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Teenagers have several credit card options available to them depending on their age. The minimum age to qualify for your own credit card account in the United States is 18 years old. Teens who're 18 years of age or older can get their own credit card by applying independently, getting a secured credit card, or getting a parent or guardian to co-sign their credit card. If you’re a parent or a guardian of a teen who is under 18 years old, then you can get them a credit card by adding them as an authorized user to one of your existing cards.
- Getting a Credit Card for a Teen Who Is 18 and Over
- Getting a Credit Card for a Teen Who Is Under 18
- What Is the Right Age to Get My Teen a Credit Card?
- Pros and Cons
- Credit Cards Options for Students
Getting a Credit Card for a Teen Who Is 18 and Over
Teens who're at least 18 years old have more options when it comes to getting their first credit card when compared to younger teens. We list the different options that these teens have when applying for a credit card below:
Normal Application Process: Teens who have a source of income—such as a job—can apply to credit cards directly without the help of a parent or a guardian. The Credit CARD Act of 2009 tightened regulations on credit card companies by requiring applicants who are under 21 years of age to demonstrate their ability to make payments on their credit cards. This proof of income burden on credit card issuers means that, if a teen doesn’t have a job, then they'll have a hard time getting approved for a credit card. Any allowance that a teen receives, even if its on a regular basis, is not counted as a source of income.
Secured Credit Card: Secured credit cards are great options for teens with no source of income. A secured credit card is like a regular credit card with the exception that the applicant is required to make a security deposit to open their account. The deposit functions as collateral should the credit card user fail to make payments on their balance. The security deposit also functions as the limit of the credit line the credit card issuer will grant the user. For example, if you open up a secured credit card with a security deposit of $500, then you won’t be allowed to spend more than $500 on your card. The security deposit is returned to the card user once the account is closed, or—in some instances—once the card user's deemed to be creditworthy. A secured card can be a good credit card for a teenager to build credit.
Co-Signed Credit Card: Co-signed credit cards are a joint account between a parent or guardian and their child, and are another option for teenagers with no source of income. The person who co-signs for the credit card will also be responsible for payments to the account. For instance, if a parent or a guardian gets their teen a co-signed credit card and the teen fails to make payments, then the parent or guardian’s credit history will also reflect the missing payments. A co-signed credit card affects the credit of both the card user and the co-signer.
Getting a Credit Card for a Teen Who Is Under 18
There are limited options when it comes to credit cards for high school students and credit cards for minors under 18. The only way for someone who's under 18 to get a credit card is to become an authorized user on someone’s existing card, such as a parent or guardian’s credit card.
Becoming an Authorized User to a Credit Card: Getting added as an authorized user to an existing credit card can help a teen build their credit score. However, not all credit card companies report authorized user accounts to the credit reporting agencies. This means that you’ll want to check with your credit card issuer to see if they report authorized issuers before adding anyone to your account for the purpose of increasing their credit score. If the credit card owner pays their credit card bills on time and practices good credit habits, then the authorized user’s credit score will benefit. Similarly, poor credit card habits such as late payments and carrying large balances can have a negative effect on the authorized user.
Making your child an authorized user on your credit card holds you liable for charges they incur. For instance, if they spend $600 at the mall on video games then you’re responsible for the charges even if you didn’t approve of the transaction.
Some credit cards charge a fee to add an authorized user. Parents and guardians should ask their credit card company about the costs associated with adding their teen as an authorized user to their credit card. Additionally, some credit card companies have an age limit requirement that authorized users need to meet. Below we list some credit card issuers and their age requirement:
|Credit Card Issuer||Minimum Age Requirement|
|American Express||15 years|
|Bank of America||None|
Being an authorized user can help a teen’s credit score, but if the teen is removed as an authorized user at some point in the future then this will shorten their average account age, which is a negative factor in the eyes of credit rating agencies. The best practice is to keep the teen as an authorized user for as long as possible or until they have established their own credit history. When the teen is removed as an authorized user, their credit score will decrease in the short term.
What Is the Right Age to Get My Teen a Credit Card?
While there isn’t a “right” age for a teenager to get a credit card, a recent survey by T. Rowe Price revealed that 68% of parents think their kids should be 15 or older when they get their first credit card. This was the overwhelming consensus as only 12% of parents thought a younger age was appropriate and 19% thought their kids should never have a credit card. The same survey revealed that 18% of kids have a credit card. A study by the Wisconsin School of Business showed that teens that get a credit card earlier in life were less likely to default in the future and had higher credit scores. However, it's important to note that socioeconomic factors—such as having a high household income could influence the results. The age that a teenager should get a credit card ultimately depends on their financial literacy and readiness which will vary among teens.
Pros and Cons of Getting Your Teen a Credit Card
If you’re considering getting your child a credit card, you should consider the many benefits and drawbacks that come with the decision. Below we list some of the biggest benefits and drawbacks:
- Allows parents or guardians and their kids to track spending patterns
- Creates the opportunity for parents or guardians to teach their kids about responsible credit card spending and credit scores
- Establishes a credit history for your child which can save them money later in life
- Offers parents or guardians and their kids convenience
- Useful in emergency situations
- Creates an opportunity for your child to damage your credit score if they are an authorized user
- Could have a detrimental effect on your kid’s credit if you don’t pay your credit card bill on time or carry large balances and they are an authorized user
- Increases the likelihood of a card being lost or stolen
Some Student Credit Card Options
Student credit cards are credit cards that are geared towards college students. Student credit cards function the same way that regular cards do, but have lower credit limits, have a higher rate of approval for those with no credit history, and have rewards programs geared towards students. As the name implies, student credit cards are typically restricted to college students, which includes two or four year college or universities. Use our tool to compare student credit cards below.
- T. Rowe Price 8th Annual Parents, Kids & Money Survey
- Wisconsin School of Business Study