Credit Cards for Teenagers

The best way to build credit at 18 is to get a credit card in your name and use it responsibly. All major credit cards report account information to the credit bureaus each month, allowing you to build credit history. As long as the information shows on-time payments and reasonable credit utilization, that credit history will be positive and you’ll be on your way to building a good credit score.

There are two ways to get a credit card at 18: as an authorized user or by applying for your own account. If you have enough independent income to afford monthly bill payments, you can get your own credit card account when you turn 18. The best type of credit card to get at 18 is a student credit card, assuming you’re in college. Credit cards for students tend to have better rewards as well as lower rates and fees than other starter credit cards for people with no credit.

But any type of card will do, provided it has a low annual fee and you use it right. To help you with that, we’ll lay out the recipe for building credit at 18 below.

Here’s How to Build Credit at 18 Years Old:

1. Become an authorized user on a family member’s credit card.
2. Apply for a starter credit card.
3. Set up automatic payments from a bank account for your starter card.
4. Make sure your card’s monthly statement balance is much lower than the credit limit.
5. Work toward a high-paying job.
6. Save as much as possible and minimize debt.
7. Monitor your credit and make adjustments when needed.

Using a credit card isn’t the only way to build credit at 18. One alternative is taking out a credit-builder loan, which is essentially a loan that holds the borrowed money in a bank account while you make payments. This allows you to build credit easily, and doesn’t require a good credit score. Once you’ve made all of the payments, the money is released to you. Credit builder loans are typically small (think around $1,000) and have short repayment times, usually just a year, so their sole intent is to help you build your credit.

Financing a car using an auto loan can also help you build credit. Just like any other loan, payments you make are reported to the credit bureaus. Getting an auto loan can also help your credit because a portion of your score is determined by your “credit mix,” so having an installment loan adds variety even once you have a credit card.

You can also arrange to have apartment rental payments reported to the credit bureaus. Some landlords report monthly rental payments to the credit bureaus automatically, but not all do. If your landlord doesn’t, you can still have your rental payments reported through a third-party service. Some of the top ones are RentTrack, eRentPayment, and Cozy. Paying rent is something you’d have to do each month anyway, so you might as well use it to build your credit, too.

Still, getting a starter credit card and/or becoming an authorized user on a family member’s or friend’s account is the best approach. Just remember that having your own account requires more responsibility, as you’ll be the one who has to pay the bills. If you don’t, your credit score will suffer. As an authorized user, bill payments are the primary accountholder’s responsibility. Because of that, authorized users can file a dispute with the credit bureaus to get negative information removed from their credit reports.

You can keep track of what’s on your TransUnion credit report and check your latest credit score for free on WalletHub. You’ll get personalized tips for how to build credit most efficiently, too.

You can’t get a credit card at 16, at least not your own account. The law prohibits issuers from offering credit cards to anyone under 18. And even then, you’ll need your own income to qualify. These restrictions prevent minors and young adults from taking on unmanageable amounts of debt due to inexperience or youthful impulsiveness.

But you can get a credit card at 16 if a friend or family member makes you an authorized user on their account. You won’t be responsible for bill payments as an authorized user, but you will build credit as long as the primary cardholder pays on time. That’s not the only way to get access to credit in your teens, either.

Here are the alternatives to getting a credit card at 16: 

• Become an authorized user: There’s no minimum age requirement for authorized users.
• Get a job and wait two years: You can get your own credit card account when you’re 18, as long as you have enough independent income for monthly bill payments. You should get a student credit card if you go to college, as they tend to have much better terms than other starter credit cards. A secured credit card is a good backup plan, too.  
• Get a debit card: This won’t help you build credit, and you won’t be able to borrow money. But a debit card linked to your checking account will free you from having to carry cash all the time.

You can get a credit card at 16. You just can’t get an account in your own name. But if someone is willing to add you as an authorized user, you can start learning about, using and building credit. And in a couple years, you’ll be able to get your first card.

You can get a credit card at 17 as an authorized user, but you have to be at least 18 years old to open a credit card account in your own name. And when you turn 18, you’ll need to show that you have your own independent income to qualify. In the meantime, you can begin to build credit as an authorized user or with a co-signed loan, and you can always use a debit card for everyday purchases.

Here’s what you can get instead of a credit card at 17:

• Authorized user card: If someone makes you an authorized user on their card, the account will be added to your credit report. And if the main accountholder pays the monthly bills on time, your credit score will improve. The main accountholder may or may not decide to give you a card that you can use to charge purchases to the account. But you won’t be responsible for making payments either way.
• Co-signed loan: You’re highly unlikely to get a loan by yourself as a minor, but if you have an adult co-signer, the lender will look at their credit and income when deciding whether to approve. That’s because the co-signer is legally responsible for paying if you don’t. This option allows you to build credit.
• Debit card: Most banks will give you a debit card connected to your checking account. You’ll be spending your own cash, not borrowing money, so you don’t need to be 18 to get one. Different banks have different rules, but most require you to be 13 or 14 years old. You won’t build credit with a debit card, but having one can make life more convenient until you turn 18.

So to recap, you can’t get a credit card at 17, at least not one of your own. But if you find someone to back you, then you can start building credit right away. And in just a year, you’ll be eligible for student cards, secured cards and other options for people new to credit.

The best credit card for 18 year olds is the Capital One Platinum card because it has a $0 annual fee. The minimum starting credit limit is $300, and there’s no security deposit required to open the account. Accounts are considered for a credit limit increase after five consecutive on-time monthly payments. Young people who want to earn rewards and don’t mind paying a small annual fee may opt for the Capital One QuicksilverOne Cash Rewards card. It offers 1.5% cash back on all purchases, and the annual fee is $39.

The best credit cards for 18-year-old students are the Capital One Journey Student Rewards, Discover it Student Chrome and Discover it Student Cash Back cards. They all offer $0 annual fees and solid cash back rewards on all purchases. A student’s age and earning potential are an attractive prospect for credit card issuers, so they’re willing to extend offers not readily available to non-students.

Some of the other best credit cards for 18 year olds are secured credit cards, which offer the easiest approval. They require a security deposit, typically around $200. The security deposit sets the credit limit and serves as collateral for the lender. It’s fully refundable after closing the account in good standing. The Discover it Secured card and Capital One Secured Mastercard are two of the best secured credit cards for 18-year-olds.

Here are the best credit cards for 18-year-olds:

• Capital One Platinum: $0 annual fee. Eligible for a credit limit increase if you pay your bill on time for the first five months. See Terms APR.
• Capital One QuicksilverOne Cash Rewards: $39. 1.5% cash back on all purchases. $400 minimum starting credit limit. See Terms APR.
• Capital One Journey Student Rewards: $0 annual fee. 1% cash back on all purchases; 1.25% for each month you pay your bill on time. See Terms APR.
• Discover it Student Chrome: $0 annual fee. 2% cash back at gas stations and restaurants up to $1,000 spent each quarter and 1% on all other purchases. First year’s cash back matched. $20 statement credit for a 3.0 GPA or better each school year. 19.49% (V) APR.
• Discover it Student Cash Back: $0 annual fee. 5% cash back on $1,500 spent per quarter in categories that rotate. 1% back on all other purchases. First year’s cash back matched. $20 statement credit for a 3.0 GPA or better each school year. 19.49% (V) APR.
• Capital One Secured Mastercard: $0 annual fee. $200 initial credit limit with security deposit of $49, $99 or $200, based on creditworthiness. See Terms APR.
• Discover it Secured: $0 annual fee. 2% cash back at gas stations and restaurants up to $1,000 each quarter and 1% on all other purchases. First year’s cash back matched. 24.49% (V) APR.
• Citi Double Cash: $0 annual fee. 2% cash back on all purchases, 1% when you buy and 1% when you pay your bill. 0% balance transfer APR for 18 months with 3% transfer fee. 15.49% - 25.49% (V) regular APR. For 18-year-olds who have already built good credit as an authorized user.

Keep in mind that the Credit Card Accountability, Responsibility And Disclosure (CARD) Act of 2009 places limits on credit cards for 18-year-olds. Under the law, consumers younger than 21 years old must have either a co-signer or proof of a steady income to be a credit card’s primary accountholder. If you can meet one of these two requirements, you’ll have a pool of cards to choose from that will help you establish credit.

Another option is to become an authorized user on someone else’s credit card. You can become an authorized user on any type of credit card, and you’ll enjoy any benefits the card offers while you establish your credit. The primary cardholder is financially responsible for the account, and his or her card activity will also be reflected on your credit report. However, any negative information such as late or missed payments will cause a drop in both of your credit scores.

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. 

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.

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.

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, charges made by a teenager using a parent’s credit card without permission can be disputed, because a case for unauthorized use could be made. The law defines unauthorized use as a credit card transaction by someone who does not have actual, implied, or apparent authority to use the card. The cardholder can’t benefit from the use, either. A teenage child using a parent’s credit card without permission would fit that description on some counts, but a case could be made that the teenager has implied or apparent authority from the cardholder. And technically, a parent could potentially benefit from a teenager using their credit card. The teenager might buy something the parent enjoys or needs, or the parent could receive rewards from the purchases.

There are a few other things to keep in mind about the legal implications of reporting a teenager’s unauthorized credit card use. For one thing, the law clearly states that cardholders cannot be liable for more than $50 in unauthorized charges, which credit card issuers extend all the way to a $0 liability guarantee. But the law also gives card issuers the right to thoroughly investigate claims of unauthorized use. In some cases, the card issuer may ask for a police report number in the process of the investigation. If this happened to you, would you report your teenager to the police to have a shot at cancelling the charges? Maybe not, but you shouldn’t have to.

There is some legal precedent for parents disputing their kids’ unauthorized credit card charges. In these cases, liability got pinned on the merchant, and there were many steps involved for the parents to get their money back. In 2014, Apple famously settled a Federal Trade Commission complaint that arose from the company holding parents liable for their kids’ in-app purchases. Apple settled for $3.25 million, and entitled the parents to full refunds of their kids’ purchases—at least one of which totaled $2,600 in charges made by a child in the Tap Pet Hotel game. A similar situation happened in January 2019 to a North Carolina mother when her child charged $1,200 to her credit card for in-game purchases on Fortnite. Her case was taken to the state level before the game’s creator, Epic, refunded her money.

If you’ve incurred fraudulent charges due to your teenager using your card without your permission, the FTC is on your side. You should file a complaint with them if you report the charges as fraudulent to a credit card company and they don’t agree. In a statement after the Apple settlement, FTC Chairwoman Edith Ramirez reminded that federal law is clear on this topic: “You cannot charge consumers for purchases they did not authorize.”