(MoneyWatch) My daughter is graduating from college this month. Like the responsible kid she is, she decided that she should apply for a credit card to make sure she could use her own plastic to pay for hotels and rental cars when she travels. She was turned down.
She has a job. She’s incredibly financially responsible. She just has no credit history — a problem shared by a good number of today’s graduates, particularly once the Credit Card Act barred banks from peddling their plastic on campus to kids with no income or assets. The good news is that there are a number of credit cards that cater to people with limited credit histories, says Odysseas Papadimitriou, chief executive of the credit card shopping site Card Hub.
The five best, in his estimation, not only provide no-fee cards to new graduates, most also offer cash back and rewards. The flip side? The interest rates are high, so any kid that carries a balance will learn a costly lesson about borrowing to buy things you can’t afford. Moreover, all credit card companies charge high penalty fees if you pay late. Some will allow you to charge purchases that exceed your credit limit, but they’ll charge dearly for it. Make sure you read the terms and follow the rules. Click here to find the five best credit cards for new grads.