If you're fresh out of college, your credit card options will likely be limited. Here's why:
If you never had a student credit card to practice with, you may have thin or no credit.
If you had a student credit card but ran into trouble managing it responsibly, you may have bad credit.
Whichever category you may fall into after graduation, here are some beginner-friendly credit cards that can help you reach your credit goals.
Options if you have no credit
Petal® 2 "Cash Back, No Fees" Visa® Credit Card
The $0-annual-fee Petal® 2 "Cash Back, No Fees" Visa® Credit Card offers up to 1.5% cash back on all purchases and additional cash back when you shop with select merchants. Plus, it has zero fees. The card is issued by WebBank, and you don’t need a security deposit to qualify.
Petal may not rely solely on credit scores to determine eligibility. The company has a machine-learning underwriting model that allows its issuer to look at income, expenses, savings and debts. Payments are reported to all three credit bureaus, which is ideal when you're trying to establish credit.
The $0*-annual-fee Jasper Mastercard®, also issued by WebBank, is ideal for working professionals who are new to credit. It doesn’t require a credit history and you don’t need a Social Security number upfront in some cases (although one must be reported within 60 days of activating the card). Without a Social Security number, you must provide passport and visa information, along with proof of income in the U.S.
The company evaluates applicants using factors such as debt-to-income ratio. As a starter card, it earns decent rewards of at least 1% cash back on all eligible purchases. It also offers a potentially eye-catching credit limit of up to $5,000, depending on eligibility. It’s a credit-building option even though it doesn’t report to all three major credit bureaus. Payments are reported to Equifax and TransUnion only, so activity on your account won’t show up in credit scores or reports pulled from Experian.
» MORE: Review of the Jasper Mastercard®
Options if you have fair credit
Capital One QuicksilverOne Cash Rewards Credit Card
The Capital One QuicksilverOne Cash Rewards Credit Card is a solid starter card for new graduates. It earns an unlimited 1.5% cash back on all purchases. You’re also automatically considered for a higher credit limit in as little as six months, which could bump up your credit scores. (A higher credit limit can lower your credit utilization ratio, a key factor in your scores.)
The card has a $39 annual fee.
Options if you have bad credit
Discover it® Secured Credit Card
The $0-annual-fee Discover it® Secured Credit Card is among the most generous secured card options. It offers 2% cash back on up to $1,000 spent per quarter on restaurants and gas, and 1% back on all other purchases. It requires a minimum security deposit of $200 to qualify.
That deposit may be a bit steep, but it could be worth it, as this card offers incentives and a possible path to upgrade to a better card. With responsible use over eight months, Discover reviews your account to see whether you’re eligible to upgrade to a traditional unsecured credit card. Discover also reports payments to all three credit bureaus.
The Tomo Card, created by San Francisco-based startup TomoCredit, doesn’t perform a hard inquiry on your credit, even when reviewing an application. So if you have bad credit, it won’t hurt your credit scores when you apply. Instead, you’ll have to link your bank account so that the company’s proprietary technology can review multiple data points about you, including your income, or income potential, and your account balances. The bank that issues the card, New York-based Community Federal Savings Bank, uses this data to determine whether you qualify.
There’s no security deposit, annual fee or APR, since the Tomo Card doesn’t let you carry a balance. Unlike other credit cards for bad credit or no credit, this one offers a decent 1% cash back on all purchases. Your payments are reported to all three major credit bureaus. The application process isn’t as seamless as it is with other cards and may take longer, but it’s a solid option if you can’t qualify for other options.
» MORE: Review of the Tomo Card
Chime Credit Builder Visa Secured credit card
The Chime Credit Builder Visa Secured Credit Card is technically a secured card, but it breaks away from that traditional mold in several ways. It doesn’t require a hard credit check, and you don't have to pay a minimum security deposit upfront. It does require a Chime Spending Account and at least $200 in direct deposits made to that account within the past 365 days, but that might be easier to swing than having to put up several hundreds of dollars all at once for a traditional security deposit.
The money you move from that Chime Spending Account to the Credit Builder secured account determines your credit limit. You can also use this money to pay off your balance, and when you do, those payments are reported to all three major credit bureaus. The card also packs features that can keep you out of debt. It doesn’t charge interest or fees because you can’t carry a balance from one month to the next.
Grow Credit Mastercard
The Grow Credit Mastercard, issued by Sutton Bank, is a virtual card that offers the chance to build credit while paying for qualifying monthly subscriptions like eligible bills, TV, music and other streaming services. There’s no credit check or security deposit required for this card. The company requires you to link a bank account, then it applies its own proprietary technology that looks at income to evaluate eligibility.
You have the option of choosing one of three membership plans, depending on eligibility. Each one has a different cost, a different monthly spending limit and different subscriptions that qualify. For example, the free membership plan allows you to build credit with subscriptions like Netflix, Pandora, Spotify, Amazon Prime and others. Paid membership plans cost $4.99 per month or $9.99 per month and they include "premium" subscriptions that allow you to build credit with Verizon Wireless, AT&T, Sprint or T-Mobile payments, among others.
The Grow Credit Mastercard functions like a credit card in some ways, but you can’t use it to spend on every purchase. It’s an installment loan for credit-building purposes, and it’s reported that way to all three major credit bureaus. You can only charge those specific subscription transactions, up to a certain amount, since the line of credit is small. And as with some of these other options, you can’t carry a balance from month to month. The card doesn’t charge any interest or fees beyond the cost of the membership plans.