Suggestions for FIRST credit card for young adult

[rob]

Looking for a FIRST credit in direct name for a young adult (early 20's)....
- He has had been an auth user on a couple of my cards for a decade and has a 770 credit score.
- Lives in a share house, so name is on a lease etc.
- I'm trying not to make the mistake of picking a card I would prefer

Q: Can I have him call and convert his existing auth user card to stand alone? I doubt it but figured would ask since it has a old open date which helps his credit score.

Q: What's a good card you have seen?
- No travel as just not worth it for him.
- Love to have something that kicks back concert tix or similar that is more interesting than just boring cash to someone that age.

Thought I would check here before playing with google & nerd-wallet etc...

[Fubs]

If he likes concerts, the CapitalOne Savor One card gives 3% restaurants, entertainment, streaming, groceries and 1% on everything else with no annual fee and a $200 sign up bonus.

It's a Master Card (I think) and Capital One also doesn't have any foreign transaction fees.

Alternatively get a Elan Max Cash Preferred card.

https://www.doctorofcredit.com/elan-max ... ategories/

It's basically the same as the US Bank Cash+, but it's entertainment and recreation category is more broad since US Bank limits you to movie theaters.
With this you can pick two 5% cashback categories and one 2% cashback category every quarter. This is also one of the few cards that lets you pick 5% for utilities.

[pizzy]

Chase Sapphire Preferred

[Bogle7]

He should join a credit union.
Get their card.

[rainfallwinterberry]

Looking for a FIRST credit in direct name for a young adult (early 20's)....
- He has had been an auth user on a couple of my cards for a decade and has a 770 credit score.
- Lives in a share house, so name is on a lease etc.
- I'm trying not to make the mistake of picking a card I would prefer

Q: Can I have him call and convert his existing auth user card to stand alone? I doubt it but figured would ask since it has a old open date which helps his credit score.

Q: What's a good card you have seen?
- No travel as just not worth it for him.
- Love to have something that kicks back concert tix or similar that is more interesting than just boring cash to someone that age.

Thought I would check here before playing with google & nerd-wallet etc...

In my experience, auth -> standalone conversions are not really a thing. Each credit is a separate underwriting decision, it doesn't really work like that.

The first credit card mainly exists to build a credit profile. AUs are useless, most banks "see through" the AU status and pretend like they don't exist for credit card underwriting purposes. A person with only AU cards still has a thin credit file, which pretty much means they're restricted to secured cards or to thin-file friendly issuers.

The usual recommendation for a thin-file friendly issuer is Discover.

Here's a summary of the other banks for which there is good info. In general, secured cards are handed out like candy, but they have basically 0 rewards so don't bother with them. All of the following are for NON-SECURED REWARD CARDS.

- Chase usually wants at least 1 year of credit history (not AU) before they'll open a card for you. May be waived if there is a previous banking relationship (checking account for >2yrs) in good standing
- Citi really doesn't like thin files. The no-reward card might be doable. They're also trying to hand out as many custom cash cards as possible currently, so you might have a chance with that, but in general prepare to get rejected.
- BoA frowns heavily upon thin files. They will reject thin files even for their student cards, the cutoff iirc is >6mos. They have a similar policy to Chase's where they take into account previous banking relationships, but I don't know if that policy extends to no-history applicants.
- Amex is fairly friendly towards thin files, but not for their high-reward cards.
- Capital One is thin-file friendly for the cards explicitly marked for thin files, they're an ok option, but their thin-file offerings are pretty crap (either AF or no rewards)
- Discover is the only issuer that I know of with a very consistent history of no-credit acceptance data-points for their reward cards (the Discover It and the Travel). That's why they're the common recommendation for first cards.

[psteinx]

Discover has a reputation for being easy to get for young/new CC holders.

Of course, it's got issues - less acceptance than other cards.

Apply for an OK CC (some 1% CB Visa/Mastercard, and if rejected, fall back to Discover.

Later they can move up to a higher CB and/or signup Visa/Mastercard.

[123]

If the child has a bank savings or checking account (and there's nothing unduly objectionable about the bank's card) just apply for a basic Visa or Mastercard with that bank. After 6 or 12 months they can apply for an additional card elsewhere. Slow and steady wins the race. It's better for them if they apply for a "sure thing" for their first card.

I wouldn't be preoccupied with rewards and cash back for their first card.

[lakpr]

DCU has a Visa Platinum secured card that does not report as secured, and will be unsecured after two years of no late payments. You can have up to $5k as the secured deposit / credit limit

[invest4]

Help them help themselves and let him / her seek out a card on their own as a start and then and have a discussion about what criteria they used, was particularly attractive, etc.

You have already put them in a good position…now let them do the work as a young adult.

[leeks]

If the child has a bank savings or checking account (and there's nothing unduly objectionable about the bank's card) just apply for a basic Visa or Mastercard with that bank. After 6 or 12 months they can apply for an additional card elsewhere. Slow and steady wins the race. It's better for them if they apply for a "sure thing" for their first card.

I wouldn't be preoccupied with rewards and cash back for their first card.

Yes I would just get a no fee credit card from the same bank used for checking. This makes it easy to review everything in one login and billpay interface. Interest rate doesn't matter as long as it will be paid every month. All the bonus things aren't worth the time to worry about, especially because a young person is probably not running large amounts of money through credit cards monthly.

Keep it simple.

[Vulcan]

AUs are useless, most banks "see through" the AU status and pretend like they don't exist for credit card underwriting purposes. A person with only AU cards still has a thin credit file, which pretty much means they're restricted to secured cards or to thin-file friendly issuers.

This has not been our experience.

Automated underwriting looks at credit score. 800 is 800.

[beernutz]

Discover has a reputation for being easy to get for young/new CC holders.

Of course, it's got issues - less acceptance than other cards.

Apply for an OK CC (some 1% CB Visa/Mastercard, and if rejected, fall back to Discover.

Later they can move up to a higher CB and/or signup Visa/Mastercard.

I suggested to both my mid-20s kids to get a Discover It Secured Card and spotted them the $500 security deposit. I tried to convey to them that charging at most a couple hundred $ and paying it off in full every month would quickly raise their FICO scores. Both did this and got their deposits returned in a few months and now they have mid-700s FICO scores.

The older one had good enough credit after a year or so of having the DC they qualified for a mortgage on a $350k first house with their SO. The cards are no annual fee and they get 2% cash back for gas and restaurants (1% elsewhere) which is where they mostly use the card. They are also emailed a link to check their FICO scores each month so they could track progress which they told me was a good motivator to use the card wisely.

[rob]

Thanks all for the input.... It's a good point on using the same bank - he has had accounts for years and its where his pays go, so probably the best option. I may have been a bit optimistic on jumping right to something that has some bells and whistles

Help them help themselves and let him / her seek out a card on their own as a start and then and have a discussion about what criteria they used, was particularly attractive, etc.

This is a great point and a nice reminder to stop me taking over. I'm not putting details here but this is him coming to me asking and he has been living independently on his debit card, is contributing to 401K etc etc... I'm not yet sure why the interest in CC's... but think its just the natural progression rather than burning out of control on credit... although you may understand why I'm holding my breath a little.

[CaptainT]

Wells Fargo active cash has no annual fee and 2% flat rate cash back on everything. This is an easy entry to cash back and 2% is pretty good for cash back at 770 they should qualify.

[Jimbo Moneybags]

I recommend your adult son check some of the online credit card review sites (like nerdwallet.com) to find a no-annual fee cashback rewards credit card that best meets his needs.

[uaeebs86]

My daughter was an authorized user on two of our cards with a decent score but got turned down on her first two applications after she graduated from college and had started working at her first job.

I recommend using the Credit Karma feature that shows which cards he is most likely to be approved for - my daughter did that and she got her first application after that with AmEx approved.

[rainfallwinterberry]

AUs are useless, most banks "see through" the AU status and pretend like they don't exist for credit card underwriting purposes. A person with only AU cards still has a thin credit file, which pretty much means they're restricted to secured cards or to thin-file friendly issuers.

This has not been our experience.

Automated underwriting looks at credit score. 800 is 800.

This may be true for smaller banks or fintechs, but large banks ignore AUs. Chase, BoA, Capital One, Citi, Amex (that's the top 5 issuers right there) all ignore AUs when determining history length. Chase, for example, will deny all applications if you have <1year of real history (unless you had a previous banking relationship), even if they've had AU cards for years. The other issuers are not as strict, but will still ignore AUs.

The credit score part is correct -- a 800 FICO is 800, but there is more to underwriting credit cards than just the score. Some banks are sensitive to new accounts (Chase will deny all cards if you opened more than 5 cards in the previous 24 months, EXCLUDING AUs, but you have to manually call in to the reconsideration department though), some to inquiries (that actually describes most of them), some to utilisation, most to a combination of all three.

Almost nobody makes an underwriting decision based on score alone. The score is important, but once it's above a threshold it might save you a few points on interest but that's really about it.

[rkhusky]

Daughter is a teen and has been an AU for a year or so. She just got a Discover of her own and her first job last week.

[nonnie]

Would he have a better chance if he applied to the same CC issuer where he is currently an AU?

[Vulcan]

AUs are useless, most banks "see through" the AU status and pretend like they don't exist for credit card underwriting purposes. A person with only AU cards still has a thin credit file, which pretty much means they're restricted to secured cards or to thin-file friendly issuers.

This has not been our experience.

Automated underwriting looks at credit score. 800 is 800.

This may be true for smaller banks or fintechs, but large banks ignore AUs. Chase, BoA, Capital One, Citi, Amex (that's the top 5 issuers right there) all ignore AUs when determining history length. Chase, for example, will deny all applications if you have <1year of real history (unless you had a previous banking relationship), even if they've had AU cards for years. The other issuers are not as strict, but will still ignore AUs.

DS had several cards issued in his name (not as AU) before he turned 21 (MIT FCU - serviced by Elan, CapitalOne, and WF).

[Leesbro63]

I did the authorized user thing for my kids and they both came of age with 800ish credit scores. And could get just about any card they wanted. The 800 score was real...not some junior score for an authorized user.

[rob]

Not sure what to do with the varying experiences....

I think we will work on a "slim" option and a "fat" option then give the fat one a whirl first..... I don't know if a failed application will hurt - and the internet seems to have varying info also.

I got his credit report from experian and agree it's real thin- basically the AU cards I got him long ago but not much else.

[Vulcan]

Not sure what to do with the varying experiences....

I think we will work on a "slim" option and a "fat" option then give the fat one a whirl first..... I don't know if a failed application will hurt - and the internet seems to have varying info also.

I got his credit report from experian and agree it's real thin- basically the AU cards I got him long ago but not much else.

That, and an income, is all he needs.

[SchruteB&B]

AUs are useless, most banks "see through" the AU status and pretend like they don't exist for credit card underwriting purposes. A person with only AU cards still has a thin credit file, which pretty much means they're restricted to secured cards or to thin-file friendly issuers.

This has not been our experience.

Automated underwriting looks at credit score. 800 is 800.

This may be true for smaller banks or fintechs, but large banks ignore AUs. Chase, BoA, Capital One, Citi, Amex (that's the top 5 issuers right there) all ignore AUs when determining history length. Chase, for example, will deny all applications if you have <1year of real history (unless you had a previous banking relationship), even if they've had AU cards for years. The other issuers are not as strict, but will still ignore AUs.

Our college student had been an AU on my Capitol One Silver card (her only credit history) and last summer applied for her own Capitol One Savor card based on her summer job income. She was approved instantly.

[LittleMaggieMae]

I'd consider a card based on what your young adult spends on in terms of rewards.

It's boring - but Bank of America has the "123" card - 3% category that can be changed monthly (or not), 2% on groceries, and 1% on everything else.
I use the 3% category for gas - when I can't get 5% cash back on gas on one of my other cards. I use it for groceries when I can't get 5% cash back on groceries on another card. Gas and groceries are things one typically spends money on every month.

I would think the goal is to get some kind of reward for spending WITHOUT encouraging spending (or impulsive spending).


No matter what card they go with - I'd also pay attention to how the rewards can be used (can they only be redeemed in $25 increments (I'm looking at you Wells Fargo), can rewards redeemed to one's checking account? Can rewards be used to pay the credit card bill? can they be redeemed for gift cards(with additional savings - a $50 card for $45.00 in rewards) or when shopping at Amazon? I would think the goal of getting rewards is to be able to use them in some useful way WITHOUT having to spend even more money or in some inconvenient way.


FWIW: I think a Visa or MasterCard might be better than Discover - I've been to festivals, street fairs, - places where small businesses using "square" or some sort of other service that reads a credit card - don't take Discover. Generally Visa is taken everywhere.

[rainfallwinterberry]

Not sure what to do with the varying experiences....

I think we will work on a "slim" option and a "fat" option then give the fat one a whirl first..... I don't know if a failed application will hurt - and the internet seems to have varying info also.

Yes it will -- most applications generate a hard inquiry (the notable exception is Amex with the "apply with cofidence" feature), and those drag down your score. A hard inquiry is not that big of a deal for thicker files, but for somebody with effectively no history it may be bad.

Here's my recommendation: try for the Discover It. It's a 1% back everything card with rotating 5% categories, redeemable as statement credit any time. If that fails, they might offer the secured version, which is still worthwhile since they usually upgrade pretty quickly (1yr seems to be the common threshold). If they don't, try for Capital One -- they're the most friendly towards thin files after Discover amongst the big card issuers, otherwise just go for a random local credit union card, those have basically no standards.

After 1 year, they should have sufficient history for most cards. Chase tends to have the most lucrative sign-on bonuses and will generally accept 1 year histories, but really most of the big issuers will start accepting.

[gotoparks]

OP- Please update the thread when he gets the card and which card it is. I am just curious about it after reading the thread. Most of my cards are credit union so I am partial to them.

[bombcar]

IF the child is a heavy Apple user (iPhone, Mac, etc) AND has good enough credit, the Apple Card is actually not that bad. Especially in how it gives insight into what it is doing and how it works.

It's not my primary card, but I kinda like the featureset and could move to it if my go-tos stop being the ones I used most (Costco and Amazon Prime, the second may go away as I've cancelled Prime end of this year).

[dogagility]

Q: What's a good card you have seen?
- No travel as just not worth it for him.
- Love to have something that kicks back concert tix or similar that is more interesting than just boring cash to someone that age.

Fidelity credit card. 2% cash back on all purchases. He can purchase concert tickets with the cash.