Study: Credit Cards for Young Professionals 2016
Forget titanium. As a young adult, you want a credit card with good rewards and benefits but low fees. Use this list as a starting point.
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Credit Cards for Young Adults with Good Credit
In the past, being a young professional meant you had it made. Graduating college and entering in a white-collar profession used to result in steady employment, a solid paycheck, and time to enjoy the single life before you settled down to start a family. This status quo has changed dramatically in recent years.
Now, it’s a tough time to be a young professional.
According to the U.S. Bureau of Labor Statistics, over 2 million college-educated workers were unemployed in 2014. No job puts a serious strain on these smart folks’ ability to save any money to reach family, social, and financial goals. And those who do have a job don’t feel the same sense of security that their parents did at workplaces where multi-decade stints were commonplace.
Even several years removed from the 2008 financial crisis, job uncertainty is a thing for many people, and employers have become stingy with 401(k) plan matching and even their willingness to keep people on as full-time employees. In increasing numbers, people under age 35 are forgoing traditional work environments and opting to work as independent contractors but are giving up some of their savings potential and access to employer-paid health care in return.
Where does all this change leave the young professional of today?
More than ever they need to plan their spending carefully and take advantage of every cost-saving tool out there. They never know when they may be back on the unemployment line or feeling the effect of a cash crunch.
Starter: Using a Credit Card as a Money-Managing Tool
No matter what your employment status, having the right credit card in your pocket is a wise move. It can help you manage your cash flow when it’s not steady, but even better than that, it can help you actually save money, through the form of rewards and serious discounts on purchases when those rewards are redeemed.
For some twentysomethings, they may be picking out their very first credit card. There’s a lot to choose from, so we’ve put together a list of the credit cards that are a good fit for young adults.
By picking the right card for your goals, you’ll have an easier time making them happen.
Young Professionals: What You Need to Know
The ideal credit card for young adults is one that offers good rewards and benefits without rip-off fees. Sounds easy? But there's a ton of choices online and it's easy to fall into the trap of getting the wrong credit card.
Or applying, only to get declined.
Do you have a credit history? Have you ever had a credit card, a car loan, or a student loan? If you’ve never had a credit card, a car loan, or a student loan — you should read our guide on how to build credit. You'll probably need to start with a secured credit card or if you are still in college, a student credit card.
Otherwise, keep reading….
Want to Apply for a Credit Card? How to Choose the Right Card
We’ll let you in on a little secret. There is no perfect credit card out there. One card that’s great for one person is a lame one for the next guy. You’ll come across some benefit you love on one card (like a super-low interest rate) but also notice a negative (like a fee added onto purchases when you travel internationally). You’ll need to zero in your priorities.
Here is what you should keep in mind:
- Rewards: Look for a credit card with rewards that fit your lifestyle. What’s the point of earning rewards on grocery shopping if you rarely step foot in a supermarket?
But watch out. Rewards credit cards tend to have high interest rates. If you occasionally carry a balance — meaning you don't pay your credit card bill in full each month — you should look for a credit card with low interest rates instead.
- Benefits: Paying by credit card means you expect certain benefits. It's no longer enough that credit card companies offer $0 fraud liability and the right to use the card. Many include perks such as extended warranty and return protection. Get familiar with the options out there and see how much you can get with your next card.
- Fees: Look, we all hate fees. Generally speaking, unless you are a big spender, you should opt for a credit card without an annual fee.
That being said, sometimes an annual fee makes sense if your spending is very predictable and you’re able to take advantage of an especially beneficial rewards program. For instance, if you spend more than $25 a week on groceries, you may want to consider the Blue Cash Preferred from American Express, a CreditDonkey advertiser. The Blue Cash Preferred gives you 6% cash back at U.S. supermarkets on up to $6,000 per year in purchases (then 1%). But it has a $75 annual fee.
And in the event you somehow routinely spend thousands per month on your credit card, a card like the Chase Sapphire Preferred might be worth considering. It has a $95 annual fee but offers 50,000 bonus points when you spend $4,000 on purchases in the first 3 months from account opening. 50,000 bonus points is worth $625 in travel when you redeem them through Chase Ultimate Rewards, which is Chase's online travel portal.
But for the rest of us mere mortals, a credit card with no annual fee is usually the way to go.
IF YOU ARE A SMART SHOPPER
Now that you’ve finished school, it’s easier to appreciate how fast time goes by. The future comes quick and it’s important to be financially prepared.
If you love to search for deals and spend your off-hours online shopping or strolling the mall fantasizing about how to spend your first rounds of paychecks, you could benefit from a card that gives you something back for your shopping efforts.
As long as you keep your spending within your budget and can pay off your balance every month, these cards are a joy to use and very rewarding to boot.
Look for one with a rewards structure you can follow and that fits your spending patterns.
Cash Back: One of the most popular cards for deal finders and shoppers is the Chase Freedom card. This card earns 1% cash back on almost everything you buy. And it earns 5% cash back in special categories that change throughout the year (requires free and easy activation each quarter), on up to $1,500 in combined purchases each quarter.
By planning your spending ahead of time, you’ll be able to save money. Past categories have included restaurants and gas stations, so all you’d have to do is keep watch on the Chase Freedom cash back calendar and plan your spending in those categories accordingly.
Plus, Chase Freedom offers a $150 bonus after you spend $500 on purchases in your first 3 months from account opening.
But that's not all. It has a 0% intro APR on purchases and balance transfers for 15 months. After that, you’ll have a variable APR of 14.24% to 23.24%.
Not sure if you can handle always paying off your balance?
Low Interest: It's smart to always pay off your credit card balance in full each month, but sometimes life happens. With the Barclaycard Ring, at least the interest charges will be reasonable, since the card has a low 8.25% variable APR on purchases and balance transfers.
IF YOU ARE A WORLD TRAVELER
It’s the perfect time to travel when you’re young. You have the energy and enthusiasm to see exotic countries before you get tied up with family responsibilities or become too complacent when you are older. As a hard-working young professional, it’s also nice to get away from it all and go on vacation. Compare the latest travel credit card deals here.
Look for a travel card with rewards you can understand and that will bring you to closer to your travel goals. If you’re an overseas traveler, then watch out for cards that carry a foreign transaction fee (which applies to every purchase made outside the U.S.).
Travel Rewards w/ No Annual Fee and No Foreign Transaction Fee:
Travel Rewards w/ $95 Annual Fee:
If you like a particular airline or hotel chain, take a look at travel credit cards to see how long it would take you to score a free flight or hotel stay. And also look into earning airline miles and points — if you are a frequent traveler, you really stand to benefit if you pay attention to both your earning and redeeming options.
Graduates: YOU’RE WELL ON YOUR WAY
In young adulthood, you’re in charge of your destiny. And your credit card choices. That means planning out your goals and choosing wisely (we recommend looking over at least 3 cards before applying).
Welcome to the real world, and happy hunting.
Credit Cards for Young Adults with Fair Credit
Build Credit: Even if you don’t have excellent credit, you can get a good rewards credit card with no annual fee. The Barclaycard Rewards is available to people with fair credit. And it offers 2X points on purchases for gas, groceries and utilities - and 1x points on all other purchases.
There's no complicated setup. No redemption fees and no limits on the points you can earn.
Plus, it reports to all 3 major credit bureaus monthly — giving you an opportunity to build your credit. And as a benefit to active cardmembers, you can opt in to have complimentary access to your FICO credit score from your Barclaycard online account.
Credit Cards for Students and Young Adults with No Credit
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First Time: Still new to the world of credit?
- If you are in college, you may consider a student credit card.
- If you are out of college, you'll probably need to look into a secured credit card. A secured credit card does not require a credit history for approval. Instead, it is secured by a deposit.
Related: Credit Cards for Beginners
Credit Cards for Young Adults with Bad Credit
If you have bad credit, there is still hope.
We all make mistakes, especially when we’re young. If you’ve made a few and have been branded with a bad credit score, you have a whole lifetime of time to build your way up to a better reputation. In fact, the most effective way to do is to prove that you can depended on by using a credit card wisely.
You can consider using a secured credit card to help rebuild your credit history.
A Sign of Finally Being a Grownup: Owning a Credit Card
Credit cards are a convenient way to keep track of your spending and manage your finances. Find the one that best fits your needs and you’ll get other rewards too — cash back, travel miles, or at least a running tab that you’re a reliable credit user and one day eligible to receive such perks.
Editorial Note: Any opinions, analyses, reviews or recommendations expressed in this article are those of the author's alone, and have not been reviewed, approved or otherwise endorsed by any card issuer. This site may be compensated through the Advertiser's affiliate programs.