Whether your teen is begging for a credit card or you’ve started thinking about giving them one so you don’t feel like a walking bank, you probably have many questions. Among them, you might be wondering, ‘Can a minor get a credit card?’
No, teens that aren’t 18 can’t get a traditional credit card in their own name without a cosigner or a verifiable income according to the
But as you may have guessed, there’s some paperwork to fill out, plus there are some things you should be aware of as the parent when it comes to giving your teen a credit card. If you have good spending habits, this can be a great time to teach your child how to use a credit card responsibly. If not, be prepared to make changes together as you try to figure off how to pay off large amounts racked up by your teen at the mall.
Before you hand over the plastic, I’m going to give you a comprehensive guide about how to get your teen a credit card, how to instill good spending habits, and lots of other stuff too. Keep reading and you’ll know everything you need to know by the end!
How can a minor get a credit card?
Of course, your teen can’t get a card without you. You must go with them to the bank or call your bank or a creditor on their behalf. You should also know that as the parent, you are fully responsible for anything your child buys with it. That means if they order a bounce house and horses for the backyard, you’re on the hook for paying the expense.
If you’re starting to second-guess this idea, don’t. Because the thing is, it will help your child in the long-run if you are clear, set ground rules, and use the card’s protective measures to save yourself from those kinds of disasters.
For this reason, there are credit cards available for different age brackets.
Age Groups for Credit Cards
– Tweens (11 to 13 years of age)
Tweens are a bit more forward in these times and while you might not agree with that, this age group is seeing a surge in independence. If you haven’t yet opened a bank account for your tween, it’s time to set one up. Don’t wait until they’re off to college to try to teach them responsible spending. It will be too late and you’ll be setting them up for failure.
The best way is to start now by allowing them to access their own debit card or even a prepaid card joined to their bank account. Your local bank can also explain any other options which might be a good fit so your tween can learn how to properly manage his or her money.
You can also have your tween share a credit card on your account, though setting a limit that you’re comfortable with should they max out the card is incredibly important. You can also use a virtual family bank to help teach them lessons about credit and how banks work without getting a real credit card just yet.
Secured credit cards or student cards can be another option to mull over for tweens. These offer them the chance to build credit safely, though you’ll have to cosign. If your tween is fairly responsible, this is an idea both of you will like.
There is a virtual family bank too, called FamZoo. It allows your family’s debit cards to link to your own card. So, your main card provides the funding to your other kids. It makes it easy to pay out for allowances, deduct for expenses, and even offers interest on any savings. It’s a cool idea, one that allows a bit more control and gradual loosening of the reins while teaching your kids how to save, budget for expenses, and use cards properly.
– Teens (14 to 17 years of age)
Older teens are usually more ready to have their hands on their own plastic than tweens. For this reason, it’s a good idea to add your child as a joint account holder or authorized user onto you or your spouse’s account. Teens that aren’t yet 18 can’t get a “normal” or “traditional” credit card in their name, and you’ll be relieved to know that the Credit CARD Act of 2009 won’t allow them one either without either a cosigner (like you or your partner) or a verifiable income.
Believe me, you want this protection from the CARD Act. If you ever got stuck with credit problems from your college days when they would just hand out credit cards to anyone, you know why this is so important.
The risk of running credit card debt up is very real for older teens so having some regulations in place definitely helps. When you add them as an authorized user or joint account holder, you help them establish a credit history. This can work in their favor in the future. Being the primary account holder, you have all the control over the account and can supervise any and all activity. The problem though is that you’re totally liable for the charges your teen puts on the card.
So, if your child has a history of splurging, you might want to proceed with caution here. Your credit can suffer if your child runs up so much debt on the card that you have trouble paying it.
One solution I tend to recommend more that works in everyone’s favor and keeps from damaging your own credit is to set up a new account that is designed just for teens. The Dearborn Federal Credit Union Student Visa Platinum is a card made for teens ages fourteen to seventeen, with one parent or guardian serving as the cosigner. The limit will vary from $250 to $1,000 depending on your own credit standing. This card and others like it let teens learn how to manage and build credit the right way.
– Credit Cards for Young Adults (ages 18+)
Once your teen hits the age of 18, they are allowed to get a credit card in their own name, though as I mentioned above, they must either have a cosigner or proof of income if they’re above 18 but under 21, which is high time you urge your young adult to take on greater financial responsibility.
These first credit cards are generally secured or student cards. A secured card is one that has a credit limit equal to the size of a security deposit they pay on the account. It’s usually around $300 or $500, which is a good starting point. This deposit is held, usually for a year, and with on-time payments and responsible use for a year, returned back to the cardholder while an official line of credit is then established.
Secured cards are used exactly like traditional cards are. Your young adult makes payments, they appear on the statement, and all that good stuff. You may want to be there to guide your child to choose a secured card that reports to all three credit bureaus as an unsecured card. These cards have a grace period that will enable the holder to pay off his or her purchases without racking up interest. Oh! And make sure it has no annual fees, check out this article I wrote, it has a handy table with most credit cards, their annual fees, and even the required credit score, I even break down how to avoid paying the annual fee if your card has one, it’s a massive resource! Interest rates will generally be higher on these kinds of cards but that doesn’t matter. The goal with these secured cards is to teach your adult child how to pay off the balance every month to avoid accruing that interest.
There are very few secured cards that are worth getting and which score a high grade across the board though some certainly deserve a look. For example, with the Harley-Davidson Visa Secured Card, there’s no annual fee and it has over 24 days of grace period. It’s a card that was made for people who are trying to build credit but it’s also a viable option for new credit card holders because it reports to the credit companies as a secured card.
Next, the Capital One®’s Secured MasterCard has no annual fee and little to no additional fees, making it a great choice for your young adult. If your newly adulted child is going to spend time abroad, perhaps teaching or taking a year off before school, this is a great choice because it doesn’t add fees for foreign transactions.
Now let’s talk about credit cards for student. They are very different from when you were in college because of the CARD Act. One thing that’s better about this card over a secured card is that there’s no deposit required. It is a traditional credit card designed for those first establishing credit, which is usually students, hence the name.
The credit limit on student cards is very modest but they also are a little more lenient on those learning how to get the hang of responsible spending. When used correctly, this type of credit card can help your young adult build a solid and healthy line of credit.
Discover it® has a Student Cash Back card which may be a great choice because it has no annual fees and won’t thrust a penalty on your kid if they pay late. The late payment is always forgiven the first time it happens, read this post to learn how you may avoid paying even the second or third late fee. They might not approve your adult child though but will usually offer to work with them in the form of a secured credit card instead.
Then there’s Capital One®’s Journey Student Credit Card, which has no annual fee and also offers bonus rewards when bills are paid on time, which is a great idea. The catch for both of these cards as well as many others is that proof of education must be presented to get them.
Which Issuers Allow Credit Cards for a Minor?
When you add your child as an authorized user, it’s a good thing if they are ready for it. I’ll tell you below how to know when they’re ready but first, I’d love to give you this handy chart to save you the trouble of contacting every card company out there to get a credit card set up for your child. Some of them don’t allow it while others have age requirements.
Check the table below to see at a glance which companies would work for you so you can save time!
Why should a minor get a credit card?
Does your kid even NEED a credit card? It’s up to you to decide, but in today’s day and age, I think it’s a good idea. Kids don’t learn about proper spending in school so it’s up to the adults in their life to teach them about it. Giving them the right kind of credit card can be very beneficial. Here’s why!
– It Can Help Them Establish a Credit History
When your minor gets a credit card through a lender that reports to the 3 credit bureaus, it can be great for their credit, when used responsibly. As they go through college, they will build up good credit which can help them once they start out in the real world. For example, they won’t need your help to cosign on their first car they buy as an adult if they have their own good credit standing.
– You Can Teach Kids About Smart Credit Card Use
Of course, if kids aren’t careful, they can rack up tons of charges. Experian data reported that the average credit card balance for 2017 year-end was $6,354! So, you’ll really want to sit down with them and teach them how to avoid problems like this.
A good idea is to talk to them about the APR (annual percentage rate) and how these rates are usually higher than other debts. You should also teach them how a credit card works. When parents don’t explain this fully, kids assume it’s like free money. There are big consequences for misuse though.
This conversation shouldn’t be a once and forget it type of thing. It needs to be a regular topic on the table in your home. Personal finance is something that is never taught in schools, and by discussing it, it helps build a healthy relationship with how to spend money.
Setting spending boundaries is critical too. When you’re adding your teen on as an authorized user, you should make sure they know how much they are permitted to spend. Set a comfortable limit each month and use a budgeting app like Mint to track it. Don’t laze out on checking the charges when the statement arrives. Make sure everything measures up. You should also set consequences with your child for the event of breaking the rules and overspending. Sit down together and do this so if the rule is broken, then it is enforced as agreed upon.
– They Can Use It in an Emergency
Most kids around the age of 13, sometimes a little younger, have a smartphone. Most parents buy them for the event of an emergency. A credit card could be viewed in the same way. If you set it up as an emergencies-only agreement with your child, then it should be treated as such.
But again, I think it’s very important that you sit down with your child and discuss what is considered an emergency and what isn’t. You might think these things are obvious, for example, if the car breaks down and needs repairs. But for teens, sometimes a new outfit or makeup is their emergency. Sit down, set those limits, and set the consequences if the rules for the card are broken.
Is the Minor in Question Ready for a Credit Card?
So now I’d like to talk to you about judging the maturity of your child. Is he or she ready for a credit card? It’s a lot of responsibility that even some adults can’t fully handle. There are many full-fledged adults that live on their credit card debt which is a very bad and dangerous habit.
Age is less important as maturity. You may have a 14-year-old that is mature and responsible and a 17-year-old that’s a total wreck. The key is a willingness to learn and to be responsible with the rules. Your child should be able to know and understand that despite the max limit on the card they get, they should always keep their revolving balance to 30% of the card’s limit, at the very most, so that they can build credit.
If your child understands how credit cards work and listens to your little lesson on how to use them, you will also need to decide if they follow the other rules in the house. If they tend to break your rules or refuse to do their chores, perhaps a credit card isn’t a wise choice right now.
Children that spend all their allowance at once aren’t ready yet either. If they constantly take the money they earn and blow it on frivolous things, you may want to wait. Ultimately, you know your child best, so think about these things and decide if you feel comfortable turning them loose with plastic.
The risks of having a credit card
Starting a responsible tween, teen, or young adult on a credit card has some great advantages, but it’s not without risk. There are some other things you simply must consider in all of this.
– Making only the minimum payment
For any cardholder, the minimum monthly payment is all that is required each month. It’s a great option to have if you’ve run into a problem one month until you catch back up as it’s better than being late. But the problem is that when you do that, the minimum interest snowballs and builds the debt. Teaching your teen why it’s better to pay their balance in full every month will ram home this point. Use simple math to explain that by only paying the minimum, they’re winding up paying much more later down the road, money they could’ve had to invest or spend on themselves.
– Overspending
Some teens get caught up in the buzz of shopping. Trying to keep up with everyone else and have the latest trends is expensive though. Teaching your teens that having a high balance all the time can put them in danger for getting those over-limit fees plus the high debt. This is where that rule about keeping spending under 30% of the credit limit comes in. It’s a smart tactic even for adults.
A great way to encourage this is to teach your teen to spend less than what they make from their job or earn from allowance. That credit ratio can affect their credit score. When they do it right, it can make their good credit standing improve further.
– Paying late
Teach your kids that paying late is the kiss of death for their credit score. And if they’re an authorized user on your account, it will reflect on you. But you can pay as usual if you’re the one in charge and if you notice your teen keeps this irresponsible behavior up, you can take away their privileges with the card.
Setting up an auto pay on the card is the best way to prevent missing payments. Meanwhile, your teen should be required to pay you by a certain time every month. By doing this, it prevents credit doom for everyone in the family.
– Identity theft
Even responsible teens can be the victim of identity theft. This is why it’s so important to review your statements. If anything seems out of place, contact the credit card issuer. If your teen loses their card, call and have it frozen immediately. They will send a new one at no charge. The worst thing you can do is not pay attention and have your card or card number stolen. The creditor can help protect you if you stay on top of things.
Teens love posting photos of stuff to show off, so remind them that posting a photo of their credit card or any of that information can be very dangerous. Even covering just some of those numbers isn’t good enough. A thief can figure it out. Tell your teen to never shop on open networks either. It’s very easy to steal data during the transmission and someone can quickly rack up charges on the card.
Don’t forget to teach your kid how to identify the common scams when a person calls and pretends to be with a credit card company. You should never give out your card number if you didn’t make the phone call or send the email to the company. Sending credit card numbers through email is dangerous too and something your teens should be taught about to protect themselves.
How to remove your child from your card
Just as quickly as they were babies, then toddlers, then teens, and now adults, there will be a time when your child is old enough and on their own where you will want to take them off your card. Or you may be fed up with their repeated irresponsibility and want them off the card. Hopefully, it’s for the former reason.
At the age of 18, your young adult can legally sign their own contract and might be able to get a card of their own. With that CARD Act though, it’s a little more challenging now. This means they will either need to show proof of their income if they’re already working or have you cosign on the account.
If you want to take them from your account as an authorized user, all you need to do is call the customer service for your card. Some cards allow this through their online portals (Capital One is one that does). When you remove an authorized user though, it is your responsibility to collect the card and stop any other ways from accessing your account. Some issuers like Chase will close the account altogether and give you a new card number to prevent any troubles.
One of the best things you can do is wait until your adult child gets their own new card and has been using it for several months onward to a couple years. Once they’ve made that leap, you can take them off your account without causing a credit problem for them.
Teaching your child to use credit responsibly means that if all goes well once they leave the nest, they’ll have great credit and will get better rates and terms at a younger age. Your child can then save up to buy a house and get an excellent interest rate on a mortgage which wouldn’t be possible without having the chance to learn and build credit as an authorized user.
Best Credit Cards for Teenagers
So, what are the best credit cards for teens? You should always look at the fees when you’re trying to find a card for your teen. The best would be the ones without an annual fee so your teen can keep the card longer. It should be noted that the higher your average age of accounts is, the better the credit scores will be for you. With no annual fees, you can keep that card open forever and it still boosts your credit file.
These are the cards I’d recommend you look into.
– Discover it® Secured Credit Card
This secured card gives cash back rewards and has no annual fee. It’s a fantastic one to build credit with plus it gives 2% cash back at gas stations and restaurants (up to $1,000 per quarter). The first year of card issuance, it gives double cash back. Plus, it waives any penalty on the first late payment. They offer acceptable deposits for limits from $200 to $2,500.
– Capital One® Secured Mastercard®
Another secured option, this one has no annual fees and is very reputable. Even first-time cardholders get an instant credit limit of $200 with a deposit as low as $49. You can also use a larger deposit, up to $1,000. Once the first 5 payments have been made on time, the issuer gives access to a higher credit line.
– Discover it® Student Cash Back
As far as student cards go, this is one of the best there is. There’s no flat rate but your teen can earn 5% cash back on different categories which rotate each quarter. These are things like restaurants and gas, and even Amazon.com. It’s on up to $1,500 per quarter and anything after that is 1%. There’s no annual fee either and with double cash back the first year for 10%, it’s one of the best ways to build credit. Plus, students get a special bonus each year for the $20 Good Grades Reward. They must maintain a GPA of 3.0 or higher to qualify for that bonus, which won’t just encourage them to spend wisely but study wisely too!
– Discover it® Chrome for Students
Another awesome card for students, this one is like the secured version as it offers all the same things as the secured version (2% cash back for restaurants and gas stations up to $1,000 per quarter and 1% after), no annual fee, and double the cash back in the first year. It comes with the student bonus too but this is not a secured card and is a great first card to get.
– Journey® Student Rewards from Capital One®
Even though this card implies it’s for students, it can be used for young adults even if they aren’t in college. That’s great for those that chose a different career path. There’s no annual fee and it earns the cardholder at least 1% cash back on everything they buy. If you make the payments on time all the time, it boosts the rewards up to 1.25%. After making the first 5 monthly payments properly on time, they also get a higher line of credit.
Conclusion
A minor can most certainly get a credit card but not without the permission of a legal parent or guardian. You can choose to add them to your account in either an authorized or joint capacity, or you can set them up with a secured or student card. The options I’ve detailed above should help you decide what is best for you and your family.
Your child might not be ready yet and only you can decide that. But if they are, you should think about getting them a credit card so they can start building that credit. Good credit can help them buy their own car, their own investment property or house, and get better rates on just about everything, plus when you teach them well, they learn how to be responsible with money. That’s something that every parent wants for their kids, so help them succeed by getting them started with a card of their own.
