Best Credit Cards for New College Graduates & Young Professionals

The best credit card for you will likely change along with your financial circumstances.  As you graduate from college and get a job, you’ll want to do a review of your finances and your current credit cards to make sure you’re taking advantage of the benefits your new salary might bring. 

Many people unfortunately rely heavily on credit in school because they don’t have much money coming in. However, once you graduate and find a job you’ll finally have a regular income. Not only will this allow you to start paying off the debt you might have accumulated during your college years, it may also mean you’re eligible for cards with better features. Here are some tips to follow as you search for the best credit card for a new college graduate.

Tip 1:  Upgrade your Credit Card

If you have a student credit card, chances are the interest charged on unpaid balances is higher than it needs to be. In order to offset the higher risk of students defaulting on credit card debt, student cards tend to have higher rates and lower credit lines.

If you were able to establish good credit while in school here are some of the best credit cards for you:

Blue from American Express

Blue from American Express has an introductory period of 15 months at 0% interest for purchases.  You can’t get a rate any lower than zero and after the introductory period is over the rate is still one of the lowest around for credit cards. 

The Blue card does offer a rewards option through the Membership Rewards Express program. You could instead opt for the Blue Cash card if you have an excellent credit history.  Blue Cash does pay up to 5% cash back but is better for people spending many thousands of dollars a year on their card.  A new graduate is probably better off sticking with the Blue card instead of the Blue Cash.

Discover More Card

The Discover More card is similar to the Blue card in that it only requires “Good credit”. It doesn’t have the introductory 0% interest on purchases but it does have a better rewards program than the Blue card.  The More card can earn you up to 5% cash back in certain categories of spending.

Although student lines of credit are excellent to have during school to help to establish a credit history, now that you have a salary coming in, you’re likely eligible for a new card that offers more benefits.  Things to look for are a lower interest rate and a rewards program.  Of course the quality of card you’re eligible for will depend on your credit score.

Tip 2: Don’t Close Your Student Line of Credit

Many people make the mistake of closing their student line of credit because they have a better line of credit opened.  Ironically, this is a move that could actually cause your credit score to drop.  The problem is that lenders look for long term credit history on your credit report since a credit history helps establish your ability to repay on time and makes companies more willing to extend you credit. 

You can check your current report for free once a year with AnnualCreditReport.com.  You can also check out your FICO score in addition to your credit report at myFICO.com.  There is a fee for the service but they do offer a free trial.

Tip 3: Watch Out For Balance Transfers

With your lower interest rate on a new credit card, you may be tempted to move your existing student credit card balance to a new line.  This may not be a bad idea but watch out for the high balance transfer fees often in place.  You also want to look for a card that offers a low APR on balance transfers (even a 0 percent APR) so you save money.

One of the cards discussed earlier, the Discover More card, will give you 0% interest for 12 months on balance transfers as an introductory rate.  They do have a balance transfer fee, 3% for each balance transfer made under this offer, with a minimum of $10 and a maximum of $75. 

How you could take advantage of this is to move your balance on an existing student card over to the Discover More card when you signup.  You’d have 12 months of no interest payments so the money you paid each month would go toward paying down the balance instead of towards interest.

Tip 4: Use Credit Responsibly

Now that you have a better credit card in your hand use it wisely.  Don’t create more debt for yourself with irresponsible spending.  As a new college graduate, you are likely looking for a home, furnishings, a car, or even to start your own business.  You’ll have plenty of opportunity to spend money, if you charge things on your card make sure you have the cash to cover them.  Pay off your credit card each month to continue to build a credit history and to avoid interest charges.

If you haven’t had a chance to build your credit history yet or have bad credit there are a few options for you. The downside is that you’ll have to pay an annual fee due to your bad credit.  The upside is you may still qualify for a credit card and if use it wisely you can rebuild your credit.

For the worst credit, apply for the Orchard Bank Classic Mastercard. The annual fee will vary depending on how bad your credit is but at least you may be able to qualify for a card.  They also offer the Orchard Bank Platinum MasterCard which is a step up from the Classic.  The Platinum has a lower interest rate and can also have a lower annual fee depending on your credit history.  Remember, if you do qualify for one of these cards, be thankful for the second chance and use it to repair your bad credit by paying your bills on time and not carrying a balance.

Tip 5:  Research Your Credit Card Options

There are many different cards available with a wide array of different card features.  Make sure you research your options before applying for a new card. You can call up your current card provider, explain your situation, and ask what cards you’re eligible for now that you have a regular income.

There are many sites online that you can use to review and compare different credit cards.  Some of the things to look for are:

• Low APR on purchases
• Low APR on balance transfers
• Low Balance transfer fees
• No Annual fees
• Cash Back options
• Travel rewards
• Gas rewards
• High Rewards earning limits
• 0% APR deals on card purchases and balance transfers

College Graduate Finance Guide
This article wraps up the personal finance tips for college graduate series.  Here is a summary of all the financial topics we covered:

• Investing for College Graduates
• Health Insurance for College Graduates
• Student Loan Tips
• Spending & Budgeting for College Graduates

• Credit Card Tips for College Graduates
• Best Travel Rewards Credit Cards on Spring Break
• The Best Credit Cards In Their Class
• Credit Scores for College Graduates
• Best Credit Cards for College Students - Charge Wisely & Build Your Credit History