Understanding Credit Card Age Requirements
When it comes to getting a credit card, age is an important factor to consider. The Credit Card Accountability Responsibility and Disclosure Act (CARD Act) of 2009 set strict guidelines for credit card issuers regarding the minimum age requirement for applicants. Understanding these age requirements is crucial for teenagers and their parents who are considering getting a credit card.
Minimum Age for Getting a Credit Card
The legal minimum age to obtain a credit card as the primary account holder is 18 years old. However, applicants under the age of 21 face additional restrictions. They must either have a co-signer who is at least 21 years old or provide proof of independent income sufficient to make credit card payments.
| Age | Requirements |
|---|---|
| Under 18 | Cannot be primary account holder, but can be an authorized user |
| 18-20 | Can be primary account holder with a co-signer or proof of independent income |
| 21 and above | Can be primary account holder without additional requirements |
Exceptions for Individuals Under 21
While the CARD Act set strict rules for credit card applicants under 21, there are still ways for them to obtain a credit card:
- Having a co-signer who is at least 21 years old and has a good credit history
- Providing proof of independent income, such as a pay stub or tax return, showing sufficient income to make credit card payments
- Becoming an authorized user on someone else’s credit card account, typically a parent or guardian
Credit Card Options for Teenagers
While teenagers under 18 cannot be primary account holders, there are still credit card options available to help them build credit and learn financial responsibility.
Student Credit Cards
Student credit cards are designed specifically for college students aged 18-22 who have limited or no credit history. These cards often have lower credit limits and income requirements compared to traditional credit cards. Some student credit cards even offer rewards like cash back on purchases.
One popular student credit card is the Discover it® Student Cash Back Card, which offers 5% cash back on everyday purchases at different places each quarter, up to the quarterly maximum when you activate.
Secured Credit Cards
Secured credit cards are another option for teenagers and young adults who want to build credit. These cards require a security deposit, which becomes the credit line for the account. This deposit reduces risk for the issuer and makes it easier for applicants with limited or no credit to get approved.
Secured cards work just like regular credit cards, allowing users to make purchases, build credit history, and sometimes even earn rewards. The Discover it® Secured Credit Card is a popular option, as it offers cash back rewards and the opportunity for cardholders to get their deposit back after establishing a history of responsible use.
Becoming an Authorized User
For teenagers under 18, becoming an authorized user on a parent or guardian’s credit card account can be a great way to start building credit early. Authorized users are added to an existing credit card account and receive their own card but are not legally responsible for making payments.
Many issuers allow children as young as 15 to be added as authorized users. The primary account holder is still responsible for all charges and payments but can use this as an opportunity to teach their teen about responsible credit use. The authorized user’s credit history will also benefit from the primary cardholder’s responsible use and on-time payments.
Building Credit as a Teenager
Getting a credit card as a teenager is not just about having spending power; it’s also an opportunity to start building a strong credit history and learn valuable financial lessons.
Understanding Financial Literacy
Before applying for a credit card, teenagers should have a basic understanding of how credit works. This includes learning about:
- Interest rates and how they are calculated
- Credit limits and the importance of not maxing out a credit card
- The significance of making on-time payments every month
- How responsible credit use can build good credit over time
Parents can play a crucial role in teaching their teens these financial literacy basics and helping them develop good credit habits from the start.
Factors to Consider When Choosing a Credit Card
When selecting a credit card, teenagers and their parents should consider factors such as:
- Annual fees: Look for cards with low or no annual fees to save money
- Foreign transaction fees: If the teen plans to travel abroad, choose a card with no foreign transaction fees
- Credit reporting: Make sure the issuer reports account activity to the three major credit bureaus to help build credit history
- Mobile app and online tools: Features like account alerts, spending trackers, and budgeting tools can help teens manage their credit card use
Responsible Credit Card Usage
Getting a credit card as a teenager is a big responsibility. It’s important for parents to have open communication with their teens about responsible credit use and to set clear expectations and guidelines.
Some tips for teenagers using credit cards include:
- Keeping track of all purchases and staying within the credit limit
- Paying the bill on time and in full every month to avoid interest charges
- Not using the credit card for cash advances, which often have high fees and interest rates
- Monitoring account activity regularly for signs of fraud or unauthorized charges
By using a credit card responsibly and building good financial habits early on, teenagers can set themselves up for a strong financial future. With the right guidance and tools, a credit card can be a valuable opportunity for teens to learn about money management and build their credit history.
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