There comes a time in one’s life when it’s necessary to use a credit card. Actually, scratch that. There are many times throughout life when a credit card comes in handy, and because your financial needs evolve as you age, the type of card you need does as well. Credit cards are no different than anything else that remains part of your life as you grow older. The clothes you wear in high school, for example, are likely far different than those you don when you have a career and a family, both because your tastes change and because your lifestyle requires a different wardrobe.
While the constant fluctuation of credit card offers prevents us from listing specific products, understanding the type of card to look for in each stage of life will make selecting a specific card that much easier when the time comes. Below you can find our recommendations grouped by life stages ranging from high school all the way to retirement
Life Stage: High School<h2/span>
Objective: Improving financial literacy & Building credit
Type of Card: Authorized user on parents’ credit card of choice
Explanation: Individuals under the age of 18 cannot open credit cards themselves, but they can become authorized users on their parents’ accounts. This can be quite helpful in teaching kids how to properly manage their own finances before they leave for college, not to mention beginning to build credit in their own names as early as possible.
Life Stage: College
Objective: Building credit
Type of Card: Student credit card with the lowest-fee structure possible
Explanation: Building credit is integral to one day qualifying for a mortgage, taking out a loan, buying or leasing a car or even getting some jobs. A credit card is the easiest way to build credit, and having the lowest fee structure possible eases the financial burden of this process.
Objective: Paying for everyday expenses
Type of Card: Rewards credit card (with extra rewards on gas and groceries)
Explanation: Young adults become responsible for more expenses in college, so why not get a credit card that effectively helps you save on such purchases? Just make sure that using a credit card for everyday expenses does not lead you to carry a balance at the end of the month by charging more than you can afford.
Life Stage: Recent College Graduate
Objective: Travel
Type of Card: No foreign transaction fee credit card
Explanation: Most credit cards charge 3% transaction fees for purchases processed abroad. The last thing you want is for your trip to cost 3% more without getting anything in return.
Objective: Big-ticket purchases
Type of Card: 0% APR credit card
Explanation: This type of card allows you to pay off significant purchases (e.g. furniture for a new apartment) with no interest for a certain period of time. Make sure to pay the balance of any such purchase either before or shortly after the introductory 0% period concludes because regular APRs are often 15-20%.
Objective: Paying for everyday expenses
Type of Card: Cash back credit card (with extra cash back on your biggest expenses)
Explanation: Recent graduates who have already begun the credit building process can begin earning rewards on their spending. Cash back credit cards provide the most versatile, hassle-free rewards, and many of them provide particularly high earning rates on spending categories ranging from gas and groceries to travel and dining in addition to a base earn rate of 1% cash back on everything else.
Life Stage: Traveling for Work
Objective: Maximize rewards
Type of Card: Rewards credit card tied to your airline or hotel of choice
Explanation: Many companies will either give you a corporate card for business travel or reimburse you for charges made on your personal card. If the latter is true in your case and you always use the same airline or stay at the same chain of hotels, get a credit card tied to that business and earn rewards on what are basically your company’s expenses. If, however, your travel requires you to use different airlines and hotel chains, then get one of the best rewards credit cards with generic travel benefits.
Life Stage: Starting a Business
Objective: Managing and tracking business expenses
Type of Card: A rewards business credit card
Explanation: A rewards business credit card is well-suited for purchases that will be paid for in full by the end of the month because it makes tracking business purchasing easy while allowing you to give employees cards with customizable limits and earn rewards on their spending.
Objective: Funding your business
Type of Card: Any low-interest personal credit card or a low-interest business credit card with CARD Act protections
Explanation: Business credit cards were not included in the scope of the Credit Card Act of 2009, so the law’s provision which prohibits interest rate increases being applied to existing balances unless the account holder is at least 60 days delinquent does not pertain to most business credit cards. Until this changes, a personal credit card might be your best bet for business funding because it ensures the cost of your debt won’t increase for no fault of your own.
Life Stage: Getting Married
Objective: Funding your wedding
Type of Card: 0% APR credit card
Explanation: Let’s face it, weddings are expensive, and while they’re definitely not worth getting into debt for, you might need a few extra months to completely pay down your wedding expenses. 0% credit cards buy you as long as 21 months to recover from the financial shock of a wedding without having to pay any interest.
Objective: Freebies for the honeymoon
Type of Card: Travel rewards credit card with a high initial bonus
Explanation: From time to time, different travel-oriented credit cards offer high initial rewards bonuses for simply signing up and charging a certain amount in the first few months. These bonuses are often enough to get a free flight or hotel stay, so monitor credit card offers leading up to your wedding and take advantage of the most lucrative one you can find. Don’t be surprised if you end up getting as many as 100,000 free miles or points by doing so.
Life Stage: Birth of Child
Objective: Easing the financial burden of added everyday expenses (e.g. diapers)
Type of Card: Cash back credit card with a high earning rate on groceries and department store purchases.
Explanation: One of the biggest financial changes that comes with having a child is the added everyday expenses. Your shopping list will now expand to include things like diapers, baby food, and new clothes. Some cash back credit cards offer as much as 5% cash back on grocery and/or department store purchases, which can really add up to big savings over time.
Objective: Saving for college
Type of Card: 529 college savings credit card
Explanation: Many parents open a 529 plan for their kids, which is a tax-advantaged savings plan designed to encourage saving for future college costs. An easy way to boost your 529 plan is to get a 529 credit card, which automatically deposits 2% cash back rewards from all your purchases into your 529 plan. Because family members can also link their 529 credit cards to your 529 plan, your child’s grandparents can also help contribute if they wish.
Life Stage: Buying a Home
Objective: Lowering the cost of interest for big-ticket purchases
Type of Card: 0% APR credit card
Explanation: When you buy a new home, your expenses will usually exceed the house’s buying price. In most cases, you will need to make some repairs, replace an appliance or even buy additional furniture. A 0% credit card allows you to pay down these big-ticket purchases interest-free for as long as 21 months, thereby helping you save.
Life Stage: Mid-Life Crisis
Objective: Big-ticket purchase
Type of Card: 0% APR credit card
Explanation: While it’s best not to let any mid-life crisis manifest itself in unnecessary materialism, if you’re going to make an extravagant purchase, you might as well avoid unnecessary interest expenses. 0% credit cards allow you to pay down purchases interest-free for as long as 21 months. Just make sure to use a credit card payoff calculator to determine the payments necessary to reach zero balance by the time the low-interest introductory period concludes and high interest rates kick in.
Objective: Travel
Type of Card: Travel rewards credit card with high initial bonus
Explanation: Rewards credit cards sometimes offer special one-time rewards bonuses just for signing up and spending a certain amount in the first few months. These bonuses are often enough to get you a free flight or hotel reservation, so look out for them and save on your mid-life-crisis-inspired travel plans.
Life Stage: After bankruptcy or foreclosure
Objective: Improving credit
Type of Card: Second chance credit card
Explanation: Declaring bankruptcy or having your house foreclosed on is extremely detrimental to your credit standing. While information about bankruptcy or foreclosure will remain on your major credit reports for 7-10 years, adding positive usage information will gradually diminish its importance and help revive your credit score. Secured credit cards will help you accomplish this because information about credit card use is sent to your credit reports on a monthly basis, they prevent you from getting into credit card debt, and most secured cards have low fee structures, allowing you to build credit as cost-effectively as possible.
Life Stage: Retirement
Objective: Saving for retirement
Type of Card: Retirement credit card
Explanation: Some credit cards, like the Fidelity Retirement Card, reward you with up to 2% cash back that gets deposited directly into an IRA or other retirement account. This can help build your nest egg, allowing you to reach your retirement savings goal just that much faster.
Objective: Travel
Type of Card: Travel Rewards + No Foreign Transaction Fee
Explanation: Many retirees decide to travel. If you get a travel rewards credit card with no foreign transaction fees enough in advance, you will not only avoid paying the 3% foreign transaction fees that most credit cards charge, but you might be able to pay for your trip with the miles or points you earn.
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