Credit cards can be very detrimental if used incorrectly, however they are also a powerful tool that can not only build up your credit, but give you some awesome experiences. My advice is a path that’s pretty simple and will work for most, but there may be a better path for you. Here are some tips that have worked for me as i have a 750+ at age 20 only using credit cards.
- You should buy almost everything with your credit card (this allows you to earn points and show credit bureaus you can be trusted with money)
- You should NEVER hold a balance above 10% (Now you can go above that 10% balance, but I would pay it down to less than 10% immediately)
- Always pay your statement balance every month.
- Never spend money you don’t have
- Apply for your first card as soon as you turn 18
- For travel hacking purposes only transfer your points to partners (we will get into this later)
- Don’t apply for a new card for at least 6 months (3 months to reapply)
- If you apply in person (where applicable) you supposedly have a better chance
- If you get rejected, wait 3 months and reapply (put down more income)
Lets get into some cards
Student cards (What to do when your 18)
As soon as your 18 you should get some sort of credit card, at a bare minimum to start building a credit history (if your parents make you an authorized user even earlier than 18 that’s great). Most of you won’t have any credit or even a job, so it will be hard getting approved for anything but a student card (if you have a job you might be able to get a different card).
This is the one I first started with, gives you 5% on rotating categories, and you will definitely get approved. I started at $500 and have been increased to over 5K on this card through standard use. With the first year being a 1 for 1 match you get 2% back on everything (they’ll match the 1% at the end of the year on everything) it is a really good card with decent rewards and a $0 annual fee. Discover also has a student chrome card, could be better if you only buy gas and food at restaurants (2% back on those categories so 4% at the end of the first year). Only downside to discover is after the first year there is no more cash back match and their rewards portal isn’t very good. Students get a free $20 though every semester. Only drawback is not everywhere takes Discover, most places do, but not all.
Chase Freedom Rise Credit Card
This is the only other student card I would consider, Chase used to have a different one but this is it now. 1.5% on everything is all you will get, but you do get access to the Chase travel portal. Being in college your most likely not spending a ton of money so the Discover card is better for most people and is what I would get if you can’t get a different car, or just turned 18.
Your first real card
If you waited a little while after being 18 and have a job, I would probably start here. I am a huge Chase fan as they have by far the best travel portal. So our goal will be to get a chase trifecta (2 cards if you have a discover with rotating categories). I recommend the Chase card if you want to use your rewards to travel, they have the best travel portal by far.
This is my favorite card for college students. You get 1.5 % on everything, 3% on dining at restaurants, including takeout and eligible delivery services, and 3% on drugstore purchases. This will also give you the Chase travel portal which allows you to transfer points to different partners. You also get $200 when you sign up (and spend $500 in 3 months). They also have a limited 5% cash back for gas for a year. Here is the link for this card. The Chase card also comes with roadside assistance (if you lock your keys in your car or need a tow they have you covered) and a couple different types of trip insurance.
This card gives you a flat 2% on everything and and $200 when you spend $500.
If you wanted to start with an AMEX card this would be it, but its not the best first card and some places don’t even take AMEX. You should always have at least one visa or Mastercard anyways.
Your second card
This card should really go hand in hand with your first card. You want better cash back on different categories, don’t get a card that does the exact same thing as your first card. My personal recommendation will be the Chase Sapphire Preferred.
This card does have a $95 per year fee, however if used properly, the value is way above that. First off is the sign up bonus, 60K points when you spend 4K in 6 months (As you can see you have to be actively spending money for a card like this to make sense). Then you get 2% on travel, 0 foreign transaction fees, and 3% on streaming services (You also get 3% on food, but you get that with the freedom). This card also gives you 10% bonus on all points earned through the year. If you earn 100K you get an additional 10K for free. These are the main benefits and with 60K points you can really get rolling. If you google around you can occasionally find an offer for 80K. Most credit cards have a better offer if you look hard enough. LINK FOR CARD
This is the AMEX equivalent I would say. Travel portal for AMEX is also pretty good. You get 4% on restaurants and groceries, 3% on flights, and 1% on everything else. $250 a year is the annual fee, however you do get $120 in Uber credit and a $120 dining credit. They also have a 60K sign up bonus for when you spend 6K. This card is good if you have an AMEX collection, I just prefer Chase.
Travel Card
This is the point I am at, once you start traveling enough there is a point where the perks of a travel card outweigh the cost. I only recommend one of these if you travel a lot of times per year. There are three main cards.
This is the card I own. They really took away some value this year when increasing the fee for authorized users. With this change I might have opted for the Capitol One Venture card, but it would have been close. This card gives you free Clear, free Global Entry or TSA Precheck, $200 in Uber credits, $200 in Airline incidentals (1 airline), and lounge access. You also get an 80K point bonus on sign up (This covers the annual fee). These benefits come at a $700 per year cost, however you easily recoup your money in the free stuff and credits (I may downgrade to gold after a year now that they changed authorized users). Authorized users used to be 3 for $95, this allowed my family to get lounge access and Precheck for $95. This was insane value as you get free food and drinks every time you go to the airport and you skip the line. If you consider getting this card, do your research. LINK
This is definitely the card I would get now if I had to choose. 75K points on sign up + 10K every year. Lounge access, free Global Entry or Precheck, and 2% on every purchase (10% on hotels booked through their portal and 5% on flights booked through their portal). You also get a $300 credit to use in their travel portal. Personally have never used their travel portal, but I could see myself getting this card in a year. The fee is only $400, significantly better than its AMEX competitor.
I think the two cards above this one are better, and you can’t have the preferred and reserved. Benefits are almost identical to the Capitol one card, but the annual fee is $550 and you only get 60K on sign up with no annual bonus.
Future Cards
After your first couple cards, slow down on getting cards. Make sure each one has a purpose and makes sense for your portfolio. Hopefully this can help!