Updated: 7 days ago
Believe it or not, there are many convincing reasons why your teenager should own a credit card. As your teen approaches adulthood, responsible credit card use can pave their way for a stable financial future.
Regardless of your age, owning a credit card is a huge responsibility. You may even wonder if credit cards are even necessary for teenagers, who most likely have little to no income. However, if used correctly, getting a credit card for your teenager can be a smart financial decision for their future. By emphasizing responsible spending and on-time payments, you can help your teenager build their credit — even at a young age.
Depending on your teen's age, you'll have different options to consider. While the minimum age to qualify for a credit card is 18 years old, teens under 21 years old will have a harder time qualifying for their first credit card without a steady source of income. However, younger teens and teens without incomes can be added as authorized users on their parent or guardian's credit card accounts. We surveyed cards on ValuePenguin and top issuer sites to find the best credit cards that teenagers could qualify for with the best rewards rates out of any other options out there. In this guide, we'll dive into the best credit card options for teens and guidelines to be aware of.
Best credit card for teens 18 and over
Discover it® Secured Credit Card Credit Card
The Discover it® Secured Credit Card Credit Card offers one of the best rewards programs of secured cards out there. You'll earn 2% cash back at Gas Stations and Restaurants on up to $1,000 in combined purchases each quarter, 1% unlimited cash back on all other purchases - automatically. Even better, for new cardmembers Discover will double the cash back you've earned at the end of the first cardmember year. Your security deposit will determine your credit line, offering flexibility for how much you can afford based on your teen's spending habits.
Best credit cards for students
Many credit card issuers offer a student credit card version to their popular entry-level cards. This is an excellent way for teens 18 and older to qualify for cards with even better rewards programs. Functioning the same way as traditional credit cards do, student credit cards usually have lower credit limits but a higher approval rate for those with no credit history. Keep in mind that student credit cards are restricted towards college students in two- or four-year colleges and not middle or high school students.
Most student credit cards also offer rewards geared toward students and their spending habits. Therefore, college students should use their credit cards on essential purchases such as textbooks and dorm essentials. Below we've gathered some of our top picks for student cards based on the rewards rate and card benefits:
If you're at least 18 years old and are a college student, this is an ideal time to apply as there are plenty of options to choose from. Whether you want to earn travel rewards or cash back, these credit cards can also help you establish your credit from the ground up.
How to get a credit card at 18
Teens who are at least 18 years old — and are now considered legal adults — have more credit card options than minors. For teens 18 and over, there are three ways to qualify for your first card.
Apply for a traditional credit card
Teens who are 18 years and older can apply for a traditional credit card without the help of a parent or a guardian but must prove a source of income. The Credit CARD Act of 2009 tightened these regulations on credit card companies, requiring applicants under 21 years of age to demonstrate their ability to make payments. Therefore, teens will have to provide proof of income, such as a W-2 form from their employer.
Keep in mind that the Credit CARD Act of 2009 restricts teens without income — such as a part-time job — to gain credit card approval. Any allowance, even on a regular basis, will not count.
Consider applying for a secured credit card
For teens without a steady income, secured credit cards are a great entry-level option. These cards act just like standard credit cards. The only difference is that applicants must make a security deposit to open their account, acting as collateral if the card user fails to make payments on their account. Additionally, the amount that you put down will usually determine your credit line. For example, if you put down a $500 deposit, then you won't be allowed to spend more than $500 on your card at a time.
If you decide to close your account, this security deposit will be returned after paying off your balance. In some instances, you may even receive your security deposit early if the credit card issuer deems the user to be creditworthy. After months of on-time and full payments, you may be eligible to receive this deposit back completely. Above all, secured credit cards help the user establish their credit habits if they have no income to qualify for a traditional card.
Opt for a cosigned credit card
If you don't want to put down a security deposit to qualify for a credit card, you have one final option: a cosigned credit card. Only select issuers allow for cosigners, so you'll want to confirm this information before applying.
By cosigning for your teen's credit card account, the parent will also be responsible for payments to the account. The cosigned credit card will affect the credit of both the card user and the cosigner. If a teen fails to make payments, the parent or guardian's credit history will reflect the missed payments.
How to get a credit card for your teen under 18 years old
For teens under 18, credit card options are much more limited. The only way for minors to qualify is to become an authorized user on someone's existing card, such as a parent or guardian's credit card.
Allowing your teen to become an authorized user can help build 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 simultaneously benefit. Similarly, poor credit card habits such as late payments and carrying large balances can harm the authorized user.
It's important to understand that making your child an authorized user on your credit card holds you financially liable for charges they incur. For instance, if they spend $600 at the mall on video games, you'll be responsible for the charges — even if you didn't approve of the transaction.
Adding authorized users will depend on the credit card, as some issuers charge a fee to add authorized users. To determine if your card is eligible, you should ask your issuer directly about any fees associated with authorized users. Finally, your credit card may have an age limit requirement for authorized users:
If the teen is removed as an authorized user in the future, this will shorten their average account age. This is typically considered a negative factor in the eyes of credit-rating agencies, decreasing their credit score in the short term. 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.
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 2017 survey by T. Rowe Price revealed that only 18% of children under 18 have a credit card. However, a study by the Wisconsin School of Business showed that teens who get a credit card earlier were less likely to have repayment failure and have higher credit scores in the long run. It's worth noting that socioeconomic factors — such as a high household income — could influence these results. Ultimately, the age that a teenager should get a credit card depends on their financial literacy and readiness, which will inevitably vary among teens.
Should you get your teenager a credit card?
How to get a credit card for your teenager
Depending on your teen's age and income, they may be able to qualify for a credit card without the help of a parent or guardian. They'll be able to file their application under their name. But if your teen is younger than 18 or has no income source, it's best to add them as an authorized user on your existing credit card. Simply call the card issuer to add an authorized user to your card, as you'll want to check for a minimum age requirement or any additional fees. Your teen will then have a separate card under their name.
How to build credit as a teenager
It's never too early to start thinking about building credit. Getting your first credit card — whether it's your very own or if you're an authorized user — requires a lot of commitment. Over time, your credit score will gradually increase with good credit habits. Here are some tips to help you build your credit with your first card:
Always make your payments on-time and in full. At the end of your billing cycle each month, you'll want to make sure you pay your credit card bill. Otherwise, you'll accrue interest on your balance, negatively affecting your credit score.
Never spend more than you can pay back. Credit cards aren't imaginary money, and you're responsible for every transaction you make. The average household carries over $8,000 in credit card debt, which builds up if you fail to make your payments.
Keep credit utilization low. Credit utilization is the percentage of credit you use, given your total available credit available. It's recommended that you spend no more than 30% of your credit limit. If your maximum credit limit is $500, you shouldn't charge more than $150 before paying your balance off in full.
Having good credit is a vital part of your financial future. Since it takes years to build an excellent credit score, it may be a good idea to get your first credit card as a teenager. Starting out, teens should use credit cards for the essentials and pay their bills as soon as possible. Credit card debt can add up quickly — but by practicing good spending habits, teenagers can understand the importance of financial management and budgeting.
Page Consumer Services is a Nevada-based company and is one of the highest-rated credit restoration companies in the nation. They have years of experience helping consumers understand and work to improve their credit and offer a 120-day money back warranty to every customer. You can call 855-700-7243 to schedule a free credit consultation with a Page Consumer Services counselor today.