Cash is King

Just as the saying goes Cash is King, when you use a cash back credit card for your purchases (as opposed to using cash or a debit card), it can quickly add up to a meaningful amount provided you are using one of the leading cash back credit cards. I identify in this article the best cash back cards as the best credit cards for recent college graduates and young adults.

This post contains affiliate links. Please read our Disclaimer for more information.

Due to the competitive nature of the credit card industry, cash back rates have gone up from the basic 1% to as high as 5% for certain categories of spend. For an average spend of $12,000/ year, that can be mean $180 for an average earn rate of 1.5% or $240 for a 2% earn rate.

Points vs Cash

With a Points rewards card, you can earn points at a similar earn rate as a cash back card, and redeem those points for travel, gift cards or even cash. Although the ability  to redeem points for a free airline ticket to Hawaii, London, or Paris may sound appealing, you will need to be somewhat points savvy to understand the redemption value of your points (i.e. how many points are required to be used for a certain airline ticket price). In other words, you could be earning 1% in points but depending on how you use your points you could get a value of up to 2% when you redeem. We will discuss more about understanding points value in our upcoming Rewards blog.

For a cash back card on the other hand, its easier to understand the value you are getting, and just as simple to redeem the points earned (usually a statement credit to offset your purchases or a check to deposit to your bank account). The value of your cash back is usually the same as your earn rate. As a result, for someone who is new to qualifying for a rewards cards, we recommend getting a cash back card for its simplicity, convenience and value.

There are a few leading cash back cards (Chase Freedom, Discover it) that offer 5% cash back on rotating categories every quarter. There is usually a cap of $1500 spend for those category spend per quarter as well as having to opt in for the higher earn categories, which takes the shine of the 5% earn rate. This means that even if you are able to spend the entire $1500, your max earn for that rotating category is $75 for that quarter.

In addition, the rotating categories (other than gas and grocery) have been lackluster in recent times, with 5% categories alternating between merchant categories (such as grocery) to spend at specific merchants (such as Amazon, Walmart etc). As a result, I feel these cards are not worth the hassle of opting in and remembering the 5% categories/merchants for every quarter. The Bank of America Cash Rewards card on the other hand gives the consumers the choice of choosing the 3% earn category with a $2500 quarterly limit. Among the category of choice is online shopping (a segment that has been growing by double digits every year). Hence, this card makes our recommended list below. My mantra on cash back cards is that the cash back program should work for me and not the other way around.

One caveat about rewards cards (both points and cash back) is that their interest rates are usually higher than a non-rewards credit card. If you are not able to pay your monthly balances in full regularly, chances are you will be paying more in interest charges than earning in cash back. In such a case, you are better off going with a non-rewards card.

Best Credit Cards for Recent College Graduates, and Young Adults 

After researching the plethora of cash back credit cards online, the cards below have been selected for recent college graduates, new US residents and young adults, based on a combination of accessibility to apply online (i.e. excluding offers from credit unions or institutions that require memberships), appealing intro offer, good cash back earn rate without the hassle of activating quarterly for specific bonus categories, ease of redemption, and a competitive APR – all with no annual fee.

Given our target niche (of college students, recent college graduates, new US residents, and young professionals), I am including below our recommended Student Cash Back card, as well as the Cash Back credit card meant for those consumers who are new to credit. For the recommended list of our other Student Credit Cards, please click here. 

If you are a small business owner looking for a credit card for your business, I recommend you look into getting a business credit card (by clicking here) instead as that will provide more applicable benefits to help you grow your business.

Here is our list of the best credit cards for recent college graduates, young adults and beginners (Credit and Cents does not receive any commission from recommending any of the below credit cards):

	American Express Cash Magnet®	Bank of America® Cash Rewards	Capital One® Quicksilver	Chase Freedom Unlimited®
Annual Fee	$0	$0	$0	$0
Sign up Bonus	$150 with $1000 spend within first 3 mo	$200 with $1000 spend within first 3 mo	$150 with $500 spend within first 3 mo	$200 with $500 spend within first 3 mo
Intro APR	0% for 15 mo for Purchases	0% for 15 mo for Purchases	0% for 15 mo for Purchases	0% for 15 mo for Purchases
Standard APR	13.99% – 23.99%	15.49% – 25.49%	15.49% – 25.49%	14.99% – 23.74%
Earn	1.5%	3% – category of choice, 2%- grocery, 1%- everything else	1.5%	1.5%
Burn (Redemption)	$25 min redemption amount	$25 min redemption amount	No min redemption amount	No min redemption amount
Credit Requirements	Generally, requires excellent credit score to be get accepted. Score range preferably between 670-850.	Usually, requires excellent credit score to be get accepted. Score range preferably between 690-850	Typically, requires good to excellent credit score to get accepted. Score of 700+.	Generally, requires excellent credit score to be get accepted. Score range preferably above 750.
Foreign Currency Conversion Fee	2.7%	3%	None	3%
Other Considerations/Perks	Cash Back earned cannot be combined  with Membership Rewards points. The Card provides access to Amex’s Pay It Plan It® program to help pay down larger purchases over time.	Customers of Bank of America can earn even higher cash back by qualifying for the Preferred Rewards program. The categories with this card do not require opt in. The 3% category of choice can be changed monthly.	This is the card that started the flat 1.5% trend for all spend (along with those “cool” TV ads) that most other major issuers now offer. Along with access to free credit score monitoring, the card also does not have a foreign currency transaction fee.	Cash Back earned can be transferred to Ultimate Rewards which is the Points rewards program for the Chase cards such as Chase Sapphire Preferred, which can then be used to redeem for travel rewards.
Our Unbiased Opinion	This card is for the cash back enthusiasts who desire simplicity and hassle free cash back that can be redeemed with very few restrictions.	Card works best for those who are looking for a way to maximize earn from  everyday expenses and are looking for the simplicity of a cash back program.	You receive a solid 1.5% flat earn on all spend without too many other bells and whistles or upside.	If you are only interested in cash back, then you can do better than this card. However, travel rewards seekers can combine the earn from this card with premium Chase Points Rewards card.
Our Grade	B+	A-	B+	A-

 

	Citi® Double Cash	Discover it® Student Cash Back	Petal® Visa Credit Card	Wells Fargo Cash Wise Visa®
Annual Fee	$0	$0	$0	$0
Sign up Bonus	No Cash Bonus Offer	Cash Back Match		$150 with $500 spend within first 3 mo
Intro APR	0% for 18 mo for Balance Transfers	0% for 6 mo for Purchases	N/A	0% for 15 mo for Purchases and Balance Transfers
Standard APR	13.99% -23.99%	11.99% – 22.99%	12.99%-29.49%	14.49% – 24.99%
Earn	2% (1% when you buy and 1% when you pay)	5% – rotating category, max of $1500/ qtr.	1-1.5%	1.5% (1.8% for 12 mo on wallet pay)
Burn (Redemption)	$25 min redemption	No min redemption amount	$20 min redemption	$25 min redemption ($20 on ATM). Redeem in increments of $25
Credit Requirements	Generally, requires excellent credit score to be get accepted. Score range preferably between 720-850.	Usually, requires at least an average  credit score of 630-689.	No or limited credit history	Typically, requires excellent credit score to be get accepted. Score range preferably between 670-850.
Foreign Currency Conversion Fee	3%	None	None	3%
Other Considerations/Perks	Newly introduced feature allows for the cash back earned to transfer to Thank You points which is the rewards currency for the Citi cards.	Discover matches the cash back earned in the first 12 months as an introductory offer. Students with good grades also get $20 annually in cash back. Ability to use cash back for purchases at Amazon is another benefit of the card. The slightly less acceptance of the card within US especially with smaller merchants can be an issue.	No deposit required. Up to 10% cash back from select merchants. Earning rate goes up to 1.5% from 1% with 12 mo of on time payments.	One differentiating benefit this card offers is the Cell Phone Insurance coverage up to $600.
Our Unbiased Opinion	Although there is no sign up bonus, given the hassle- free earn and burn and the 2% earn overall, we consider this card to be a leader in the cash back space.	This card offers new to credit customers like students to track and monitor their credit score, get cash back and  use their credit limit wisely.	No fees usually charged by other cash back cards. Attractive cash back card for new to credit customers – earn cash back while building credit history.	This card is similar to the other 1.5% cash back cards meant for the cash back enthusiast who desires simplicity and low maintenance for earning and redeeming for cash back.
Our Grade*	A-	A-	B+	B+

Please check back to our site as we will be updating this chart at least quarterly.

To get information on updated best credit cards for recent college graduates, students, new US residents, and young professionals, please subscribe to our free newsletter here.

Leave us a comment below about your thoughts on cash back cards. 

Are you an Amazon Prime member? Click here to see which credit card is best to use for shopping at Amazon.com.

For individuals looking for information on building credit history fast click here, or for a list of our recommended Secured Credit Cards, please click here. 

*Rating Key:

A/A-: Industry Leading or Highly Recommend

B+: Recommend enthusiastically

B: Recommend

B-: Can be suitable to apply for some prospective customers

The cash back credit cards analysis, review or recommendations shown here are those of the author only and have not been reviewed, approved or endorsed by any third party.

Sources used for the article: Issuer websites, federalreserve.gov.