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Best Credit Card for New Graduates
August 30, 2024
If you’ve recently graduated, you’re entering a new chapter of your life. Now is an excellent time to set the foundation for your future.
That foundation should include getting a handle on your finances. Using a credit card can help you build your credit score and cover any gaps in your budget (for a cost, of course).
This guide will help you find the best credit card for new graduates (and the best credit card for graduate students). We’ll cover card features, perks, rewards, APRs, and everything else college students and recent grads should know.
What to look for in a credit card for new graduates
New grads are in an excellent position for a fresh start. But they also likely have some big upcoming expenses and may have yet to land a job. And student credit cards may no longer make sense for them to use (in fact, new grads may no longer qualify for them).
With these factors in mind, what should recent graduates look for from credit card issuers?
Low fees
As a recent grad, you’re likely looking to save where possible, which can extend to your credit card choices.
Many credit cards have annual fees. Depending on the card, these can range from very low (like $25) to very high (like $500).
There are also many no-annual-fee cards. Many of the best credit cards for young adults fall under this category.
But it’s not just the annual fee you should consider! Be sure to also keep an eye on:
- Balance transfer fees
- Late fees
- Penalty fees
- Foreign transaction fees
- Etc.
If you’re a new grad, it’s generally best to stick to no-fee or low-fee cards.
Good rewards
Many credit cards earn rewards when you make purchases. These can come as cashback, airline miles, or flexible points.
For instance, a card might offer 1.5% cashback. That means if you make a $100 purchase, you’ll earn $1.50 in rewards. This money can really add up fast!
The best credit cards for new graduates on our list below earn competitive rewards. But when selecting, think about what types of rewards will be most beneficial for you.
Have you caught the travel bug? Consider a no-annual-fee travel rewards credit card.
Prefer to keep things simple? A basic cashback credit card may make sense for you.
Good approval odds
As a recent grad, you may not yet have the highest income — or the best credit score. However, income and credit score are involved in the credit card approval process, so you’ll want to opt for a card you have a decent chance of getting approved.
The best credit cards for low-income earners are available for those with decent credit but low income. In addition, you may consider a secured credit card if poor credit is holding you back. Unlike unsecured cards, secured cards require a security deposit; however, they are an excellent choice for building credit.
If you already have good credit and a good income, you will have a wider variety of credit cards to choose from.
Credit-building & monitoring features
When you’re fresh out of college, you’re likely taking steps to establish your financial foothold. A big part of that is building up your credit score.
Having a way to monitor your credit and take steps to improve it is vital. Fortunately, most credit card issuers now offer credit-monitoring tools to help you keep an eye on your credit reports.
These tools can give you an estimate of where your score is at and help you understand why that’s the case. Some have even more advanced monitoring and alerting features — to alert you if your score drops, for instance, or if a new account is opened in your name.
Competitive interest rates
Whenever possible, it’s best to avoid carrying a balance on a credit card. This is because the interest rates they charge (measured in APR) are typically very high. However, if you pay your card off in full each month, you won’t owe any interest on your monthly payments.
At the same time, having the option to use credit and pay it off over time is helpful. Therefore, paying attention to the annual percentage rate (APR) of each card you consider is wise if you expect to carry a balance now or in the future.
APRs are often in the 20%+ range on average. However, it can vary since APR is based on the applicant’s credit score. Look for a card with a competitive APR to save money on interest charges.
Perks for your lifestyle
Credit cards can also offer a variety of perks. For instance, some have travel perks, like airport lounge access or rental car insurance. Others might include shopping perks, like extended warranty coverage.
Getting a credit card with perks is nice — but make sure you’ll actually be able to take advantage of them! If you never travel, for instance, getting a travel rewards card probably wouldn’t make sense for you.
Not entirely sure what you’re looking for? Use the Kudos Explore Cards feature to find all the best credit cards on the market.
What is the best credit card for new graduates?
There are hundreds of different credit cards available today. So we’ve simplified things and listed the four best credit cards for new grads below.
Capital One Savor Cash Rewards Credit Card
The Capital One Savor Cash Rewards Credit Card card is a versatile and popular credit card with no annual fee. In addition, depending on your spending habits, it can earn anywhere from 1% to 10% back, so it’s a great choice for a rewards card.
This card earns 10% on Uber & Uber Eats, 5% at Capital One Travel, 3% on streaming, entertainment, and groceries, and 1% back on everything else.
The only downside is that this card is designed for people with good to excellent credit scores. If your score is low, consider looking at something like the Destiny Credit Card instead (see below).
Destiny credit card
The Destiny Credit Card is designed specifically to help you build credit. It’s a great choice for those with limited credit histories or poor credit scores. It may even be available for people who have previously filed for bankruptcy.
And unlike most credit-building credit cards, the Destiny Credit Card doesn’t require a security deposit (as it’s an unsecured card). It functions like a standard credit card, but getting approved for it is easier. As you pay your bills on time, you’ll start building a positive credit history.
The only downside is that the Destiny card doesn’t earn rewards and usually has a low credit limit.
Wells Fargo Active Cash
The Wells Fargo Active Cash credit card is a simple, lucrative cashback rewards credit card. Regardless of the spending category, it earns 2% back on all purchases. There’s even a signup bonus: $200 in bonus rewards after you spend $1,000 in the first 90 days!
This card also has no annual fee, and it comes with a perk called cell phone insurance, where if you pay your cell phone bill with the card, your phone will be protected against damage or theft.
Finally, the Active Cash card has a 0% promo APR for the first 15 months on purchases and balance transfers.
On the downside, getting approved for the Wells Fargo Active Cash card can be tricky if you don’t have good credit.
Chase Freedom Unlimited
The Chase Freedom Unlimited card is a powerful rewards credit card that’s versatile for many different types of people. For example, it earns 5% cashback at Chase Ultimate Rewards (for travel purchases), 3% cashback on dining out and food delivery, 3% back on drugstore purchases, and 1.5% back everywhere else.
There’s also an additional perk for the first year: You get an extra 1.5% cashback on all purchases. That can really boost your rewards-earning potential! There’s also 0% APR for the first 15 months.
And the Freedom Unlimited has tons of useful perks, such as trip delay protection, rental car insurance coverage, extended warranty coverage, and much more. All with no annual fee!
The Freedom Unlimited is best for those with good or better credit. However, if you have poor credit, it may be tough to get approved.
Bottom line
The best credit card for grad students and recent graduates will be a card with a low (or no) annual fee, competitive rewards, and perks that suit your lifestyle. Some of the best options are listed above.
Didn’t quite find what you were looking for? Use the Kudos Explore Cards tool to browse hundreds of the best credit cards on the market.
And to make sure you’re utilizing all your current credit cards’ perks, use Kudos. Kudos is a browser extension that helps you select the perfect card to use when shopping online to earn the most rewards and perks possible.
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