Author Topic: Credit Card for 20-something starting their career  (Read 1635 times)

elysianfields

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Credit Card for 20-something starting their career
« on: August 03, 2021, 06:15:59 AM »
Hi Mustachians,

A young person I know just snagged their first career job and I'd like to recommend some good credit cards.  This person already has a decent credit score because they were an AU on their parents' CCs, so they don't need a secured card or one for "building credit".  OTOH they don't have the salary or credit history to snag some of the huge travel / points bonuses out there.

I thought of Discover It with its 5% rotating categories, limited to $1500 per quarter, and they have the $50 referral bonus.

CapitalOne Quicksilver offers 1.5% cash back on most everything, a $200 bonus after spending $500 within the first three months.

What other recommendations do you have?

nereo

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Re: Credit Card for 20-something starting their career
« Reply #1 on: August 03, 2021, 10:51:54 AM »
Hi Mustachians,

A young person I know just snagged their first career job and I'd like to recommend some good credit cards.  This person already has a decent credit score because they were an AU on their parents' CCs, so they don't need a secured card or one for "building credit".  OTOH they don't have the salary or credit history to snag some of the huge travel / points bonuses out there.

I thought of Discover It with its 5% rotating categories, limited to $1500 per quarter, and they have the $50 referral bonus.

CapitalOne Quicksilver offers 1.5% cash back on most everything, a $200 bonus after spending $500 within the first three months.

What other recommendations do you have?

Honestly, for a lower-salary young person I ignore cash-back cards and simply get a standard zero-fee credit card from a major company that (hopefully) won't be bought up or bankrupt in 3-5 years.

The reasoning is simple; with a moderate salary and short credit history the amount one can reap from cash-back cards is minimal without churning.  Churning is more of an 'advanced' skill, and benefits from having both a longer credit history and more available credit (neither of which this person apparently has). I mention "from a major company" because I struggled early on as several of my oldest cards were closed when the issuing bank closed.  At one point i had 15+ years of continuous credit use but my report said my 'average credit age' was < 2 years because of this.


chemistk

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Re: Credit Card for 20-something starting their career
« Reply #2 on: August 03, 2021, 11:26:11 AM »
I think the quicksilver is a good option - the $200 would be a nice chuck of change for someone getting on their feet (assuming they reach the $500 spend organically). I converted my CapOne Journey into a Quicksilver probably 8 years ago, and it's still in my wallet. The 1.5% is excellent for purchases that don't fall into a boosted category on other cards, and I have found that Capital One is has the quickest fraud detection & best fraud resolution of the ~8 cards I routinely use. It's always my go-to for purchases from sites that are likely to have less robust security.

mckaylabaloney

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Re: Credit Card for 20-something starting their career
« Reply #3 on: August 03, 2021, 12:27:35 PM »
I like the Citi Double Cash, which doesn't have a signup bonus but offers 2% cash back on every purchase.

They could also try applying for one of the Chase Freedom cards (I'd probably just do the Freedom Unlimited for simplicity's sake), which would give them a good start to Ultimate Rewards points if they think they'll eventually try for bigger, travel-focused cards like the Sapphire line.

trollwithamustache

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Re: Credit Card for 20-something starting their career
« Reply #4 on: August 03, 2021, 01:08:03 PM »
it very likely doesn't matter as long as you get some kind of points useful to you.

The big pay off comes if you can manage spend around the new card bonuses. if you can delay or lump big purchases within a couple months, it makes sense to get whatever card has the newest best intro offer just before you do the big spend.  But, as others have noted, churning goes up in value the longer you have had a good credit history and may not really be available to you right now.

lhamo

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Re: Credit Card for 20-something starting their career
« Reply #5 on: August 03, 2021, 02:41:43 PM »
Chase Freedom and Chase Freedom Unlimited have good bonuses on their rotating categories (which usually include groceries for one quarter) and earn you rewards points that you can save and eventually combine with the more splashy bonus cards if/when you want to apply for them.

If they are outdoorsy, the REI branded card from US bank gives extra REI dividends and also provides cellphone insurance if you bill your phone payments to the card.

Fidelity has a 2% cash back card that I regularly get offers for.

elysianfields

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Re: Credit Card for 20-something starting their career
« Reply #6 on: August 08, 2021, 04:06:40 AM »
Thank you to all who responded, much appreciated.

Honestly, for a lower-salary young person I ignore cash-back cards and simply get a standard zero-fee credit card from a major company that (hopefully) won't be bought up or bankrupt in 3-5 years.

The reasoning is simple; with a moderate salary and short credit history the amount one can reap from cash-back cards is minimal without churning.  Churning is more of an 'advanced' skill, and benefits from having both a longer credit history and more available credit (neither of which this person apparently has). I mention "from a major company" because I struggled early on as several of my oldest cards were closed when the issuing bank closed.  At one point i had 15+ years of continuous credit use but my report said my 'average credit age' was < 2 years because of this.

Thanks for the response, you make a very good point.  That makes another plus for Capital One, Chase, and Citi.

Quote from: mckaylabaloney
I like the Citi Double Cash, which doesn't have a signup bonus but offers 2% cash back on every purchase.

They could also try applying for one of the Chase Freedom cards (I'd probably just do the Freedom Unlimited for simplicity's sake), which would give them a good start to Ultimate Rewards points if they think they'll eventually try for bigger, travel-focused cards like the Sapphire line.

I wasn't aware of the Citi Double Cash, thanks for the tip.  I've used Chase Freedom myself, but I'm not sure this young person plans a lot of travel just yet.

Quote from: lhamo
Chase Freedom and Chase Freedom Unlimited have good bonuses on their rotating categories (which usually include groceries for one quarter) and earn you rewards points that you can save and eventually combine with the more splashy bonus cards if/when you want to apply for them.

If they are outdoorsy, the REI branded card from US bank gives extra REI dividends and also provides cellphone insurance if you bill your phone payments to the card.

Fidelity has a 2% cash back card that I regularly get offers for.

I was also not aware of the REI-branded card, thank you.

I use Fidelity myself for my HSA and Roth IRA, they also regularly offer the same card.  I find myself wanting more and more to move my business to Fidelity, particularly for their brokerage services: commission-free purchases of stocks & bonds, the fractional share purchase option (especially great for young people starting their investing, whether investing in index ETFs or stockpicking), free dividend reinvestment, and the no-bs fee-free maintenance of my HSA.  Interactive Brokers does offer a better margin interest rate, so I'll continue to use IB as well.
« Last Edit: August 08, 2021, 04:15:41 AM by elysianfields »

goodmoneygoodlife

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Re: Credit Card for 20-something starting their career
« Reply #7 on: December 01, 2021, 06:34:23 AM »
If I'm just starting out, I'd probably just do a Chase Freedom card.

You keep your expenses low and the 5% rotating categories generally has 1 or more relevant things for your spending each quarter.

For example, this quarter, they have 5X points for PayPal. I just did all my holiday shopping on Paypal and got 5X points back.

The kicker w/ the Chase Freedom cards is that you'd eventually want to pair it with a Reserve card ($95/yr or $550/yr) to be able to transfer it to travel partners to maximize your value (instead of just cash back).

I weigh some of the merits/tradeoffs of having an annual fee card here. Though the punchline I feel for someone starting out is just to accumulate as many points as humanly possible, and when you can afford to travel more frequently, then go ahead and capture max value for your points.