Choosing your first credit card can feel overwhelming, but it's a crucial step in building a solid financial foundation. A well-chosen credit card can help you establish a credit history, earn rewards, and manage your spending. This guide will walk you through the best credit card options for young people in 2024, helping you make an informed decision that aligns with your financial goals.
Comprehensive Credit Card Comparison Table
| Card Name | Key Features | Why It's Great for Young People |
|---|---|---|
| Discover it® Student Cash Back | 5% cash back on rotating categories each quarter (up to the quarterly maximum), 1% unlimited cash back on all other purchases, no annual fee, good grades reward. | Excellent cash back rewards, especially for students. The good grades reward is a unique incentive. No annual fee makes it low-risk. |
| Discover it® Student Chrome | 2% cash back at gas stations and restaurants (up to $1,000 in combined purchases each quarter), 1% unlimited cash back on all other purchases, no annual fee, good grades reward. | Ideal for students who spend more on gas and dining. The good grades reward is a nice perk. No annual fee is a plus. |
| Capital One Quicksilver Student Cash Rewards Credit Card | 1.5% unlimited cash back on all purchases, no annual fee. | Simple and straightforward rewards structure. Good for building credit without complicated categories. No annual fee. |
| Capital One Platinum Credit Card | Focus on building credit, no annual fee. | Designed for those with limited or fair credit history. Helps establish credit without the pressure of rewards. No annual fee. |
| Petal® 2 "Cash Back, No Fees" Visa® Credit Card | Up to 1.5% cash back on eligible purchases (starts at 1% and can increase), no annual fee, reports to all three major credit bureaus. | Good option for those with limited credit history. The cash back potential increases over time, incentivizing responsible use. No fees. |
| Journey Student Rewards from Capital One | 1% cash back on all purchases; earn 0.25% bonus cash back every month you pay on time, no annual fee. | Rewards responsible payment habits. Helps build credit and encourages timely payments. No annual fee. |
| Deserve® EDU Mastercard for Students | 1% cash back on all purchases, no annual fee, Amazon Prime Student offer. | Offers a simple cash back reward and a useful perk for Amazon Prime Student members. No annual fee. |
| Chase Freedom Unlimited® (Considered after establishing some credit) | 5% cash back on travel purchased through Chase Ultimate Rewards, 3% on dining and drugstores, 1.5% on all other purchases, no annual fee. | Excellent rewards program for those who travel and dine out. Best applied for after building a credit history with a student card. No annual fee. |
| Bank of America® Customized Cash Rewards Credit Card (Considered after establishing some credit) | 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 (on the first $2,500 in combined choice category/grocery store/wholesale club purchases each quarter), 1% on all other purchases, no annual fee. | Offers flexibility in choosing a rewards category that aligns with your spending habits. A good step-up card after a student card. No annual fee. |
Detailed Explanations of Key Features
Discover it® Student Cash Back: This card stands out with its rotating 5% cash back categories, which change each quarter. You earn 5% on purchases in these categories (up to a quarterly maximum, usually $1,500), and 1% on everything else. The key is to activate the rotating categories each quarter to maximize your rewards. The good grades reward is a one-time statement credit for maintaining a high GPA.
Discover it® Student Chrome: This card focuses on rewards for gas and dining, offering 2% cash back at gas stations and restaurants (up to $1,000 in combined purchases each quarter) and 1% on all other purchases. This is a great choice if you frequently spend on these categories. The good grades reward is a one-time statement credit for maintaining a high GPA.
Capital One Quicksilver Student Cash Rewards Credit Card: This card offers a simple and consistent 1.5% cash back on all purchases. This simplicity makes it a great choice for those who don't want to track rotating categories or specific spending habits. It's a straightforward way to earn rewards on everything you buy.
Capital One Platinum Credit Card: This card is designed for building credit and doesn't offer rewards. Its primary focus is to help you establish a positive credit history by making on-time payments and keeping your credit utilization low. It's a good option if you have limited or fair credit and want to build a strong foundation.
Petal® 2 "Cash Back, No Fees" Visa® Credit Card: This card offers a unique approach to building credit, using your bank account data to assess your creditworthiness, even if you have limited credit history. The cash back rewards start at 1% and can increase up to 1.5% based on your payment history. It also reports to all three major credit bureaus, helping you establish a credit score.
Journey Student Rewards from Capital One: This card rewards responsible payment behavior. You earn 1% cash back on all purchases, and an additional 0.25% bonus cash back every month you pay on time. This encourages timely payments and helps you build a positive credit history.
Deserve® EDU Mastercard for Students: This card offers a straightforward 1% cash back on all purchases and a valuable perk for Amazon Prime Student members. The Amazon Prime Student offer can be a significant benefit for students who already use the service.
Chase Freedom Unlimited®: This card is a step up from student cards and is best considered after you've established some credit history. It offers 5% cash back on travel purchased through Chase Ultimate Rewards, 3% on dining and drugstores, and 1.5% on all other purchases. The Chase Ultimate Rewards program offers valuable travel benefits and redemption options.
Bank of America® Customized Cash Rewards Credit Card: This card offers flexibility in choosing a rewards category that aligns with your spending habits. You earn 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 (on the first $2,500 in combined choice category/grocery store/wholesale club purchases each quarter), and 1% on all other purchases. The ability to customize your rewards category allows you to maximize your cash back earnings based on your spending habits.
Frequently Asked Questions
What is a credit score and why is it important? A credit score is a three-digit number that represents your creditworthiness. It's important because lenders use it to determine whether to approve you for loans, mortgages, and credit cards.
How can I build credit with a credit card? Use your credit card responsibly by making on-time payments and keeping your credit utilization low (ideally below 30%).
What is credit utilization? Credit utilization is the amount of credit you're using compared to your total credit limit. Keeping it low demonstrates responsible credit management.
What is an annual fee? An annual fee is a yearly charge for owning a credit card. Many student cards don't have annual fees.
What is APR? APR (Annual Percentage Rate) is the interest rate you'll be charged if you carry a balance on your credit card. Try to pay your balance in full each month to avoid interest charges.
What is a secured credit card? A secured credit card requires a cash deposit as collateral. It's a good option for those with no credit history or bad credit.
How do I choose the right credit card for me? Consider your spending habits, credit history, and financial goals. Choose a card that aligns with your needs and offers rewards or benefits that are valuable to you.
What should I do if I can't pay my credit card bill on time? Contact your credit card issuer as soon as possible to discuss your options. Late payments can negatively impact your credit score.
What are the benefits of having a credit card? Credit cards can help you build credit, earn rewards, track your spending, and provide purchase protection.
How can I avoid overspending with a credit card? Create a budget, track your spending, and avoid impulse purchases. Only charge what you can afford to pay back each month.
Conclusion
Choosing the right credit card as a young person is a crucial step towards building a strong financial future. By carefully considering your spending habits, credit history, and the benefits offered by each card, you can select a card that helps you establish credit, earn rewards, and manage your finances responsibly. Remember to always prioritize responsible credit card use to avoid debt and build a positive credit history.