Best Credit Cards for Young Adults

Take a look at some of the best credit cards for young adults that are available on the market.

Updated: March 29, 2024
Matt Crabtree

Written By

Matt Crabtree

|
Rachel Wait

Edited By

Rachel Wait

 

One of the biggest benefits of applying for a credit card as a young adult is that it can help you to establish a credit history. This can be crucial if you want to apply for other types of credit in the future, such as a loan or a mortgage. Having a good credit history increases your chances of getting accepted and qualifying for the best rates.

However, it's important to consider exactly what you want to use your credit card for before applying to be sure you're choosing the best option.

In this article, we'll be taking a look at some of the best credit cards for young adults that are available on the market.

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1. Capital One Classic Credit Card★★★★★Click Here
2. Tesco Bank Foundation Credit Card★★★★★Click Here
3. HSBC Student Credit Card★★★★Click Here
4. TSB Student Credit Card★★★★Click Here

As this may be the introduction to many students'/young adults' journey into the world of credit cards, we'll also be providing some additional context to help break down the importance of these cards and how they actually work.

Let's start things off with a brief explanation of what credit cards are.

What Is a Credit Card?

In essence, a credit card enables you to buy something now and pay for it later. When you use a credit card, you borrow money from the card provider, up to a set limit, and then repay the amount borrowed over time.

Whenever you're applying for a credit card, the provider will evaluate your creditworthiness based on a few different factors — your credit history, income, and something known as a debt-to-income ratio, for instance.

This helps them establish whether you've borrowed responsibly in the past and whether they are happy to give you a credit card. It also helps them assign you a credit limit, ultimately representing the total amount that you're able to borrow using the credit card.

From here, using a credit card is a pretty straightforward process, not dissimilar from a debit card if you've ever used one of those. Basically, whenever you buy something with your credit card, whether it's in a shop or online, the bank pays the merchant whatever you owe them on your behalf (rather than simply withdrawing the funds from your bank account, as would happen with a debit card).

After this, you'll receive a statement each month that shows all the transactions that you made using the card during that particular billing cycle. We'll come onto this in more detail later, but the statement generally includes information like the date and location of each transaction, how much you spent, and the remaining amount of credit that you have.

Credit cards offer something called a grace/interest-free period, which is essentially a period of time — usually lasting between 21 and 55 days — where you're able to settle your credit card bill without incurring any interest.

So, if you pay the full balance that you've spent that month before the grace period expires, it means you don't have to pay any interest, which is obviously important for students or young adults looking to avoid extra costs.

However, if you end up carrying a balance from one billing cycle to the next one, you will be charged interest on whatever the outstanding amount is, and this is known as the Annual Percentage Rate (or APR).

Regular Credit Cards VS. Credit Cards for Young Adults

So, why do we bother specifying credit cards for young adults rather than simply providing you with any other kind of credit card?

Well, there are actually a few different variables that go into this. Put simply, though, most young adults won't be able to qualify for the majority of cards that people with a more established credit report/history can.

Let's take a closer look at some of these reasons:

1. Eligibility Criteria

Standard credit cards typically come with more stringent eligibility requirements, conditions like having a high credit score or a consistent income, for instance — something very uncommon among young adults.

As such, anyone who's just starting to build their credit is unlikely to qualify for these cards since they'll have a pretty limited credit history.

On the other hand, a student credit card, for example, usually has more lenient criteria when it comes to eligibility since the credit card issuers recognise that this demographic is obviously not going to have the same kind of credit rating.

Furthermore, many of the cards that are tailored for young professionals tend to take into account factors beyond their credit file, like their current educational status, student loan, or potential future income. However, you will usually need to have a student account with the provider to qualify.

2. Credit Limits

Anyone with a more established credit history and good credit rating is likely to receive a higher credit limit than those who don't.

Now, while this obviously means they're going to have greater spending power, it also means they're at a lot higher risk of overspending and accumulating a level of debt that can become unmanageable.

To combat this, the cards that are targeted at young adults come with lower credit limits instead. The reasoning behind this is entirely understandable, given that this is many people's first credit card, so this is more of a precautionary measure to help younger users avoid racking up a significant amount of debt before they've even finished university, for example.

3. Rewards and Benefits

Some credit cards offer a range of benefits such as cashback, travel rewards, or loyalty points. However, generally these cards are offered to those who have a good credit score and can demonstrate they have borrowed well in the past.

This means that young adults are less likely to qualify for credit cards that offer rewards and benefits – although there are a handful of credit builder cards that do offer rewards.

4. 0% spending

Some credit cards offer 0% promotional offers for a set time. This means you can spend on your credit card and avoid paying interest on that spending for a number of months. As long as you pay off your balance in full before the 0% deal ends, no interest will be charged. This can make them ideal for spreading the cost of a large purchase.

However, again, the longest 0% deals will go to those who have a good credit record. But that's not to say young adults won't be able to take advantage of these deals at all, so it's still worth comparing your options.

How Do Credit Cards Work?

Now that we've covered some of the main features of a young adult/student credit card, let's break down how these cards actually work when you put them into practice.

Balance Due

From the minute you receive your credit card and make your first payment, the credit card company that issued your card keeps a record of your transactions and compiles them into a statement that is then issued to you towards the end of the billing cycle — usually on a monthly basis.

This is fairly intuitive to understand, but the balance due essentially represents the total amount of all these transactions, serving as the final amount you have to repay.

It's not strictly the initial cost of your purchases, though, as it also includes things like the interest charged on any unpaid balances you might've carried over from the last month. Applicable fees, like an annual fee or late payment fees, are also included on this list.

Since we're trying to avoid unexpected surprises or interest here, it's absolutely crucial to pay close attention to what the balance due is whenever you're looking at your credit card statement.

Credit Utilisation

Aside from the fact that you'll avoid paying interest, paying off the full balance every month before the payment is due is generally a very effective way of keeping a healthy credit utilisation ratio. This is essentially the percentage of your credit limit that you are using at any given point.

Credit utilisation, along with a few other key factors, is one of the main variables that the banks take a look at when working out your credit score. In general, it's best to keep it below 30% if you can.

If a lender notices that you have quite high credit utilisation, it tends to signal that you're probably relying too much on credit and aren't financially stable — which, in the eyes of the lender, is a huge concern.

Best Credit Cards for Young Adults — Reviews

So, now that we have an understanding of how these cards work let's explore some of the best credit cards that are currently available for young adults:

1. Capital One Classic Credit Card

Capital One Classic Credit Card

Capital One Classic Credit Card
Credit Limit
Minimum £200
Representative % APR (variable)
34.9% APR
  • For people with bad credit or building credit.
  • Credit limit £200 to £1,500.
  • Interest-free period up to 56 days on purchases each billing period for cleared balances.

Representative Example – If you spend £1,200 at a purchase interest rate of 34.94% p.a. (variable) your representative APR will be 34.9% APR (variable). Your APR and credit limit may vary depending on your circumstances.

Kicking things off, let's take a look at the Capital One Classic credit card, which is perfect for anyone who's already built up a bit of credit history.

While most of the cards we'll be looking at in these reviews don't typically require any credit history (which is ideal for students), this card is geared towards anyone who has had some history of managing credit (such as an overdraft), even if you have had County Court Judgments (CCJs) or defaults in the past. It might suit people who have just finished university and don't have a full-time job yet, for instance.

The 34.9% representative APR is particularly high, but the card offers credit limit of up to £1,500, which is pretty competitive for a credit builder card.

2. Tesco Bank Foundation Credit Card

Tesco Bank Foundation Credit Card

Tesco Bank Foundation Credit Card
Credit Limit
Minimum £250
Representative % APR (variable)
29.9% APR
  • Collect Clubcard points almost every time you shop.
  • Credit limit £250 to £1,500.
  • Access to Tesco Bank CreditView, provided by TransUnion, for 3 years from account opening.

Representative Example – If you spend £1,200 at a purchase interest rate of 29.9% p.a. (variable) your representative APR will be 29.9% APR (variable). Your APR and credit limit may vary depending on your circumstances.

The Tesco Bank Foundation credit card is designed for those who are new to credit or have a bad credit rating. Starting credit limits are between £250 and £1,500 and you could receive regular increases if you make your payments on time and stay within your credit limit.

You'll also be able to access Tesco Bank CreditView which is provided by TransUnion and helps you to track your credit score with monthly updates. So you'll be able to see how much progress you're making.

Unusually for a credit builder card, you'll also earn loyalty points when you spend. As the card is provided by Tesco, you can earn Clubcard points every time you shop – just don't be tempted to spend more than you can afford to repay in a bid to chase points.

The card has a representative APR of 29.9%.

3. HSBC Student Credit Card

HSBC Student Credit Card

HSBC Student Credit Card
Credit Limit
Up to £500
Representative % APR (variable)
18.9% APR
  • Interest-free period up to 56 days each billing period for cleared balances.
  • Credit limit up to £500 (subject to status).
  • No annual fee.

Representative Example – If you spend £500 at a purchase interest rate of 18.9% p.a. (variable) your representative APR will be 18.9% APR (variable). Your APR and credit limit may vary depending on your circumstances.

As the other two options were more for young professionals/graduates, let's take a look at a card that's suited to students: the HSBC Student Credit Card.

While the credit limit is fairly modest on this card, offering only £500, this is not uncommon among student credit cards as a whole — especially when you consider that you don't need an established credit history to be eligible.

Understandably so, any card that requires a specific credit rating, like the Capital One Classic credit card, is going to offer a higher credit limit since you can theoretically be trusted with larger amounts of money.

Aside from this, though, what really sets the HSBC Student credit card apart is the 18.9% representative APR, which is significantly lower than the two previous options we've reviewed so far.

Note that you will need to be an HSBC student account holder to qualify.

4. TSB Student Credit Card

TSB Student Credit Card

TSB Student Credit Card
Credit Limit
Minimum £500
Representative % APR (variable)
21.9% APR
  • Interest-free period up to 56 days on purchases each billing period for cleared balances.
  • Credit limit £500 to £1,000 (subject to status).
  • No annual account fees.

Representative Example – If you spend £1,000 at a purchase interest rate of 21.95% p.a. (variable) your representative APR will be 21.9% APR (variable). Your APR and credit limit may vary depending on your circumstances.

Lastly, let's finish with the TSB Student Credit Card, which, like the previous option, targets students specifically. Again, you'll need to have a student current account with TSB to qualify.

Similar to the HSBC Student Credit Card, this card has a lower representative APR of 21.9%. However, it offers a maximum credit limit of £1,000 which is higher than that offered by the HSBC card.

Note that you won't be able to apply if you have a CCJ, have been declared bankrupt or are subject to an individual voluntary agreement (IVA).

How to Choose Credit Cards for Young Adults

Check Your Credit Score

Unless you're choosing a card that explicitly mentions there are no requirements, your credit score is going to play a crucial role in determining the type of credit card you can actually qualify for.

While most credit cards for young adults have fairly lenient eligibility criteria, having a higher credit score generally opens the door to more options with higher credit limits.

Remember, you can access your credit report for free with any of the 3 main credit reference agencies – TransUnion, Experian and Equifax.

Read the Fine Print

Never skip the fine print when you apply for a credit card. Whether it's the grace period, late fees, or the APR, having a firm understanding of some of these details is crucial to using your card correctly.

Final Thoughts

To wrap things up, whether you're trying to get started on your credit journey as a student or you're simply looking to improve your credit rating as a young professional, there's a litany of benefits to owning a credit card.

However, it's crucial that you use your credit card sensibly, otherwise you could make your credit score worse and end up in serious debt.

Only ever spend what you can afford to repay, aim to pay off your credit card balance in full every single month and never exceed your credit limit. Do this and you should see your credit score improve over time.

Related Guides:

Best Credit Cards for Young Adults: FAQs

Are There Any Age Restrictions for Young Adults Applying for Credit Cards?

What Should I Do If I Can't Make a Credit Card Payment as a Young Adult?

What Is APR?

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About Havin Bank Havin Bank, formerly known as Havana International Bank, or HIB, was founded in the United Kingdom in 1972. It received its banking authorisation the following...
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About HSBC Bank HSBC is a British banking and financial services company. It is the largest bank in Europe and the seventh largest bank in the world. The bank originated in Hong Kong...
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Part of one of the world’s biggest supermarket chains, Tesco Finance was launched back in 1997. The Head Office is based in Edinburgh, and although there were bricks and mortar branches...
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About TSB TSB is a UK-based retail and commercial bank. It is a subsidiary of the Sabadell Group. The TSB we know today came to be in 2013, formed from Lloyds TSB Scotland PLC...
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About Union Bank Union Bank, or Union Bank of Nigeria, was founded in 1917 as Colonial Bank. Its name was changed to Barclays Bank Dominion, Colonial and Overseas in 1925 after...
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