With loads of credit-building options available for new grads, it can be difficult to figure out the best credit card perks. Some credit cards come with amazing benefits and money-saving features — you just have to know how to go about picking a credit card and what perks are the sign of a good one.
Whether you’re researching a MasterCard, Visa, Discover, or American Express card, look over the standard benefits before you apply. These can be found on your credit card company’s website or by searching the Consumer Financial Protection Bureau’s credit card agreement database.
Here’s what to look for in the best credit cards for young adults.
Price and purchase protection
A good first credit card will include price and purchase protection. Price protection helps you find the best-priced item within a specific time period. If you make a purchase using your credit card and find a lower price on the same item, the credit card company will refund you the difference.
Purchase protection, also called damage protection, insures your purchases from accidental damage or theft. The timeframe and exact amount of each kind of protection vary with the credit card you choose.
Most cards also come with extended warranties for purchases in the event the item is defective. This could save you a lot of money over the long run, so make sure it comes standard with whatever kind of credit card you choose.
Fraud protection alerts
The best starter credit card will also come with fraud protection. This perk alerts you when suspicious activity is posted to your account.
In the event your card is stolen or lost, you want to make sure you’re protected from fraudulent charges. Alerts can save time, preventing the thief from making more purchases and helping you recognize the theft faster.
Rewards on-time payments
Some cards actually reward users with an increased credit limit after paying the bill on time for several months. In addition, seek out perks like having the first late payment fee waived and no penalty APR.
Rewards like this can motivate you to establish good spending habits — an essential benefit of any good first credit card.
No excessive fees
As a new college graduate, it’s often difficult to find a low-fee credit card since your credit history is limited. Still, do your best to seek out the best credit cards for college graduates with as few fees as possible.
While it’s not practical to avoid every type of fee, here are some of the most common ones you’ll want to limit:
- Balance transfer fee
- Super high interest rate
- Finance charges
- Foreign transaction fee
- Over-the-limit fee
- Late payment fee
- Cash advance fee
No annual fee
If you’re unable to find a card that has very few fees, prioritize the best credit cards for young adults without an annual fee. This is a fee you pay once a year to own the card and access premium benefits. However, this type of charge is usually not the worth the price as a new college grad.
The perks of premium credit cards may be tempting, but it’s more important to keep your hard-earned money. Choose a credit card with no annual fee.
Relevant rewards categories
Look for the best starter credit card that gives cash back rewards or points on purchases in the categories you spend the most.
If most of the purchases you’ll make with this new card will likely be social or entertainment related, make sure the card will reward you accordingly. Check out the rewards program attached to the card to be sure you can cash these rewards in for things you actually want, such as a cash deposit into your checking account or a statement credit.
Reports to all three credit bureaus
As you’re building credit, it’s important to choose a credit card that reports to all three credit bureaus: Experian, TransUnion, and Equifax. Establishing a good history of credit using a credit card is a good start, but it takes time.
While most credit card companies do report the transaction history to these credit bureaus, not all of them do. That makes this an important perk to seek out as you research the best credit cards for young adults.
Free FICO score monitoring
In addition to credit bureau reporting, choose a credit card that includes free FICO score monitoring. You should be able to access your credit score on a monthly basis. This is a fairly new feature, but one that can help you keep track of your credit score and monitor how your credit history is stacking up.
Obviously, you want to look for a financial institution that offers a credit card with mobile-friendly access to your account. You’ll track your purchases and check in on your account more often if you can access it from anywhere.
A great place to look for your first credit card is with the bank you currently use. They will usually be able to use your past history with the bank as a way of improving your chances of getting approved for a better credit card.
When looking for the best credit cards for young adults, take your time to read through the list of benefits and fees. Then use this checklist to ensure you maximize your spending while staying away from excessive credit card fees.
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