Most people scoff at the idea of providing credit cards to young adults, but if you’re a parent concerned about your teen’s financial future, then you should consider the benefits of them obtaining a credit card. Not only does it provide them with financial security, but it also allows for some parental peace of mind knowing that they have access to emergency funds at all times. Below we’ve listed 4 cards with major benefits for young adults!
Why Get a Credit Card at a Young Age?
Allowing your kids to use credit cards comes with several benefits. For starters, it enables them to learn how to manage credit provisions responsibly. Without a doubt, there is no better time for teens to learn how to manage their credit cards than when they are still under your care. Using a credit card also helps teens build their credit. Through this, they will be able to apply for car loans and other financings without a cosigner.
It’s important to note that to be eligible for a credit card, applicants must be at least 18 years of age. Getting started at this young age allows young adults to prepare themselves for the financial journey that is adulthood.
Best Credit Cards for Students
1) Capital One Journey Student Rewards
The Capital One Journey Student Rewards card suits college students and teens with limited or no credit[i]. It offers 1% cash back on every purchase and a 25% bonus monthly for those who make their payments before the due date. Like other teen credit cards, this credit card helps teens know more about credit and monitor their credit scores over time.
With the help of CreditWise, those with this card can understand their credit score, monitor changes through alerts, and monitor individual credit information with ease. All these are crucial for teens looking to improve their credit score. The bank increases the credit limit of holders after six months and has no chargeable foreign-transaction fees. This minimizes the costs, especially for teens studying abroad.
- Has cash back, which is unusual for student cards
- Credit limit increases over time
- No annual fees
- No foreign transaction fees
- Low cash back rates
- No bonus categories
2) Bank of America Travel Rewards Credit Cards
The Bank of America Travel Rewards Credit Cards is the best overall and best travel teen credit cards available[ii]. The card has a high earning rate on the rewards program, which can be redeemed for vacation packages, rental cars, baggage fees, flights, and cruises.
The credit card currently offers 25,000 bonus points for those who spend up to $1,000 in purchases within the first 90 days. The points can be redeemed for a $250 statement credit for travel-related purchases. Like other suggested credit cards, it has no annual fees and lacks a foreign transaction fee, which makes it ideal for students who travel outside the U.S.
- No interest if you pay off the balance within 12 months
- No foreign transaction fees
- Decent travel reward earnings
- Rewards cannot be transferred
- High introductory bonus offer
3) Discover it Secured Credit Card
The Discover it Secured Credit Card is the best choice of credit card for teens for its bonus offers[iii]. The credit card offers a bonus matching the cash earned in the first year of usage. This offer suits those who are strategic with their purchases in the first year. That aside, the card doesn’t have annual fees and has a 5 percent cash back.
- Large bonus in the first year
- High rewards on alternating spending categories
- Reward for students who maintain good grades
- Alternating spending categories require users to register quarterly
4) Chase Freedom Unlimited Credit Card
Another great credit card of choice is the Chase Freedom Unlimited Credit Card for many reasons[iv]. For starters, teens earn up to $200 for spending $500 within the first 3 months after opening the account. There is also a 5 percent cash back on grocery store purchases or expenses of up to $12,000 in the first year. Users earn a 1.5% cash back on other purchases.
Similarly, the card has no annual fees, no minimal figure to redeem cash back, and 0% introductory APR for the first 15 months.
- No annual fees
- Cash back on grocery purchases
- No minimum required to redeem cash back
- Requires one to spend largely on the first months to get a bonus
The Bottom Line
Credit cards for teens are available in two types. Though both are referred to as starter cards, there are college student credit cards and credit cards for teens with no credit. Fortunately, the best credit cards for teens have several things in common. From the various types mentioned above, all are available for teens with no or limited credit history, have no or low annual fees, and great cash back offers. The combination of these features enables teens to build their credit scores while saving money. With the wide availability, search widely before deciding on the best credit card for your teen.
[i] Capitalone.com. 2020. Capital One Credit Card Reviews | Capital One. [online] Available at: https://www.capitalone.com/credit-cards/reviews/?prodid=journey [Accessed 2 September 2020].
[ii] Bank of America. 2020. Bank Of America® Travel Rewards Credit Card For Students. [online] Available at: https://www.bankofamerica.com/credit-cards/products/student-rewards-credit-card/ [Accessed 2 September 2020].
[iii] Cards, C., Cards, S. and Card, D., 2020. Discover It Student Cash Back Credit Card | Discover. [online] Discover.com. Available at: https://www.discover.com/credit-cards/student/it-card.html [Accessed 2 September 2020].
[iv] Creditcards.chase.com. 2020. Chase Freedom Unlimited Credit Card | Chase.Com. [online] Available at: https://creditcards.chase.com/cash-back-credit-cards/freedom/unlimited [Accessed 2 September 2020].