strong financial foundation. It allows you to establish credit history, manage expenses, and potentially earn rewards. Choosing the right card, however, can be overwhelming. This article will guide you through the best credit card options for new graduates in 2024, focusing on rewards programs, benefits, and factors to consider when making your decision.
| Card Name | Key Features | Why It's Great for New Grads |
|---|---|---|
| Discover it® Student Cash Back | Rotating 5% cash back categories (up to quarterly maximum, enrollment required), unlimited 1% cash back on all other purchases, no annual fee, Cashback Match™ (Discover will automatically match all the cash back you’ve earned at the end of your first year!) | Excellent for building credit, earning rewards on everyday spending, and no annual fee makes it low-risk. The Cashback Match is a fantastic bonus in the first year. |
| Capital One SavorOne Student Cash Rewards Credit Card | 3% cash back on dining, entertainment, popular streaming services, and at grocery stores (excluding superstores like Walmart and Target), 1% cash back on all other purchases, no annual fee. | Perfect for students who frequently dine out, enjoy entertainment, and subscribe to streaming services. No annual fee and potential for significant rewards. |
| Journey Student Rewards from Capital One | 1% cash back on all purchases, boosted to 1.25% when you pay on time each month, no annual fee. | Simple rewards structure and a bonus for responsible payment habits make it ideal for beginners. Focuses on building good credit. |
| Petal® 1 "No Annual Fee" Visa® Credit Card | Designed for those with limited or no credit history, reports to all three major credit bureaus, no annual fee, cash back rewards vary based on creditworthiness. | A good option if you have limited or no credit history and struggle to get approved for other cards. Helps build credit with responsible use. |
| Bank of America® Customized Cash Rewards Credit Card for Students | 3% cash back in a category of your choice (gas, online shopping, dining, travel, drug stores, or home improvement/furnishings), 2% cash back at grocery stores and wholesale clubs, 1% cash back on all other purchases, subject to quarterly spending caps. No annual fee. | Offers flexibility in choosing a rewards category that aligns with your spending habits. Good for those with a specific spending focus. |
| Deserve® EDU Mastercard for Students | 1% cash back on all purchases, Amazon Prime Student membership reimbursement (for eligible cardholders), no annual fee. | Offers a straightforward rewards program and the added benefit of Amazon Prime Student reimbursement, making it attractive for students. |
| Chase Freedom Unlimited® | Although not specifically a student card, it's often accessible to new grads with a slightly more established credit history. 1.5% cash back on all purchases, 5% on travel purchased through Chase Ultimate Rewards®, 3% on dining and drugstores, no annual fee (after introductory period), and a sign-up bonus. | A great option for those with a good credit score already. Offers a high flat-rate cash back and valuable travel rewards through Chase Ultimate Rewards®. |
Detailed Explanations
Discover it® Student Cash Back: This card is a standout for its rotating 5% cash back categories, which change each quarter and require activation. These categories often include popular spending areas like gas stations, grocery stores, restaurants, and Amazon.com. Outside of the rotating categories, you earn 1% cash back on all other purchases. The absence of an annual fee makes it a low-risk option for students, and the Cashback Match at the end of the first year effectively doubles your rewards. This feature is particularly beneficial for new cardholders as they learn to manage their spending and build credit.
Capital One SavorOne Student Cash Rewards Credit Card: This card caters to the lifestyle of many students by offering 3% cash back on dining, entertainment, popular streaming services, and at grocery stores (excluding superstores like Walmart and Target). This higher rewards rate in these categories can quickly add up, especially if you frequently dine out or subscribe to multiple streaming platforms. The 1% cash back on all other purchases provides a base level of rewards for everything else you buy. Like the Discover it® Student Cash Back, it has no annual fee.
Journey Student Rewards from Capital One: The Journey Student Rewards card is designed to encourage responsible credit use. It offers a straightforward 1% cash back on all purchases, but the real incentive is the bonus. By paying your bill on time each month, you boost your rewards rate to 1.25%. This simple structure and the emphasis on on-time payments make it a great choice for building credit and developing good financial habits. It reinforces the importance of responsible credit management from the start.
Petal® 1 "No Annual Fee" Visa® Credit Card: The Petal® 1 card is specifically designed for individuals with limited or no credit history, which is a common situation for new graduates. It utilizes an alternative underwriting process that considers factors beyond just your credit score, such as your income, savings, and spending habits. This can make it easier to get approved compared to other credit cards. The card reports to all three major credit bureaus, helping you build credit with responsible use. The cash back rewards vary based on your creditworthiness, so it's essential to check the specific terms offered to you.
Bank of America® Customized Cash Rewards Credit Card for Students: This card offers a high degree of customization, allowing you to choose a 3% cash back category that aligns with your spending habits. The options include gas, online shopping, dining, travel, drug stores, or home improvement/furnishings. You can change your chosen category each month. You also earn 2% cash back at grocery stores and wholesale clubs, and 1% cash back on all other purchases. The higher rewards rates are subject to quarterly spending caps, so it's important to track your spending to maximize your earnings. The card has no annual fee.
Deserve® EDU Mastercard for Students: The Deserve® EDU Mastercard is tailored for students and offers a simple 1% cash back on all purchases. What sets it apart is the Amazon Prime Student membership reimbursement for eligible cardholders. This benefit can be a significant cost-saver for students who already subscribe to Amazon Prime Student. The card also has no annual fee, making it a cost-effective option.
Chase Freedom Unlimited®: While not exclusively a student card, the Chase Freedom Unlimited® can be a viable option for new graduates who have already established a decent credit score. It offers a generous 1.5% cash back on all purchases, 5% on travel purchased through Chase Ultimate Rewards®, and 3% on dining and drugstores. These rewards can be highly valuable, especially if you travel or dine out frequently. The card also often comes with a sign-up bonus, which can provide a substantial boost to your rewards balance. The rewards earned can be redeemed for cash back, travel, or gift cards through the Chase Ultimate Rewards® program. Although it has no annual fee, it's generally harder to get approved for than dedicated student cards.
Frequently Asked Questions
What is the best credit card for building credit as a new graduate? The Discover it® Student Cash Back and Journey Student Rewards from Capital One are excellent choices as they are designed for beginners and report to all three major credit bureaus.
Do student credit cards have annual fees? Most student credit cards, including those mentioned above, do not have annual fees.
What credit score do I need to get a student credit card? Many student credit cards are designed for those with limited or no credit history, so a credit score may not be a major factor. However, a fair to good credit score can improve your chances of approval and potentially lead to better terms.
Can I get a credit card if I have no income? While it can be more challenging, you may still be able to get a credit card. Student cards often consider factors beyond income, and you can also include household income if you are over 21.
How do I choose the right credit card for me? Consider your spending habits, credit score, and desired rewards. If you dine out frequently, a card with dining rewards may be a good fit. If you have limited credit history, focus on cards designed for beginners.
What are the benefits of using a credit card? Using a credit card responsibly can help you build credit, earn rewards, track spending, and provide purchase protection.
How can I use a credit card responsibly? Always pay your bills on time and in full, keep your credit utilization low (ideally below 30%), and avoid spending more than you can afford to repay.
What is a credit utilization ratio? It's the amount of credit you're using divided by your total credit limit. Keeping it low demonstrates responsible credit management.
What is an APR? APR stands for Annual Percentage Rate. It's the interest rate you'll be charged on your outstanding balance if you don't pay it off in full each month.
How do I apply for a credit card? You can typically apply online through the credit card issuer's website. You'll need to provide personal information such as your name, address, Social Security number, and income.
Conclusion
Choosing the right credit card as a new graduate is a significant step towards building a solid financial future. Carefully consider your spending habits, credit history, and the rewards and benefits offered by each card to make an informed decision that aligns with your needs and goals. Prioritize responsible credit use to establish a strong credit foundation for years to come.