You can get credit cards for kids by making them authorized users on your credit card account. A child legally cannot get their own independent credit card account until they turn 18 years old, but making your child an authorized user on your credit card can help them get a head start on building their credit history. Some credit card companies have minimum age limits for authorized users, but most credit card companies do not.
When a primary cardholder pays the bill on time and maintains low credit utilization, any authorized users on the account benefit from it. An authorized user doesn’t even have to use the credit card to reap the benefits. Also, some card issuers allow primary cardholders to set spending limits for each authorized user, which could come in handy if you’re giving a credit card to a child.
That said, if you’re trying to teach your kids about budgeting in a more hands-on way, you may also consider letting them use a prepaid or reloadable debit card designed for kids. These prepaid cards - one example is the Greenlight Card - allow parents to load money onto the card from an app and closely monitor their kids’ transactions. The big downside to a prepaid card for kids is that it does not build their credit history, because it’s not a credit card.
Teens should have credit cards because having a credit card is the most efficient way to build credit history, and credit history will come in handy as teenagers get older. Some experience handling a credit limit before teens enter adulthood and reach financial independence is a bonus. A significant number of parents agree, too. Nearly 20% of teenagers ages 13-17 have credit cards, according to a 2017 TransUnion survey.… read full answer
Giving a teenager a credit card comes with pros and cons. The only way someone under 18 years old can get a credit card is by becoming an authorized user on an adult’s account. Credit card companies do report to credit bureaus about authorized users, which builds credit history. But the primary cardholder still takes on the responsibility of paying whatever debt ends up on the card, regardless of who is using the account as an authorized user. Parents who are thinking about adding their teen as an authorized user should set some rules for the card, and make sure those rules are enforced. After all, if a minor wreaks financial havoc as an authorized user on your credit account, you’re stuck with the bill.
Some credit card companies make it easy for primary cardholders to monitor spending and create boundaries for authorized users. American Express consumer credit cards allow cardholders to set spending limits as low as $200 for each authorized user. The Barclays mobile app allows primary cardholders to customize spending limits per transaction, with the option to turn certain spending categories on or off. And the Citi Costco Anywhere Visa card has customizable spending limits, but that’s the only Citi card to offer it.
Teenagers who get credit cards before they’re 21 years old, either as an authorized user on someone else’s account or on their own after they turn 18, tend to have better outcomes. They’re more likely to have a higher credit score later on in life, and are less likely to default on financial obligations in the future, according to a 2016 University of Wisconsin study. Becoming financially literate is increasingly important in our modern world, and early exposure to the credit system can pay dividends.
When they turn 18, a teenager has the opportunity to apply for their own credit card, granted they have their own independent income. Many 18-year-olds have limited or no credit history, so they may be limited to a student card or a secured card. Some student cards have rewards beneficial to students, like statement credits for good grades. And they generally come with better terms than cards offered to non-students with limited credit history.
Yes, you can add your teenager to your credit card as an authorized user, but the teen’s age will matter to some credit card companies. American Express and Discover require authorized users to be at least 15 years old, for example, while U.S. Bank requires them to be 16. But lots of credit card companies do not have an age requirement for authorized users, including Chase, Bank of America, Citibank, Capital One, Wells Fargo, USAA, Navy Federal Credit Union, PNC Bank, TD Bank, and First National.… read full answer
Adding your teenager to your credit card account can help both you and your teenager, as long as you manage the account responsibly. Your teen will begin building credit history, even if you never hand them a card. And if you do decide to give them a card, they could learn some great early credit lessons – with your tutelage, of course. Plus, if you add your teenager to a rewards credit card, whatever the teenager spends will add to your rewards.
That said, there are plenty of ways for this scenario to go badly, too. If you give your teenager a credit card, there’s a real possibility that they’ll use it to buy things you’d never authorize them to buy, and you’ll be on the hook for the charges. Or, if you don’t use your account responsibly, all the negative information added to your credit report will also end up on your teenager’s report if they’re an authorized user. The damage doesn’t have to be permanent, though. Authorized users have the right to request removal from the account and dispute the negative information, which will remove that information from their credit report.
Plus, if you make your payments on time and make sure your teenager knows what the card should (and shouldn’t) be used for, you’ll likely avoid the pitfalls.
No, you can’t get a credit card at 15. You won’t be able to get one in your own name until you’re 18. And even then, you might need to start out with a secured card until you’ve built up your credit history. The law prohibits minors from getting credit cards and requires anyone under 21 to show that they have their own income when they apply for a card.… read full answer
But just because you can’t get your own credit card account doesn’t mean you have no options. Your best bet is becoming an authorized user on someone else’s card. Authorized users can charge purchases to the primary cardholder’s credit account, but they don’t have any legal responsibility for payment. And as long as the primary cardholder makes payments on time, the authorized user gets positive information on their credit report.
There are other ways to build credit without a credit card, like making rent payments, but they aren’t available to most 15-year-olds. And if you want a credit card because carrying cash all the time is a hassle, many banks allow teenagers to open checking accounts with debit cards. Debit cards draw on the money in your checking account, so you don’t have to borrow money to use them. Prepaid cards (reloadable) and gift cards (usable until balance runs out) are other good spending tools.
So instead of getting a credit card at 15, it’s probably best to focus on becoming an authorized user, getting a debit card or both.
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