The summer I turned 18, my parents sat me down and had the credit card talk. I was heading to college in another state, and they thought it’d be wise for me to start building credit.
Although I had income from my job, they cosigned for my card so I’d have a larger credit line in case of emergencies. Then they explained why it was important to be smart with my credit — and left the rest up to me.
I received and paid the bills on my own. I learned what happened when I charged too much (and owed interest); I learned why it was better to pay my bills in full. When I finished college, with several years of credit history backing me up, I applied for my first credit card without a cosigner. Since then, I’ve continued to use credit cards to earn rewards and build credit.
My early introduction helped me realize credit cards weren’t scary or evil, as long as you use them correctly.
If you’re reading this post, you’re probably a parent interested in giving your teenager a starter credit card. Or a teenager interested in getting a card yourself. Here are several ways to get credit cards for teenagers, followed by pros, cons, and recommendations.
What Age Can You Get a Credit Card?
So, how old do you need to be to get a credit card? The answer is complicated.
In college, I remember banks handing out credit cards like candy. But thanks to the Credit Card Act of 2009, cardholders under 21 must now have proof of independent income or a cosigner over 21 (and most card issuers don’t allow cosigners).
And before turning 18, teenagers can’t have their own credit card, whether or not they have a cosigner. Their only option is to become an authorized user on someone else’s credit card.
Given these restrictions, here’s a suggested timeline for kickstarting your teen’s personal finance education:
- Tweens (11–13): Sign up for a prepaid card to teach her about budgeting without cash. Since many allow for monthly direct deposits, you could load her allowance directly onto the card. You could also try a tool like FamZoo, which sells prepaid cards controlled by a mobile app.
- Teens (14–17): Since there aren’t any credit cards for minors, your best option is to add her as an authorized user on one of your accounts. If, going forward, you manage that account well, this will give her an almost-instant boost. It also gives her financial freedom while you continue to monitor her spending.
- College students and young adults (ages 18+): Help her apply for a secured or student credit card, or check out cards for limited or no credit. If she has a job, scholarships, or grants, she can apply on her own; if she doesn’t, you may need to cosign (but we don’t usually recommend this, and it’s only possible for certain card issuers).
Why Would You Want to Give Your Teen a Credit Card?
By getting your teenager a credit card, you can teach her lifelong lessons about credit, budgeting, and money management. You’ll also help her build her credit profile. If your teen waits until after college to dip her toes into credit, she might have difficulty securing a car loan or lease.
That said, credit cards for teenagers do come with risks. Before giving your teen the keys to the financial kingdom, make sure you take the following steps:
- Explain how credit works: Every credit card for teenagers also needs to come with a conversation about credit — and the consequences of its misuse. This convo shouldn’t be a one-time thing, either; continually discussing personal finance is the key to a healthy relationship with money. At the end of this post, I review some of the key credit-related terms every teen should know.
- Set spending boundaries: If you add your teen as an authorized user, make sure she knows how much she’s allowed to spend. Perhaps it’s $150 per month, which she needs to track with a budgeting app. You should also set aside time to regularly review charges, such as whenever the statement arrives.
- Define emergencies: Many parents want their children to have credit cards in case of emergencies. But an “emergency” looks different to someone who’s 14 than to someone who’s 44. Ensure your teen knows what qualifies as an emergency. Can she only use the card if her car breaks down? Or does a dire after-school pizza craving count, too?
Now let’s dive into the different options you have for credit cards for teenagers.
Option 1: Add Your Teen as an Authorized User
For teenagers under 18, adding them as authorized users is the only way to help them build credit.
Most major credit card companies allow you to add underage authorized users, though they may have minimum age requirements. For Barclays and Amex, your teen must be at least 13; for Discover, 15.
It’s easy to make your teen an authorized user on your credit card account. You can do it while you’re applying, or later on through your online account or over the phone. You won’t need much more than her name, address, and Social Security number.
Once you’ve added her, your teen will soon get her own card in the mail. While it’ll have the same account number as your card, your teen’s name will be on the front.
PROS: You’ll be able to monitor her spending through your online account or monthly statements — and if you have a rewards credit card, will earn points from her purchases. If you add her to a card you already hold, the process will only take a few minutes. Certain cards, like those issued by Amex, may allow you to set spending limits for authorized users.
CONS: You’ll be liable for your teen’s behavior. If she goes on a shopping spree she can’t afford, you’ll have to foot the bill (because most issuers don’t let you set spending limits for authorized users). If you don’t pay the bill, you’ll owe interest and increase your credit utilization, negatively affecting your credit scores. In many cases, the charges appear on one bill, meaning you’ll need to manually separate your teenager’s purchases from your own.
INSIDER ADVICE: If your teenager is under 18, adding her as an authorized user is a convenient way to build her credit and cover emergencies. That said, it gives her a lot of freedom — and if she’s irresponsible, could damage both of your credit scores. And of course, if you’re irresponsible with the account you’ll be doing more harm than good to both of your scores. It also won’t necessarily give her practice budgeting and paying her own bills.
So, rather than adding her as an authorized user on one of your regular cards, we’d recommend applying for a new card (more on that below) and letting her manage the account on her own.
5 Tips for Making Your Teen an Authorized User
If you want to pursue the authorized user strategy, it’ll work best if you follow these tips:
- Before adding your teen as an authorized user, commit to using credit responsibly, especially for the account you’re adding her to. If you make late payments or default on your bill, then becoming one of your authorized users will hurt, rather than help, your teen.
- Make sure your credit card issuer reports authorized user behavior to the three major credit bureaus: TransUnion, Equifax, and Experian (all the major card issuers should). This will help your teen build credit.
- Consider implementing a spending limit. American Express allows you to do this with all authorized users, as does the Costco Anywhere Visa® Card by Citi (Review). You can also control your teen’s spending through an app like Card Valet.
- Let your teen see the monthly bill, so she knows how much she’s spending. It’d be wise to give her a monthly budget, then have her track purchases through an app like Mint. If she has a source of income, she could practice making monthly payments to you.
- Maintain your teenager’s authorized user status until she’s had a chance to establish credit on her own. Removing her will eventually shorten her average age of accounts, affect her credit utilization, and potentially reduce her credit scores.
Option 2: Get a Low-Limit Credit Card for Teens
If you want to help your teen build credit, but don’t want her to have unlimited access to your normal credit line, consider applying for a new card — then adding her as an authorizer user.
Once you’re approved, you can ask the issuer to lower the new card’s credit limit. That way, your teen won’t be able to rack up more charges than she can afford to pay back.
PROS: Your teen can build her credit within the confines of a lower limit. If it’s a new card that you don’t otherwise use, all the charges will be hers. Which means it’ll be easy to monitor spending, enforce budgeting, and have your teen practice paying the bills in full.
CONS: Unless you already have a spare card to use for this purpose, you’ll need to apply for one. With a low limit it’ll also be easy to max out the card and increase your credit utilization ratio, which is not good for credit scores.
INSIDER ADVICE: This is our favorite strategy for first credit cards for teenagers under 18. Although it requires a little extra effort, a low-limit credit card allows teens to build credit and practice financial independence — without many of the risks that accompany a high-limit card.
Option 3: Choose a Starter Credit Card
Once your teen turns 18, she’ll be eligible for her own credit card.
Though starter and student credit cards have reduced credit requirements, applicants under 21 must have proof of independent income to get approved.
So if your teen doesn’t have a job, scholarships, or grants, your best bet is to go with option 2 and add her as an authorized user to a new, low-limit card.
If your teen is ready to build credit with her own card — and has the income to back her up — she can opt for either unsecured or secured. The former are “normal” credit cards; the latter require a refundable security deposit that, in most cases, then serves as your line of credit. If you put down a $500 deposit, for example, your secured card will have a $500 credit limit.
PROS: Getting a credit card can help your teen earn rewards and learn about grownup financial responsibilities.
CONS: This is the big leagues — and you won’t have much control over your teen’s behavior. Financial irresponsibility could lead to long-term financial repercussions.
INSIDER ADVICE: Once your teen’s flown the coop and is earning a steady paycheck, it’s probably time for her to get her own credit card. If she still has some work to do in the money department, opt for a secured card. But if she’s financially responsible, a starter credit card can be a great idea. If you’re worried about overspending, encourage her to ask for a low credit limit — just understand that doing so will increase her credit utilization ratio.
5 Best Credit Cards for Teenagers
When you’re looking for a credit card for your teen, it’s important to consider the fees. Ideally, you’ll find a card without an annual fee, so your teenager can easily keep the card for a long time. (The higher your average age of accounts, the better your credit scores will be. Even though I never use my first credit card, I have kept the account open for 15 years, which is a big boost to my credit file.)
Here are two secured and three unsecured teenage credit cards — all of which are free of annual fees.
Featuring cash back rewards and no annual fee, this secured option is one of the best credit cards to build credit. It offers 2% cash back at restaurants and gas stations on up to $1,000 per quarter, with double cash back the first year. It also waives the penalty on the first late payment, providing a bit of forgiveness for first time credit card users. Credit limits can be between $200 and $2,500.
This card’s another good secured option because it doesn’t have an annual fee and is from a reputable issuer. First-time cardholders will automatically get a credit limit of $200 after a deposit of $49, $99, or $200; the maximum possible deposit is $1,000. After the first five on-time payments, users will have access to a higher credit line.
This is probably the best student card on the market. Instead of a flat rate, you’ll earn 5% cash back on rotating quarterly categories like gas, restaurants, and Amazon.com (on up to $1,500 each quarter; it earns 1% after that). It has no annual fee, and will double the cash back in the first year — for a whopping 10%! Students will also get an annual $20 Good Grades Reward for maintaining a GPA of 3.0 or above.
This is one of the best credit cards for students, and is very similar to the aforementioned Discover it® Secured Credit Card (Review). It offers 2% cash back at gas stations and restaurants, on up to $1,000 each quarter (and 1% after that). It has no annual fee, and will double the cash back in the first year. Like the regular Discover it Student card, students will also get an annual $20 Good Grades Reward for maintaining a GPA of 3.0 or above.
Despite the moniker, this card is available to anyone whether or not they’re in college. It has no annual fee and earns at least 1% cash back on every purchase. We like that it incentives responsible credit behavior by increasing the rewards to 1.25% for on-time payments, which you should be making every month. After making the first five monthly payments on time, users will also get a higher credit line.
What to Teach Teens About Credit
Regardless of how your teenager gets a credit card, it’s essential you teach her the basics of credit beforehand. Doing so will set her up for financial success later in life.
Here are some key topics you should review with your teen — and then review again, until she begs you to stop talking about it!
- Credit vs. debit: Credit cards are different than debit cards. One withdraws money directly from your checking account; the other is a loan you’ll need to pay back. You should never use your credit card to take money out of the ATM, as these “cash advances” come with expensive fees.
- Credit reports and scores: Think of your credit reports like your report card and your credit scores as your grades. Your credit reports detail your previous credit behavior, and your credit scores reflect how trustworthy you appear to lenders. In the future, good credit scores will make it easier to rent an apartment or get a job. Bad credit scores could make it hard to get a car or home loan. Using a credit card responsibly is one of the best ways to build credit.
- On-time payments: Paying your bills on time is the single most important factor for strong credit scores. Not to mention, late payment penalties are expensive. Set up autopay online so your bills will always be paid on time.
- Interest rates and minimum payments: Credit cards come with really high interest rates, a.k.a. “APRs.” Although you must always pay the “minimum payment” to avoid being late, you should strive to pay your bills in full to completely avoid interest charges. (If you charge $2,000 on a credit card with a 22% interest rate, and only pay the minimum payment, it will take you almost 16 years to pay off your card, by which time you’ll have paid $3,026 in interest!)
- Identity theft: It’s important to keep track of your credit card and your statements. Keep an eye out for fishy purchases, and safeguard your number online. If you think you’ve lost your card, call the issuer immediately. It will put a freeze on your card, and if you’ve officially lost it, it will mail you a new copy at no cost. Whatever you do, don’t stay silent if you’re not sure where your card is.
Since personal finance isn’t taught in schools, it’s up to parents to make sure their children have a strong financial foundation. By familiarizing your teenagers with credit and credit cards, you’ll teach them lessons that will stay with them for the rest of their lives.
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