If a debit card alone isn’t working out for your college student, a range of options allow them to acquire a credit card, including one that works even if they aren’t yet 18.
Here’s a rundown of the choices you have. They’re structured around the age of your scholar, which largely determines the kind of card they can get--and who’s responsible for the debts they run up when they use it.
In short, those under 18 years old can get a credit card under an adult’s account, while those between 18 and 21 years must meet specific requirements for a credit card of their own.
A credit card option for those under 18 years old
Consumers under 18 years old can’t get a credit card in their own names, but can be added to a parent’s or other adult’s credit card account as an authorized user. While many credit card companies allow authorized use at any age, others require authorized users to be a minimum age--typically 15 (American Express and Discover) or 18 (Synchrony). In most cases, the primary card holder can add an authorized user by providing the user’s name and Social Security number to the credit card company. This process can be done online or over the phone.
Authorized users receive their own credit card with their name on it, but they are not legally responsible to pay any debt that’s charged on the card. That responsibility lies with the primary card holder. If only to minimize any misunderstandings, then, it’s important that the main user and secondary user agree how the credit card can be used, including what can be purchased with the card and how much can be charged each month. To help reinforce these agreements, some credit card issuers (notably American Express) allow the primary card holders to set spending limits for authorized users.
One potential benefit for authorized users is that the credit card’s payment history will be added to their credit reports. Most major card issuers report authorized user accounts to at least one of the three major credit bureaus: Experian, Equifax and TransUnion. That can help an authorized user build a good credit history, as long as the primary card holder makes timely monthly payments and doesn’t overcharge.
If, however, the primary user becomes delinquent on payments or maxes out the card, that will hurt the secondary user’s credit. In such cases, an authorized user can call the credit card company using the phone number on the back of the card and request to be removed from the account.
Credit card options for 18-to-21 year olds
Young adults can receive a regular credit card on their own or with help from a co-signer. They can also choose among three card types that are particularly suited to first-time card holders.
A regular card on their own
Those between 18 and 21 years old can open a credit card account in their name if they have proof of individual income, according to rules set by the Credit Card Accountability and Responsibility Act of 2009. In an effort to curb credit card debt among young people, the act requires credit card companies to make sure young applicants have the means to repay their bills. Most issuers require applicants 18 to 21 to simply state their salary amount on the credit card application. But, unique among the major banks we surveyed, Wells Fargo takes it one step further and requires additional documentation of income, such as deposit slips, paystubs, or tax returns.
A regular card with a co-signer
Another way for adults between 18 and 21 to get a credit card is to have a co-signer, another adult who is at least 21 years old. The co-signer should have good credit history to increase the chances of getting approved. Unlike an authorized user, both co-signers are jointly liable for repayment and both can charge debt to the card. Both must use the card responsibly because the payment history is reported to each signer’s credit reports. Even more than with authorized cards, then, he co-signers should agree on how to use the card, such as what purchases can be made and how much can be charged each month. This requires ongoing communication between the two parties. To cancel a jointly held card, issuers typically require permission from both co-signers.
A good “starter” credit card
Three types of cards are well-suited to young first-time card holders. Secured credit cards are good for those with little to no credit history. They require a security deposit to open the account. Several issuers also offer student credit cards for young adults with limited credit history and income. They typically offer limited rewards and have higher interest rates, but no fees. Retail credit cards also are easier to qualify for than a regular credit card, but they typically come with smaller credit limits and higher interest rates. Many of them can’t be used outside the issuing store.