What’s the right age to get a credit card?
It’s never too early to start building good credit. Well, the average 11-year-old does not need to be thinking about their credit—but any should be learning about responsible spending as soon as they start getting an allowance or earning money from babysitting, odd jobs or a paper route! Good credit doesn’t just automatically happen, you have to learn how to be responsible with your finances, whether you are operating on a six-figure income or making a few bucks a week.
Getting an actual credit card is something that should not happen until a person can show that they are financially responsible. It is a big commitment, and one that should be carefully thought about before taking the plunge. Bad credit habits are easy to establish—and very, very difficult to fix once you have damaged your credit.
Is There a Right Age?
The right age for getting a credit card is not necessarily a specific number, but instead a certain maturity and responsibility level. Also, you need to have some sort of income to pay the balance. Although you probably won’t qualify for a credit card without some sort of income, you should make sure that your income is sufficient to pay all of your monthly bills before trying to get approved for a credit card. Your spending should never exceed your income!
Can a Teenager Get Approved for a Credit Card?
Let’s say you are a responsible 18-year old student heading off to college. You have a part time job and enough money to pay for your monthly expenses (food, cell phone, clothes, gas money, insurance, etc.). While you may be legally considered to be an adult, and have the right to vote at 18, a credit card is not a right—it is a privilege, and one that is not often extended to younger adults.
Since 2009, there has been legislation in place (2009 Credit CARD Act) that requires any applicant under the age of 21 to get a cosigner when applying for a credit card, unless they have full time, regular income. The cosigner must have very good credit, and is essentially guaranteeing the credit card company that, if you don’t make the payments, they will take the responsibility.
For some 18-year-olds, their parents may be willing to co-sign and help them begin building credit. While this is great, it does not help the 18-year-olds with parents who have poor credit or who are unwilling to shoulder the responsibility of making payments, should their child be irresponsible. As a cosigner, a person is risking their own good credit score to help someone else—not everyone is (or should be) willing to do this.
And, if you do get a co-signer, then you had really be ready to step up and be responsible, otherwise you not only risk your credit and that of the co-signer, but you could damage your relationship and trust with that person, too.
Are There Other Options?
If you don’t want to try and get a co-signer, or you don’t have anyone willing or able to be a co-signer for you, then there are still some other options for you to start building your credit. One of the most popular options is to apply for a secured credit card. What this means is that you provide a security deposit to the bank and then you get a credit card. The credit limit may be the same as the security deposit, some may be higher.
You get the opportunity to use the credit card regularly, show that you are responsible about making payments, and build your credit. After a period of time (this time may differ for individuals, but is usually around a year or so), you should have built up a good credit history that will allow you to qualify for a traditional credit card. When you close the secured credit card (and are in good standing with no money owed!), your security deposit will be returned.
Secured credit cards are easy to get, even for young adults, because your security deposit means that the bank is not at risk if you don’t make your payments. They already have your money.
It’s important to start building credit as soon as you have the income and responsibility level to use a credit card appropriately. Some may not reach this level until mid-adulthood, but for those who are younger and may not be able to apply for their own card, a secured credit card is an option if there is not an option for a co-signer. Be responsible with your credit, from the very beginning, and you will soon find that you have a stellar credit score, one that will qualify you for great terms and conditions, as well as awesome reward opportunities!