Let’s face it, with consumer debt in the United States reaching $16.15 trillion in the Q2 of 2022, the best chance the youth of our nation has is to have a clear understanding of credit, debt, the basics of personal finance as well as how they play a major role in the options they have in the future. One way for a teen to understand the factors that make up their financial future is to have an early introduction to credit by way of a credit card. Responsibly handling a credit card at an early age can build the skills and habits necessary to see healthy growth in their financial picture. That said, not all credit cards are geared toward teens in the same way. Take a look at the top 5 credit cards for teens to consider when getting started.
Capital One Journey Student Rewards Card
The Capital One Journey Student Rewards Card offers the consumer the ability to earn cash back as well as provides rewards for paying the bill on time. When booking hotels as well as car rentals through Capital One Travel the cardholder can earn 5% cash back. A 1% cash back reward is offered on other purchases and paying the bill on time yields the cardholder an additional 0.25% cash back in that month. The APR on the card won’t increase if there is a late payment, however there is a $40 late fee. Cardholders will also enjoy no foreign transaction fees or annual fees.
Discover It Student Cash Back Card
The Unlimited Cashback Match offer is perhaps one of the most attractive features of this card. During the first year of use cardholders can expect that their earned cash back will be matched by Discover. This offer has no minimum spending requirement and there is no cap to the rewards within the first year. This is a great incentive for the cardholder to use and keep the card in good standing. The unlimited 1% on all purchases with 5% cash back on purchases made in a quarterly rotating list of retailers gives cardholders a variety of options for earning cash back. There is no credit card requirement for the application process. Students can build their credit with no annual fee. An introductory 0% APR for the first 6 months will help teens get started.
SavorOne Student Cash Rewards Credit Card from Capital One
Teens can earn an unlimited 3% cash back on activities and purchases that they do anyway such as grocery stores, entertainment, dining, streaming services. A 1% cash back reward is offered on all other purchases. The card offers a $0 Fraud Liability feature freeing the cardholder from unauthorized purchases. The lock card feature on the mobile app allows the cardholder to easily freeze the card if it becomes lost or stolen until it is recovered. Their referral program can put up to $500 a year in the cardholder’s pocket when friends or family are approved for a Capital One card. The perks with this card help it fit into many teens’ day-to-day life.
Secured Credit Cards
In some cases, the best way for a teen to start out with a credit card is with a secured credit card. This allows the cardholder to use their own funds to “stock” the card and when they pay the balance down regularly and responsibly their credit will improve. These banks report to the credit agencies as if the card were unsecured, building the cardholder’s credit over time. This is also a good way for the cardholder to learn how to handle a credit card and reap the benefits of cash back rewards where offered. A secured card can also be a good way to learn how to manage your money wisely during inflation. Here are a few solid secured credit cards to get started with.
Discover it Secured Credit Card
This card is to the point, simple to manage and understand. The cardholder puts a deposit on the card and that is the amount that the cardholder has available as credit. If the deposit is $200 the available credit will be $200. After 7 months there will be an automatic review of the account and with responsible card usage the secured card can be transferred to an unsecured credit card and the deposit is returned to the cardholder. With no credit check required, no annual fee and the ability to earn cash back, this is a good way to get started.
Quicksilver Secured Cash Rewards Credit Card from Capital One
This card has no annual fee and offers cardholders the ability to earn an unlimited 1.5% cash back for every purchase that they make. The refundable deposit that the applicant makes is what their starting credit limit is. After a 6-month period their account will be evaluated for responsible card usage and a higher credit line may be offered without having to add an additional deposit.
Promoting good spending and a good understanding of the basics of personal finance is a stepping stone to opening up more options for a teen. Selecting the best starting point depends on the individual, their goals and their immediate needs. In some cases, a teen can learn more about using a credit card by becoming an authorized user on a current cardholder account. This can start at a young age (in some cases 13 years old) and will build the foundation needed to make good choices and even learn how to manage your money wisely during inflation.
Shawn Manaher is a former financial advisor, has founded 5 online businesses, and is a coach, speaker, podcast host, and author. He’s been featured on Forbes, The Consults Corner on TAE Radio, The Writing Biz, What’s Your Story, and more. He loves to share his personal finance tips and money management wisdom with others on his website, ShawnManaher.com, to help them find financial freedom.