by Odysseas Papadimitriou. CardHub CEO
Many people mistakenly believe that regulations – the Credit CARD Act of 2009, in particular – prevent folks who are under the age of 21 from getting their own credit cards, but that’s certainly not the case.
You can get your own credit card account as soon as you turn 18 and a credit card with your name on it even earlier than that, if you’re an authorized user on a parent’s account.
That’s because the law merely dictates that any credit card applicant must be at least 18 years of age and able to display the income or assets needed to at least make minimum monthly payments. That’s true regardless of your age, though the required minimum payment will likely be higher for consumers with more extensive credit experience as they are likely to have higher credit limits and spend more on a monthly basis.
Under 18: Become an Authorized User
Again, you cannot get your own credit card if you’re under the age of 18 – even with a co-signer. There are many reasons why that’s the case, but we won’t get into them here.
If you want a credit card before you turn 18, your lone option is to use a parent’s credit card account as authorized user. This will give you valuable experience managing credit before your own financial reputation is truly on the line. And while being an authorized user won’t pay the same credit building dividends as having your own account, it will help lay a solid foundation and may even enable you to garner a higher-tier account when applying for your first individual card.
Whether or not you dabble with credit prior to legal adulthood, the importance of a good credit score necessitates that you begin asking yourself, “how can I get a credit card at 18,” as the big day approaches.
Ages 18-21: Credit Card & Co-Sign Options
Young adults typically have limited credit history as well as limited income, which means their credit card options are limited to student credit cards. secured credit cards. and other starter credit cards . Student credit cards tend to have the best terms because issuers prize the above-average earning potential that college-educated consumers possess. Nevertheless, as long as you are able to get a credit card that either charges no annual fee or a low annual fee, you’ll be able to build credit cost-effectively – your top priority at this stage in your financial life.
If you don’t have any independent income, getting a parent to co-sign you application is also an option. A co-signer basically serves as a secondary payment source, giving issuers a safety net of sorts in the event that you – the primary accountholder – cannot pay for balances incurred. The cards you could conceivably get using a co-signer will therefore only be as good as the co-signer’s credit standing will allow.
Credit Cards & Old Age: Is There a Limit?
Senior citizens often wonder if there is any age limit when it comes to applying for a new credit card. There is not. It would be considered discrimination for a credit card company to deny an adult applicant simply because they
are “too old.”
Credit Cards & The Financial Literacy Curriculum
Many parents have a game plan of sorts for teaching their children the tenets of responsible money management. Adding a child as an authorized user on a credit card account is one of the last steps given the implications that can accompany mistakes. For example, an authorized user could run up a bunch of charges if you don’t establish a custom spending limit for them, perhaps leading you to incur finance charges, raise your credit utilization ratio higher than you’d like it, and hurting your credit.
The basic progression required to raise a financially literate child generally entails:
- Starting with a Prepaid Card – You can load your child’s budget onto a prepaid card, review their spending habits through online account management tools, and teach the importance of responsible budgeting and bank-fee avoidance.
- Transitioning to a Cash Allowance – Providing a cash allowance at longer intervals will truly test your child’s budgeting skills as well as give them practice keeping track of cold hard currency.
- Progressing to a Checking Account – Setting up a checking account in your child’s name and giving them access to it introduces new account management skills, such as writing checks and avoiding account overdrafts. The stakes are higher at this point in the learning process, as account overdrafts and bounced checks can prevent your child from getting another checking account in the future.
- Authorizing Credit Card Use – Adding your child to your credit card account as an authorized user will give them experience using a physical credit card in a relatively low-risk environment.
- Opening a Student Credit Card or Co-signing – Student credit cards typically offer better terms than other offers targeted to people with limited credit. You can expect a few no annual fee student credit cards with at least 1% cash back or 0% interest for the first few months to be available. However, if you want more attractive rewards or a longer 0% rate for your child, you could co-sign for a card as well. (Editor’s Note: We recommend that new credit card users avoid carrying a balance from month to month, as doing so can lead to bad habits and expensive finance charges).
The credit card options that are available to underage consumers depends on how you define “underage.”
If you are between the ages of 18 and 21, you can typically get a student credit card, secured card, or other starter credit card without a co-signer. You’ll simply need to display the requisite income and assets to make monthly minimum payments.
If you don’t have the requisite income, you can apply with a co-signer in order to open a card and begin the credit building process as quickly as possible.
If you’re under the age of 18, you won’t be able to get your own credit card, but you can ask that your parents add you to one of their accounts as an authorized user so that you can begin credit building and potentially gain some valuable credit management experience (if they trust you enough to actually give you a physical card tied to their account).
Image: JNT Visual/Shutterstock