College graduation is anything but traditional this year thanks to the coronavirus pandemic. While it probably seems like much is out of your control right now — like future job prospects or renting a new apartment — there are certain financial milestones you can take to steer yourself in the direction you want.
Opening your first credit card is an important step on your journey to financial success and something you can do today. And if you already have a student card, now could be a good time to upgrade to a new card that's better suited for the needs of your post-grad life.
As a recent college graduate, you should aim to open a credit card with a low or no annual fee, especially if you don't have a job yet. Annual fee cards can be an unnecessary cost — and as your credit improves, there will be lots of time to enjoy a premium credit card one day. With this in mind, four out of the five cards we recommend below have no annual fee.
If you have no credit history or bad credit, you can start off with a secured card or a card that doesn't check your credit report. If you started building credit in college, you may have a fair, good or excellent credit score that allows you to qualify for a cash-back card or interest-free offer.
Before you apply for any of the cards below, check your credit score. This helps you narrow down the cards you may qualify for and makes the decision process a bit easier.
Now onto our list: Below, we review the best credit cards for college graduates, sorted by what credit score you need, so you can find the next card for your wallet.
1% cash back on eligible purchases and 1.5% after you make 12 on-time monthly payments
14.49% to 25.49% variable
Who's this for? Recent grads who didn't have a credit card in college or who don't currently have any information on their credit reports need a card for people just starting out. Our first choice is the Petal® Visa® Credit Card, issued by WebBank Member FDIC.
The Petal Card doesn't set credit requirements, so if you have no credit history, you may qualify for this card over alternatives. During the application process, you may be asked to link bank accounts so the creditor can review your bank statements and other data, such as bill payments and earnings. If you have a history of paying your other bills on time, or if your bank account shows regular income, Petal will consider this in your application.
But keep in mind, if you do have a credit history, it will factor into the credit decision.
Beyond a unique application process, the Petal Card forgoes many common credit card fees. There are no annual fees, no late payment fees and no foreign transaction fees.
Plus cardholders can earn 1% cash back on eligible purchases, which can increase to 1.5% cash back after you make 12 consecutive, on-time monthly payments. This is a great way to encourage timely payments, which is the most important factor of your credit score.
Check out the best credit cards for building credit.
This card doesn't offer cash back, points or miles
No current offer
N/A for purchases and balance transfers
26.99% variable on purchases and balance transfers
No credit history
Who's this for? If you have bad credit, the card options you have to choose from are typically limited. Your choices will likely include cards with annual fees and high interest rates or secured cards that require a deposit. A secured card, such as the Capital One® Secured Mastercard®, is a great way to rebuild credit and work up to an unsecured card.
The Capital One Secured Mastercard is unlike other secured cards that require a minimum $200 security deposit. Cardholders have the opportunity to qualify for a lower $49 or $99 deposit, based on your creditworthiness, and still receive a $200 credit limit. If you don't qualify, the minimum deposit is $200.
This card also provides the chance to get a higher credit limit (with no additional deposit) after you make your first five monthly payments on time. This is a great incentive to maintain positive payment history.
Check out the best credit cards for bad credit.
1.5% cash back on all purchases
Who's this for? Grads who started building credit late in college or are recovering from mistakes they made when they were younger may now have a fair/average credit score. If that's you, don't think rewards cards are out of reach. The Capital One® QuicksilverOne® Cash Rewards Credit Card requires average credit and offers a decent 1.5% cash back on all purchases.
Similar to the Capital One Secured Card, you can receive a higher credit limit after making your first five monthly payments on time, which can be helpful if you're not approved for a high credit limit right away.
While this card has a $39 annual fee, you can offset it by spending $2,600 a year on your card (see our methodology below). This might be manageable if you work part-time or full-time.
The QuicksilverOne Card is a good choice if you plan to travel outside the U.S. since there are no foreign transaction fees and it comes with travel accident insurance, auto rental collision damage waiver and 24-hour travel assistance services.
Check out the best credit cards for fair and average credit.
Unlimited 1.5% cash back on all purchases
Earn a $150 statement credit after you spend $1,000 in purchases in your first 3 months
0% intro APR on purchases and balance transfers for 15 months from the date of account opening
12.99% to 23.99% variable
Either $5 or 3%, whichever is greater
Who's this for? If you have a good credit score and want to earn cash back while benefiting from special financing offers, the American Express Cash Magnet® Card is a great choice. It requires good to excellent credit and offers 1.5% cash back on all purchases.
Plus you can earn a $150 statement credit after you spend $1,000 in purchases in your first three months from account opening, which is a nice added perk if you can reasonably meet the requirements.
The Cash Magnet also offers a great introductory 0% APR for 15 months from the date of account opening (then 12.99% to 23.99% variable APR). This provides you with over a year to pay off new purchases and/or transferred debt from a non-Amex card.
Take note that balance transfers must be completed within the first 60 days from account opening and are subject to a 3% fee ($5 minimum). However, this fee can be cheaper than keeping debt on a high interest card.
Check out the best credit cards for good credit.
2% cash back: 1% on all purchases and an additional 1% after you pay your credit card bill
No current offer
0% for the first 18 months on balance transfers; N/A for purchases
13.99% - 23.99% variable on purchases and balance transfers
3%, minimum $5
Who's this for? If you worked hard on building your credit in college and graduated with an excellent credit score, you may qualify for some of the best cards. The Citi® Double Cash Card is our top choice for a no-annual-fee cash-back card with a simple, yet competitive rewards program.
Cardholders earn 2% cash back on all purchases — 1% when you make a purchase and an additional 1% when you pay your credit card bill. This is one of the highest flat-rate rewards programs available and lets you earn without having to keep track of bonus categories or activation.
In addition to rewards, cardholders receive free two-day shipping at select online retailers with ShopRunner, just like the Amex Cash Magnet Card mentioned above.
This card also provides one of the longest 0% APR periods for balance transfers at 18 months (after 13.99% to 23.99% variable APR). This can be helpful if you need to transfer debt from another non-Citi card. Keep in mind balances must be transferred within four months from account opening, and there's a 3% balance transfer fee (minimum $5).
Check out the best credit cards for excellent credit.
To determine which credit cards offer the best value, CNBC Select analyzed popular credit cards available in the U.S. We compared each card on a range of features, including rewards, welcome bonus, introductory and standard APR, balance transfer fee and foreign transaction fees, as well as factors such as required credit and customer reviews when available. We also considered additional perks, the application process and how easy it is for the consumer to redeem points.
CNBC Select teamed up with location intelligence firm Esri. The company's data development team provided the most up-to-date and comprehensive consumer spending data based on the 2019 Consumer Expenditure Surveys from the Bureau of Labor Statistics. You can read more about their methodology here.
Esri's data team created a sample annual budget of approximately $22,126 in retail spending. The budget includes six main categories: groceries ($5,174), gas ($2,218), dining out ($3,675), travel ($2,244), utilities ($4,862) and general purchases ($3,953). General purchases include items such as housekeeping supplies, clothing, personal care products, prescription drugs and vitamins, and other vehicle expenses.
CNBC Select used this budget to estimate how much the average consumer would save over the course of a year, two years and five years, assuming they would attempt to maximize their rewards potential by earning all welcome bonuses offered and using the card for all applicable purchases. All rewards total estimations are net the annual fee.
While the five-year estimates we've included are derived from a budget similar to the average American's spending, you may earn a higher or lower return depending on your shopping habits.
Don't miss: What to do if you have no credit after college
For rates and fees of the American Express Cash Magnet® Card, click here.
Information about the Petal® Visa® Credit Card, Capital One® Secured Mastercard®, Capital One® QuicksilverOne® Cash Rewards Credit Card and Citi® Double Cash Card has been collected independently by CNBC and has not been reviewed or provided by the issuer of the card prior to publication.