Best Credit Cards For 2016 Graduates

Selected by CardHub Editors from 1,000+ credit cards — Updated September 28, 2016

It’s imperative that recent high school and college graduates begin building credit as soon as possible. And of all the financial products that help us build credit, credit cards are the most efficient because they allow users to add positive information to their major credit reports on a monthly basis at potentially no cost.

But all credit cards aren’t created equal, as available offers have drastically different approval requirements, fees, rewards and interest rates. A given individual’s card choice ends up being rather straightforward, however. It all comes down to determining which of the following groups you fit into:

Grads With Good Credit: If you’re leaving school with an unofficial minor in personal finance, after responsibly managing your credit for nearly four years, you’re now ready to graduate to the market’s big leagues. But you should still avoid annual fees in order to save money for other financial priorities.

Grads With .EDU Email & Limited/No Credit: Student cards tend to offer better terms than a young person’s credit standing would ordinarily merit, due to their age and above-average earning potential. An active university email address and a clean credit record are all that’s required.

Grads With Inactive .EDU Email OR Credit Missteps: A secured credit card is the next best option if you can’t qualify for an offer targeted to students. Secured cards offer what amounts to guaranteed approval since the security deposit you will be required to place also acts as your spending limit, thereby protecting the issuer against a lack of repayment and preventing users from getting in over their heads.

We kept those guidelines in mind when comparing more than 1,000 credit card offers – irrespective of advertising status – in order to ultimately select the Best Credit Cards for 2016 Graduates.

This content is not provided or commissioned by any issuer. Opinions expressed here are the author’s alone, not those of an issuer, and have not been reviewed, approved or otherwise endorsed by an issuer.

Grads With Good Credit

Citi® Double Cash Card – 18 month BT offer Proceed 974 reviews

(Cash Back) – You’ll earn 1% cash back on every purchase that you make with this card and another 1% back on your corresponding monthly bill payments. We can all do the math, especially with no annual fee to add to the equation.

Capital One® Quicksilver® Cash Rewards Credit Card Proceed 3,294 reviews

(Initial Bonus)– Offers 1.5% cash back across all purchases in addition to a $100 initial bonus for spending $500 in the first three months. You also get 0% on new purchases for 9 months (13.24% - 23.24% variable thereafter). There is no annual fee.

Chase Slate® Proceed 1,886 reviews

(Financing) – One of the best cards on the market, this so-called free-balance-transfer offer gives qualified applicants a 0% introductory APR for 15 months on purchases and balance transfers with $0 introductory balance transfer fee for transfers made during the first 60 days of account opening.

Grads With .EDU Email & Limited/No Credit

BankAmericard Cash Rewards™ for Students Credit Card 465 reviews

(Initial Bonus) – If you apply online, spending at least $500 during the first 90 days you have this card will score you a $100 cash bonus. You’ll also get 3% cash back on gas and 2% on groceries (on the first $1,500 spent in those categories each quarter) as well as 1% on everything else. There is no annual fee.

Journey® Student Rewards from Capital One® Proceed 1,473 reviews

(Cash Back) – This card is both lucrative and conducive to responsible money management, offering 1% cash back across all purchases and 1.25% cash back in months that you pay your bill on time. It does not charge an annual fee.

BankAmericard Travel Rewards® for Students Credit Card 204 reviews

(Travel Rewards) – This student BankAmericard offers a 20,000-point initial bonus for spending $1,000 within 90 days of account opening, redeemable for $200 in travel expenses. It also provides1.5 points per $1 spent and charges neither an annual fee nor a foreign transaction fee.

Regions Student Relationship Rewards® Visa® Credit Card 77 reviews

(0% Financing) – This student credit card offers 0% financing on new purchases for the first 12 months your account is open, and it doesn’t charge an annual fee.

Grads With Inactive .EDU Email OR Credit Missteps

Capital One® Secured MasterCard® Proceed 5,385 reviews

(Partially Secured) – This is a partially secured card, which means it’s possible to get a credit line in excess of your security deposit, depending on your credit standing and disposable income. It has no annual fee.

Discover it® Secured Credit Card 5 reviews

(Secured) – This secured card, which requires a minimum security deposit of $200, stands out because of its lack of an annual fee and its generous rewards: 2% cash back at restaurants and gas stations (up to $1,000 in combined purchases each quarter) and 1% cash back on everything else. All first year earnings are doubled.

Capital One® Platinum Credit Card Proceed 2,101 reviews

(Unsecured: No Missteps) – This card stands out because it requires neither a security deposit nor established credit history for approval and doesn’t charge an annual fee. But if you have any red marks on your credit file, you should probably opt for a secured card instead. Does not charge an annual fee.

10 Money-Saving Tips For College Grads

Even with a specially curated selection of offers to choose from, the absolute best choice can be difficult to identify. And beyond that, an often-scary new world of financial responsibility awaits. But keeping the following tips from CardHub editors and other experts in mind will certainly help you stay on the right path.

  1. Gauge The Market: You need a basis for comparison when comparing credit card offers. Any offer viewed in a vacuum might as well be in another language. As a result, it’s always a good idea to check out our latest Credit Card Landscape prior to submitting an application. Here’s the current lay of the land as far as student cards are concerned:

    • None of the college student card offers that we track have annual fees.
    • The average 0% student balance transfer card waives interest for almost one more month than the overall average 0% transfer card.
    • Both cash back and mile/point-based student initial rewards bonuses are well below the overall market initial rewards bonus average, though.
    • Only 14% (down from 19% last year) of student credit cards lack foreign transaction fees. Students thus need to choose carefully when destined for an international spring break bonanza or overseas post-graduation backpacking trip.

  2. Get Your Priorities Straight: When it comes to prioritizing specific needs within these categories, your course of action will again be quite simple. For starters, cost-effective credit building should be a recent college graduate's top personal finance priority. You should therefore focus on cards that do not charge annual fees. Beyond that, look into rewards if you always pay your bill in full and 0% rates if you don’t – but remember these come after low fees on the card term totem pole.

  3. #SchoolSpirit: Most colleges and universities have a co-branded credit card program, often offered through the school’s alumni association. In addition to promoting engagement with the university (thus boosting donations), such offers may provide good value and should be compared to the best offers you can qualify for.

    For example, the Howard University Credit Card offers a 12-month 0% introductory APR, while the Ohio University Card gives you 20% off your first purchase at campus stores, and both the University of Oregon and Oregon State University cards provide 5 points for all purchases at associated merchants and a 10,000 bonus points for spending at least $500 in the first 90 days.

  4. Automate Everything: Considering young people’s innate forgetfulness and all that comes with starting a new chapter in life, it’s probably best not to rely on memory to meet important deadlines, such as due dates for monthly payments.

    “Most graduating college students already have school loans,” says Richard A. Ferri, founder of the investment advisory firm Portfolio Solutions. “Adding credit card debt only makes things worse.”

    Setting up automatic payments from a bank account will not only prevent your credit standing from taking a hit due to tardiness, but it will also help you avoid wasting money on interest and late fees. You can also set up alerts for when you’re approaching your credit limit in order to minimize credit utilization (and thereby expedite credit building).

  5. Save & Invest: You can set yourself up to withstand future economic downturns by setting aside at least 10% of your take-home each month. Your goal should be to establish a rainy-day fund with about a year’s worth of income, which you can tap in times of trouble. “As a young adult, it’s crucial to have at least a few thousand dollars in the bank to get you through the first few months after graduation,” says Andrew Josuweit, CEO of Student Loan Hero.

    It’s also important to begin saving for retirement as early as possible, whether that means putting money into an IRA (which could be helpful come tax time) or contributing to an employer’s 401(k) plan (especially if there is a contribution matching plan in place). Not only will this remove the temptation to spend, but you’ll also benefit from years of compound interest. Your income might be limited early on, but don’t use that as an excuse to delay getting into good habits.

    “The most common mistake that young people make with their money is not contributing enough to their employer’s retirement plan,” says George Papadopoulos, founder of Fee Only Wealth Management. “At the very least they should contribute enough to participate fully in the matching! If they can maximize their contributions and adjust their lifestyle accordingly and keep it up for several straight years, they will be way ahead than their peers to building wealth.”

  6. ABC: Always Build Credit: The importance of a solid credit score bears repeating, as it affects not only the credit card and loan terms for which you qualify, but also your insurance premiums, job prospects, and ability to find a place to live or a car to drive. In fact, “one could argue that a student’s credit history is far more important to his or her future than grade point average,” says Jennifer Collet, president and CEO of the Missouri Council on Economic Education.

    With that being said, the earlier you can begin building credit, the better (and the more you’ll save over the course of your lifetime). To this end, “It is important for young people to know what elements go into their credit report so they educate themselves on what to focus their efforts to maximize their credit profiles and credit scores,” says Eric Moscato, clinical lecturer in finance at Iona College’s Hagan School of Business.

    You can keep a close eye on your credit by signing up for a free account with WalletHub – the first and only site to offer free credit scores and full credit reports that are updated on a daily basis.

  7. Be Frugal: Not everything you want you need, and the earlier you come to that realization, the less the lesson will ultimately cost you. So approach your money as a limited resource that must be allocated carefully. This manner of thinking will force you to prioritize, and will hopefully enable you to splurge a bit on the things you really care about while saving on unnecessary temptations resisted.

    “Don't think you ‘need’ everything that is promoted in the media,” recommends David C. Talbot, a professor of finance at Plymouth State University. And “live below your income level,” adds Connie Ostwald, an adjunct faculty member at Eastern University. “If you get married, learn to live on one income before kids come along! Do not go in debt (except for a house or car IF you have a job). Never get a parent to co-sign if you can't qualify. If you can't qualify, you can't afford it!”

    Erik Carter, resident financial planner with Financial Finesse, Inc. suggests that you “continue living a student lifestyle as long as possible. It’s tempting to want to automatically increase your lifestyle with a new job but building those savings can make a huge difference in your financial freedom.”

  8. Comparison Shop for Grad School: While attending college is clearly a wise financial move, being strategic about which school to attend, what to major in, and whether or not to pursue an advanced degree will help you maximize the return on your investment and minimize the burden of student loan debt. The average graduate owed about $28,950 in 2014, and our collective student loan debt now exceeds $1.3 trillion. The best approach is to compare cost disparities among different institutions, majors, and advanced degrees to the employment rates and average salaries of alumni.

    “When finance is ignored in life decisions, young people lose out big time on future opportunities,” says Peter Bielagus, founder of Wealth Educators International. “The student who falls in love with a college because it has a cool campus and a new $80 million dollar fitness center, but borrows through the nose to go there, sets their life on a very limiting path.”

  9. Relocate Opportunistically: Although it might be tempting to stick around somewhere familiar, moving (at least temporarily) could make a great career move, considering that job prospects in a given field can differ considerably in across the country. Checking out the Best & Worst Cities for Wallet Wellness will give you an idea of which cities’ economies are growing and where average salaries go the furthest considering the cost of living.

  10. Improve Your Financial Literacy: Experts generally agree that most students are not ready for financial adulthood upon leaving campus. This includes Stephen Kidd, director of the finance program at The University of Charleston, who says it is “an area that needs much more focus throughout our college and university systems,” and Shawn Cavalli, a professor of business at the Community College of Aurora, who calls for educators to “do a better job of teaching students how to manage money wisely,” as it is the “type of education that will pay dividends for the rest of our students’ lives.”

    Indeed, the financial unpreparedness of most college graduates is “one of the worst failings of higher education,” according to Thomas Smythe, an associate professor at Furman University, particularly since it is “it is the one area of life that we know everyone has to deal with whether they like it or not.”

    So, for your own sake, you’d better get with the program and start learning the tenets of responsible money management as soon as possible. You can get a sense of where skills stand by taking our quiz and getting your WalletLiteracy Score Doing so soon after graduation is especially important, considering “the biggest financial impact and habits can be made in the first few years after graduation,” according to Gregory A. Kuhlemeyer, a professor of business at Carroll University.

Bonus: The Most Common Mistakes Recent Grads Make… CardHub polled a panel of personal finance experts for tips on what recent graduates should not do with their money, and you can find their guidance below.
  • “Making only the minimum payment on credit cards.” - David C. Talbot – Professor, Plymouth State University
  • “Moving back in with parents! Kids don't learn to struggle for financial independence when their parents enable them to remain dependent children!” - Connie Ostwald – Adjunct Faculty, Eastern University
  • “Getting into too much debt. We live in the age of credit cards and easy debt. When you pay with a credit card, psychologically, there is less loss than with cash and it’s easy to overspend in order to get what you want now as opposed to saving the money to get it later.” - Shawn Cavalli – Professor, Community College of Aurora
  • “Oftentimes the excitement of work causes them to deal only with the urgent things, and they forget about the important things. One important example is retirement planning. The first dollar saved in retirement is the most important, as it will spend the longest amount of time growing.” - Christopher J. Mason – Associate Professor, Concordia College
  • “I see two. 1) They don't begin saving 15% of their income for retirement with their first job. They all think "they have time," but they don't understand that once they establish a certain lifestyle that it is virtually impossible to go back. 2) They finally have a paycheck and feel like they need to buy everything at once. This usually leads to a path of debt purchases that get out of control. It's that need for instant gratification.” - Thomas Smythe – Associate Professor, Furman University
  • “Not thinking about the long-term impacts versus the short-term gratifications and needs.” - Gregory A. Kuhlemeyer, Ph.D. – Professor, Carroll University
  • “Not saving enough, either because they’re spending too much or because they’re putting savings towards paying off low-interest rate student loans faster. Young people are in need of short term savings to cover emergencies since they’re most likely to be in-between jobs and to buy a first home. They also have the time to invest aggressively for retirement and earn more than they would save by paying down low interest debt like student loans.” - Erik Carter - Resident Financial Planner, Financial Finesse, Inc.
  • “Young people, having little concept of the power of compounded returns, have little understanding of the need to begin investing at an early age. Young people then become old people with little set aside for their retirement security.” - Stephen Kidd - Assistant Professor and Finance Program Director, The University of Charleston
  • “The most common mistake young people make with their money is thinking and believing that since they generally have so little money, there's no point in getting educated about personal financial management. But regardless of your income, you are always spending money and making decisions that impact your finances, so it pays to get smarter sooner.” - Eric Tyson, author of Personal Finance for Dummies

Community Discussion

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