- Get a Credit Card as Soon as Possible: Putting off your credit card application is a bad idea because it simply delays your credit-building efforts. A credit card is the most efficient credit-improvement tool available because it reports information to the major credit bureaus on a monthly basis and can be free to use. As long as your account is in good standing, the information that gets reported will be positive and your credit score will rise. Your account will stay in good standing if you pay your bill on time each month or if you don’t make any purchases and simply maintain a balance of zero. In other words, you don’t actually need to use a credit card to build credit with one.
- Set Up Automatic Monthly Payments: Payment history is the biggest component of a credit score, and setting up automatic monthly payments from a bank account is the easiest way to make sure you don’t lose credit just because you have a lot going on. That’s especially important for young adults, who often have a lot of new obligations. Just make sure you always have enough money in your bank account to cover at least your card’s minimum monthly payment.
- Use Less Than 30% of Your Credit Limit: The amount of a credit card’s spending limit that you use each month, also known as credit utilization, is an important ingredient in your credit score and one of the easiest to control. In addition to spending less and making a bigger payment, you can also reduce your credit utilization by paying a credit card’s bill multiple times per month. Credit utilization is calculated using the balance listed on your monthly statement.
- Review Your Transactions Each Month: Luxuries can quickly become necessities if you aren’t careful. Plus, avoiding debt and maximizing savings are key when you’re young because you want compounding – interest applying to interest that’s already been assessed – to work for you, rather than the other way around. You don’t want to wind up paying for fraudulent purchases, either. These are all good reasons to at least scan the purchases listed on your monthly credit card statements.
- Keep an Eye on Your Credit Score: You may be able to improve your credit score enough to qualify for an even better credit card in a matter of months. Watching your credit score rise will help you determine when the time is right to apply. And you can always check your latest credit score on WalletHub, the only site with free daily updates.
|Credit Card||Best For||Annual Fee|
|Petal® 2 Visa® Credit Card||Overall||$0|
|Discover it® Secured Credit Card||Secured||$0|
|Capital One Platinum Credit Card||No Credit / New to Credit||$0|
|Chase Freedom Unlimited®||Good Credit||$0|
|Capital One QuicksilverOne Cash Rewards Credit Card||Cash Back||$39|
|Capital One Venture Rewards Credit Card||Young Professionals||$95|
Methodology for Selecting the Best Young Adult Credit Cards
To identify the best credit cards for young adults and then maintain the list over time, WalletHub’s editors regularly compare 1,500+ credit card offers based on approval requirements, rewards, fees, APRs and special features. We use age-based spending data from the Bureau of Labor Statistics to estimate the savings each card is likely to provide the average young person. We then select the top cards in a handful of relevant-subcategories, in recognition of the fact that young adults are a very diverse group, characterized by a fairly wide age range and credit histories spanning from bad to limited to good or better.