Credit.com recently listed its . Being unsure if teenagers should even have credit cards, I was curious what they recommended. Do the cards encourage responsible use? Are the usage rules and fees clearly stated? How do the cards compare to those aimed at adults?
Credit.com considered 41 factors to determine the top three cards, including annual fees, rewards to dollars ratio, online shopping discounts, APR, fees to cancel the card, how user-friendly the application is, and more.
The evaluation was run by Credit.com writer Beverly Blair Harzog, who started with 45 cards. I was surprised that out of a 100 possible points, the winning cards only scored between 50-52 points. Either Bev has ridiculously high standards, or these cards leave a lot to be desired. Here’s what she said about each one:
Winning card – 52 points –
Pros: Discover’s CardBuilder allows you to create your own card. Well, it sort of does. There are some restrictions on the combinations you can create. I created a student card using CardBuilder and came up with a pretty terrific credit card. I chose the 5 percent cash bonus rewards, with rotating categories such as gas, restaurants, department stores, and groceries.
I like the reward categories because they fit in with the student lifestyle. The only hitch is that on purchases other than the rotating categories, you get a low .25 percent before you reach $3,000. Hint: Get there in a hurry by putting some of the semester’s expenses on the card and paying it off during the 25-day grace period. I pay tuition regularly, so trust me, it’s not hard to spend this much quickly. After you reach $3,000, you get 1 percent on everything. Right away, you’re teaching your child how to take advantage of rewards cards!
Cons: The card I created offers a 12-month zero percent introductory APR, which I highly recommend for someone who’s new to credit card payments. It leaves a little margin for error if your child has to rotate a balance for a month or two. Here’s the downside to my Frankenstein credit card: a 19.99 percent APR. But guess what? The goal is to teach your college kid that a smart consumer pays off the balance every month. If a credit card is handled properly, the APR shouldn’t matter. If not handled properly, well, your child will learn a painful credit card lesson. There’s no annual fee.
Second Place – 51 points –
If you don’t have a family member in the military, you can qualify your child for this card by joining the Pentagon Federal Credit Union (this requires a $20 contribution to the National Military Family Association). There’s one other caveat: you must also be willing to be a joint owner on the account.
Pros: You get five percent cash back from gas purchases paid at the pump. On all other purchases, you get one percent cash back. Not bad at all for a student card.
Cons: You get a 13.99 percent variable APR on purchases, which is an excellent rate for this category. There’s no cash advance fee and there’s no annual fee. You can also get a 24-month, 4.99 percent introductory rate (and pay no fee) on balance transfers made between July 1, 2011 and September 30, 2011.
I don’t usually recommend that parents co-sign for a child so I consider this a disadvantage, or part of the “cost” of getting this card. There are too many legal and emotional issues that can arise. But this is an excellent card and if you think your child won’t have problems paying off the balance on time every month, this is a good option.
Third place – 50 points –
I continue to love the way Capital One presents its credit cards to consumers. It’s simple and direct. And on this card’s home page, they include credit education for students. I think that’s a great touch.
Pros: You earn 1 percent cash back on all purchases. That’s a rewards program that’s easy to explain to your kid. But you know what I really love about this card? If you pay your credit card bill on time, you get a 25 percent bonus on the cash back you earn each month. Positive reinforcement is always a good thing, right?
Cons: This card has a fairly high 19.8 percent variable APR. If your kid pays the full balance on time, this won’t matter. There’s no annual fee, no foreign transaction fees, and no balance transfer fee.
Note: Credit.com receives a commission when someone applies for and has his/her application for the Journey Capital One card accepted. It does not receive remuneration for the other two cards mentioned in this post.
Credit.com is currently updating its disclosure policy to include a statement at the bottom of any credit card reviews for which the site receives a commission (upon successful application). The site also has an FTC disclosure in the right sidebar. Together, these two disclosures make it one of the most transparent credit card sites I know of.
Credit.com was founded in 1995 by Adam Levin, who used to be the Director of the New Jersey Department of Consumer Affairs. The company is based in San Francisco and New York.