As a newly graduated student looking to build credit, you’re probably asking yourself, “What credit card should I get?”
Perhaps you’ve had some experience with credit, or maybe this is your initial exposure to choosing your first credit card. Either way, here’s what to look for when searching for the best credit cards for college graduates.
1. Know your credit score
Before applying for any credit card, it’s important to know how your credit score will impact your chances of approval. As a new grad, you’re likely starting out with little to no credit history, and therefore may not be able to qualify for credit cards with more prestigious rewards.
It’s a good idea to review your credit report so you can see where you stand. You can do this by checking your information for free via AnnualCreditReport.com or a site like Credit Karma. Having a grasp on what your credit score is will help you prioritize the cards that are most likely to approve you.
The more credit you apply for, the more hard inquiries will be posted to your credit history. This can negatively impact your credit, so apply wisely and choose ones you know you’ll have a good chance of getting approved.
2. Look for the best bonuses and perks
What are your spending habits like? Do you spend money in a particular category, like food or gas, more than others? It’s important to answer these questions so you can look for the best perks and credit card bonuses.
In addition, read the fine print to see what kind of limitations there are, how you can cash in your rewards, and if the points expire. Some of the best credit card perks for new grads include:
Low or no interest
Though you should always strive to pay off your credit card balance each month, sometimes emergencies happen. For those times when your budget is stretched thin, it’s in your best interest to look for a low-interest credit card or a no-interest promotion.
This could save you hundreds of dollars when using your card. Be sure you fully understand the rules and limitations of the low- or no-interest offer before using your card.
Rewards or cash back
Bonus rewards and cash back are popular perks that most credit cards will use to reward customers for charging purchases to their card. This can be in the form of travel points, airline miles, or straight up cash back rewards. Look for a card that offers additional points or rewards for the categories you spend the most in.
Secured line of credit
In the event you don’t qualify for an unsecured credit card with great perks, you can still apply for a secured card with a small line of credit. You’ll be required to pay a deposit until you’re able to build up a good history of credit and can apply for other unsecured cards.
If you don’t have a full grasp on your spending habits yet, it could be your best bet to apply for a general cash back rewards credit card so you earn points for all your purchases, no matter what category.
Most of the time, your current bank will offer a credit card that best fits your needs based on your past spending history or history as a customer. So that’s an excellent starting point when looking for credit card perks.
3. Watch out for credit card fees
One of the most important things to consider when choosing your first credit card is to thoroughly review the fees. With the plethora of credit cards available on the market today, there’s no reason you should have to pay an annual fee or high-interest charges.
Watch out for these common credit card fees that can easily be avoided:
Unless you’re using a platinum card with major perks, it’s best to avoid cards that have annual fees. There are lots of options for good credit cards that offer plenty of rewards or cash back and don’t come with an annual fee.
This fee will eat into your rewards and could cause you to pay out-of-pocket just for the convenience of plastic. You may not get the highest perks or reward-earning capabilities, but once you have a good handle on credit cards you’ll be able to apply for more robust ones.
A finance charge is the interest you’ll pay to the credit card company for any balance that you don’t pay off within the 30-day grace period. This amount will vary based on your total balance and interest rate you’re approved for when you applied for the credit card.
If the card you choose comes with a fairly high finance charge, you can avoid this by paying off your balance in full every month.
Foreign transaction fee
This isn’t something you’ll have to worry too much about unless you plan to leave the country and use your credit card for overseas purchases. In the event your job sends you overseas or you want to go on an international vacation, you’ll be glad you don’t have a card that charges you a 2 or 3 percent fee each time you swipe it.
Late payment fee
Obviously, you want to avoid late payments as much as possible, but accidents happen. Verify what your late payment fee is with this card so you know the consequences if you somehow miss a bill.
It can be a bit difficult to get used a limit on a credit card, especially one that’s only $500 or $800. It’s easy to over-extend yourself financially and end up overcharging your card. If you do, you’ll end up paying an over-the-limit fee.
To avoid these fees carefully review your credit card terms and conditions, so you’re familiar with everything the card offers before you start using it. Responsible credit card usage means you won’t have to pay unnecessary fees and can maximize the card’s rewards.
What credit card should I get?
The answer to “What credit card should I get?” will be different for everyone, based on your financial habits and spending categories. However, there’s one financial move that’s still good advice: Use your new card responsibly so you don’t end up chasing payments for the next few years.
Once you receive and activate your new credit card, don’t be tempted to rack up the entire credit balance all at once. Start by simply charging one regular bill to your credit card, and set up an automatic payment from your bank to pay off the balance every month.
Don’t use the credit card for anything else until you get a good grasp on how this new plastic works. Doing this will essentially put your credit building on auto-pilot and keep you from overspending.
When choosing your first credit card as a new grad, shop around and compare perks, interest rates, and fees. Don’t make the mistake of choosing a credit card too quickly. Make sure the rewards are something that will actually benefit you.
Having a credit card is one of the best ways to establish a good history of credit and set yourself up for a solid financial future with banks. However, it can also do the opposite if it’s not managed properly. For a sound financial future, research the best credit cards for college graduates and spend wisely.
Interested in refinancing student loans?Here are the top 6 lenders of 2018!
|Lender||Variable APR||Eligible Degrees|
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1 Important Disclosures for Earnest.
To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.
Earnest fixed rate loan rates range from 3.89% APR (with Auto Pay) to 7.89% APR (with Auto Pay). Variable rate loan rates range from 2.47% APR (with Auto Pay) to 6.97% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of Month/Day/Year, and are subject to change based on market conditions and borrower eligibility.
Auto Pay discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.
The information provided on this page is updated as of 08/21/18. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, email us at firstname.lastname@example.org, or call 888-601-2801 for more information on ourstudent loan refinance product.
© 2018 Earnest LLC. All rights reserved. Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by or agencies of the United States of America.
2 Important Disclosures for Laurel Road.
Laurel Road Disclosures
APR stands for “Annual Percentage Rate.” Rates listed include a 0.25% EFT discount, for automatic payments made from a checking or savings account. Interest rates as of 11/8/2018. Rates subject to change.
Variable rate options consist of a range from 3.27% per year to 6.09% per year for a 5-year term, 4.64% per year to 6.14% per year for a 7-year term, 4.69% per year to 6.19% per year for a 10-year term, 4.94% per year to 6.44% per year for a 15-year term, or 5.19% per year to 6.69% per year for a 20-year term, with no origination fees. APR is subject to increase after consummation. The variable interest rate will change on the first day of every month (“Change Date”) if the Current Index changes. The variable interest rates are based on a Current Index, which is the 1-month London Interbank Offered Rate (LIBOR) (currency in US dollars), as published on The Wall Street Journal’s website. The variable interest rates and Annual Percentage Rate (APR) will increase or decrease when the 1-month LIBOR index changes. The variable interest rates are calculated by adding a margin ranging from 0.98% to 3.80% for the 5-year term loan, 2.35% to 3.85% for the 7-year term loan, 2.40% to 3.90% for the 10-year term loan, 2.65% to 4.15% for the 15-year term loan, and 2.90% to 4.40% for the 20-year term loan, respectively, to the 1-month LIBOR index published on the 25th day of each month immediately preceding each “Change Date,” as defined above, rounded to two decimal places, with no origination fees. If the 25th day of the month is not a business day or is a US federal holiday, the reference date will be the most recent date preceding the 25th day of the month that is a business day. The monthly payment for a sample $10,000 loan at a range of 3.27% per year to 6.09% per year for a 5-year term would be from $180.89 to $193.75. The monthly payment for a sample $10,000 loan at a range of 4.64% per year to 6.14% per year for a 7-year term would be from $139.65 to $146.76. The monthly payment for a sample $10,000 loan at a range of 4.69% per year to 6.19% per year for a 10-year term would be from $104.56 to $111.98. The monthly payment for a sample $10,000 loan at a range of 4.94% per year to 6.44% per year for a 15-year term would be from $78.77 to $86.78. The monthly payment for a sample $10,000 loan at a range of 5.19% per year to 6.69% per year for a 20-year term would be from $67.05 to $75.68.
However, if the borrower chooses to make monthly payments automatically by electronic funds transfer (EFT) from a bank account, the variable rate will decrease by 0.25%, and will increase back up to the regular variable interest rate described in the preceding paragraph if the borrower stops making (or we stop accepting) monthly payments automatically by EFT from the designated borrower’s bank account.
3 Important Disclosures for SoFi.
4 Important Disclosures for LendKey.
Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.
5 Important Disclosures for CommonBond.
Offered terms are subject to change. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900). If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown.
All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate. All variable rates are based on a 1-month LIBOR assumption of 2.28% effective October 10, 2018.
6 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|2.47% – 6.99%3||Undergrad & Graduate|
|2.57% – 6.97%1||Undergrad & Graduate|
|2.51% – 8.09%4||Undergrad & Graduate|
|3.02% – 6.44%2||Undergrad & Graduate|
|2.50% – 7.24%5||Undergrad & Graduate|
|2.79% – 8.39%6||Undergrad & Graduate|