Want to build credit, but have no clue where to start? You’re in the right place.
We know that it’s tricky to choose a credit card when you’re a young adult, especially if you’re new to the world of personal finance. That’s why we’ve taken the time to answer common credit-related questions from people just like you. We cover everything from the application process to the importance of paying your monthly statement on time, so browse our FAQs for tons of insider info on credit cards for young adults.
General Information About the Best Credit Cards for Young Adults
What is a credit card for young adults?
A credit card for young adults is a line of credit that is designed for young adults, such as college students and recent graduates. In some cases, your line of credit is self-funded via a security deposit (more on that below). Other times, a bank funds your line of credit, and then you repay the bank by sending payments to your credit card company.
Do I have to be a young adult to get one of these credit cards?
Nope, that’s generally not a requirement if you’re applying for a credit card geared toward young adults. There are some exceptions, of course.
However, if you aren’t a young adult, you might prefer different cards than the ones referenced in this article. Check out these articles instead:
Credit cards for young adults are generally designed for individuals who don’t have much experience with personal finance products. They are set up to benefit young cardholders and help them build or establish credit.
What’s the difference between a secured card and an unsecured card?
Most credit cards, including the ones in our list of faves above, are unsecured. That means you don’t have to provide collateral to get a line of credit. Your line of credit is funded by a bank or credit union on the credit card’s behalf.
A secured credit card is funded by your own money. You send a deposit, and then the credit card company activates your card. The amount of your security deposit often determines how much credit you receive, but some companies offer partially secured cards.
A partially secured card is a line of credit that’s funded by you and a financial institution. For example, you may pay a security deposit of $100 but receive a credit line of $200. If you do not default on your payments or violate your cardholder agreement, you can request a refund for your full or partial security deposit when you close your credit card account.
Can I use my credit card to pay for college?
Yes, but we don’t recommend it if you have other options. Make sure you’ve applied for scholarships, Pell Grants, and student loans before you rack up debt on your credit card.
You can use your credit card to pay for nearly everything (as long as it’s legal!), but we encourage you to use it responsibly. We’ll discuss this more under the section titled “How a Credit Card for Young Adults Can Affect Your Credit.”
What is the best credit card for young adults?
It’s hard to just choose one card as the best credit card for young adults because everybody has unique spending habits and financial goals. With that in mind, we’ve compiled a list of our 4 favorite credit cards for young adults:
- Discover it® Secured Card - best for young adults without credit history
- Chase Sapphire Preferred® - best for young adults who like to travel
- Chase Freedom® - best for recent graduates with good credit
- Citi® Double Cash Card - best for all-around spending
We’ve also compiled a list of the best credit cards for college students that you might find helpful.
The Application Process for Credit Cards for Young Adults
How do you get a credit card for young adults?
Many credit cards for young adults have an online application that provides a response in less than a minute or two. You may also have the option to apply over the phone, via postal mail, or at a local bank or credit union.
Why didn’t I get an instant approval for a credit card?
We know it’s a total bummer when you don’t get approved instantly, so we’ll explain why it happens. When you get the dreaded “we are still processing your application and will contact you within 7 to 10 days” response, it does not mean your app got rejected. It means that something on your app flagged a manual review rather than a computer-generated approval.
Here are some common issues that may lead to a manual review:
- No established credit or very little credit
- Multiple addresses in the last few years
- Excellent credit but lower-than-expected income
- A low credit score that’s the result of recently rectified debts from years ago
If you don’t receive an instant approval, contact the credit card company to see if you can speed up the application process. They may need additional information from you.
Do I need my parents to cosign for my credit card?
If you have decent credit, you can get a credit card without having your parents cosign on the application. However, there might be benefits to applying with your parents, including:
- High credit line
- Low APR
- Approvals for cards that you would have been rejected for on your own
- Generous rewards and other perks if their signature helps you get a card geared toward people with excellent credit
If your parents have bad credit, we don’t recommend having them cosign. Their financial history and current spending habits may impact your future credit history in a negative way.
What are some reasons I might get denied for a credit card?
Check the terms of service before you apply for a credit card for young adults. Many credit card companies provide information on deal breakers that cause immediate rejection, such as:
- Active bankruptcy status
- Unemployment with no source of steady income
- Lack of a Social Security number
- Lack of U.S. citizenship
You may also get rejected for a card if you have a low FICO score, a high debt-to-income ratio, and/or multiple accounts in collections.
When can I reapply if I get denied for a credit card for young adults?
After you fix the issues that contributed to your rejection, which may take a while. If you’re unsure why you got rejected, you can request a statement of explanation from the credit card company.
We recommend waiting at least 6 months, preferably much longer - like a year or two - before reapplying for a card. This gives your credit history time to show a pattern of responsible behavior after you fix the issues that caused the card rejection.
Fees, Deposits, and APR
How much does it cost to get a credit card for young adults?
It’s free to get a credit card unless your card charges an activation fee, an annual fee, or a security deposit. A security deposit is refundable if you use your card responsibly, but activation fees and annual fees are generally not.
What does it mean if a credit card wants a security deposit?
It means that your FICO score probably needs some TLC, so you are a risky applicant. Instead of denying your application, the credit card company wants you to fund your own line of credit with a security deposit.
A security deposit is refundable, sometimes with interest, if you follow the cardholder agreement. If you file for bankruptcy or have your credit card account closed due to nonpayment, you probably won’t get your security deposit back.
What fees I should expect from a credit card for young adults?
Your card might have an annual fee, but those are more common in rewards cards or cards geared toward adults with excellent credit. You may have an activation fee if you get a card for people with bad credit, but most cards we’ve reviewed don’t charge upfront fees.
Here are some other fees you may encounter while using a credit card for young adults:
- Cash advance fees
- Overlimit fees
- Late fees
- Terminal fees for some merchants
- Foreign transaction fees
You can limit the number of fees you pay by using your card responsibly. Pay your bill on time, and avoid using your credit card to withdraw cash from an ATM unless it’s an emergency.
What is my APR?
An APR is an annual percentage rate. The Consumer Financial Protection Bureau explains how an APR works by describing it as “the price you pay for borrowing money.” We agree with this definition.
An APR is often avoidable if you pay off your entire credit card balance before the due date. If not, you may pay an APR that’s generally somewhere between 10% to 35% for your purchases. You’ll know what your variable APR is when you apply for a credit card, so there shouldn’t be any surprise expenses each time you use your card.
Does everyone have the same APR for a credit card?
Each credit card has its own guidelines for determining a cardholder’s APR. Some cards give every customer the same APR, but that’s not the norm.
Your APR is generally determined by creditworthiness, which means whether your credit is good or bad. If you have bad credit, you’ll probably have a high APR because it’s risky for credit card companies to give you a line of credit.
How a Credit Card for Young Adults Can Affect Your Credit
Will getting a credit card for young adults help my credit?
It might - as long as you use it responsibly. Don’t make frivolous purchases with your card, and don’t max it out.
Pay your bill on time, every time, and try not to utilize more than 30% of your available credit. That means you shouldn’t charge more than $90 total if you’ve got a $300 credit line.
How do I check my credit?
Many credit cards for young adults offer free credit monitoring, so that’s one option. You can also request a free credit report each year from the three major credit bureaus.
Credit Karma and Credit Sesame let you monitor your credit report for free, but neither site provides free copies of your official credit reports. You can request those by visiting AnnualCreditReport.com. If you want your FICO score, check out MyFico.com.
Why did my credit score go down when I applied for a credit card?
This is a common complaint from credit card applicants, and it happens when a company runs a hard inquiry rather than a soft inquiry. In the future, you can prevent this by using preapproval tools before you apply for cards. These tools use soft inquiries that do not affect your credit score.
How long does it take to build credit with a credit card for young adults?
If you have bad credit or no credit, your credit score may jump several points as soon as you get approved for a new credit card. However, it takes months - sometimes years - for your credit score to drastically change when you start building credit.
If I get a secured card, will it still improve my credit?
Yes, if you use your secured card responsibly. Credit bureaus treat secured credit cards the same way they treat unsecured cards. If you pay your monthly bills on time and keep your credit utilization ratio low, a secured card can help improve your credit.
Potential Concerns About Credit Cards for Young Adults
What if I can’t afford my credit card bill?
Make sure the credit card company knows! If possible, contact them before your bill is late to explain what’s going on in your life. They may extend your due date or offer to waive the late fee if you are honest about your situation.
Even if the credit company isn’t willing to work with you, they might keep your card open if you let them know you’re experiencing a temporary financial setback. If they don’t hear from you, they might close your account or lower your credit line.
What happens if my card is lost or stolen?
Your credit card company will issue a replacement card (there might be a fee for this) and cancel the original card. Make sure you contact your credit card company ASAP if your card is missing, as your account might get hit with fraudulent charges if you wait too long.
Yes, you can dispute the fraudulent charges, but it takes time to do that. It’s easier to prevent them from happening in the first place by telling a credit card company your card is gone.
There’s a purchase that isn’t mine on my credit card statement - help!
Yikes! Okay, before you panic, answer the following questions:
- Have you signed up for any monthly subscriptions, such as Ipsy or FabFitFun?
- Have you recently rented a car?
- Have you recently booked a hotel room?
- Is your credit card linked to PayPal or your bank account as a secondary funding source?
- Does your card have a monthly maintenance fee or an annual fee?
- Have you registered any bills for auto debit?
We mentioned cars and hotel rooms above because sometimes they place authorization holds on credit cards and debit cards. Alternately, you may have simply forgotten you signed up for a subscription box or an automatic debit for a bill.
If none of these situations apply, contact your credit card company immediately. These charges may be the result of identity theft or a compromised card number. Your card company can help you remove them from your statement.
What if I go over the limit for my credit card?
A credit card isn’t a checking account, so it’s difficult for you to go over the limit. The exception is if you have a monthly maintenance fee, an annual fee, a late fee, or APR interest that hits after you have maxed out your card.
If you manage to go over the limit for your credit card, you might get hit with an overlimit fee. Even if you don’t have a fee, try to avoid going over your limit; it doesn’t look good on your credit report.
I returned a purchase and don’t see my refund - what do I do?
Contact your credit card company if it’s been more than a week or so. Refunds generally take a few days to appear on credit card statements. That means it’s totally normal if you return a pair of socks to Target and don’t see your refund 15 minutes later.
Hold on to your receipt for the returned item until the correction appears on your statement. You may need to show the credit card company if you don’t see your refund after the normal processing timeframe passes.