When was the last time you made a payment with cold, hard cash? Total System Services’ 2017 U.S. Consumer Payment Study shows that 77 percent of respondents prefer to pay with a credit card. A credit card can be an excellent way to start building a good credit history, but finding the best credit card for your situation can be complicated enough; what credit options are available for teens or young adults?

Understand Your Options

There are some good first credit card options for young adults. But, before you get started, it’s important to realize that the Credit Card Accountability Responsibility and Disclosure Act of 2009 requires that people under 21 years old show that they are able to repay the credit card balance — i.e., have an income. If your teen has a job, that’s great. That may make applying for their own card easier. If not, an easier choice may be making them an authorized user on your credit card.

Danielle Iggrassio, a college sophomore, says her father added her as an authorized user on one of his cards “So I could get a card without dinging my credit score, and it gets me cash back at restaurants, which is good because I’m never cooking.” The Balance lays out the pros and cons of this choice: You should find out if the credit card issuer actually reports authorized user accounts to the credit bureaus so the card will help your teen build their credit history.

Consult a list like the one found on NerdWallet that shows which credit card issuers and banks report authorized users, and what bureaus they report to (Discover reports to all three of the major credit bureaus). If yours isn’t on that list, you may want to consider a different credit option for your teen.

Another option is to help your teen apply for their first card. There are some good deals out there for students: the Discover it® Student Card offers perks anyone might want, like cash back and low APR, as well as a student-exclusive statement credit for keeping their grades up.* Researching credit cards can be a good assignment for your teen, since so much information is readily available. Sue Fabozzi of Staten Island, NY says that when her daughter, a high school senior, is ready to open a credit card, she’d like one that “rewards my daughter’s schoolwork.”

Andrew Behan, a college sophomore, who chose his credit card “through a recommendation from a friend at work,” says, “I didn’t think I’d care about rewards, but it turns out the points for flights are really useful.”

Choose The Right One For Their Situation

Once your teen has a short list of credit cards they’re interested in, review them together. It’s important to make sure you both understand the terms (features, rewards and penalties) and eligibility requirements to help ensure that the card they apply for is the best fit for them. Then, you get to have a nice chat about the importance of making their credit card payments in full, on time, every billing statement.

Check if the issuer offers benefits like Discover’s Account Tools — DirectPay allows you to set up and manage automatic bill payments, and your teen can set up text alerts to remind them when the bill is due and confirm that their automatic payment posted. Behan says he likes “checking my balance on [my phone] to see if I qualify for anything.” With 48 percent of people ages 18-24 using banking apps at least weekly, if your teen doesn’t already manage their money on their phone, they likely will soon.

Fabozzi’s biggest concern with getting a credit card for her daughter is “the ability to track her spending and keep her from making irresponsible purchases.” Lots of cards allow the primary cardholder to monitor the card’s usage — no matter who’s using it — and to limit the amount an authorized user can charge. Sue’s daughter, Anna, says she and her mother are “still discussing” getting her a credit card, and that she wants one “that lets me get discounts on Amazon or sports tickets.”

Consider Some Alternatives

But what if your teen’s application is rejected? It’s not the end of the world. Read the adverse action letter, which is the card issuer’s detailed explanation of its rejection, to see what you and your teen can work on. Get your teen familiar with monitoring their credit report and make sure their history is accurate. Experian also recommends that you add them as an authorized user on your card and waiting a while before reapplying.

You can also look into a secured credit card, which is “backed by a cash deposit you make when you open the account,” according to NerdWallet. This deposit then functions as the credit limit. These cards are usually easier for people with lower credit scores to qualify for, and the limitation of the amount of the deposit can be a help with budgeting. Keep an eye out for annual fees and look for a card that allows the user to transition to an unsecured card after they’ve established that they can use it responsibly (i.e., paying the bills in full, on time, every cycle).

The Discover it® Secured card begins reviewing accounts after eight months to see if users qualify for an unsecured card**; with a refundable deposit and cash back rewards, it can be a good option for your teen if they don’t yet qualify for an unsecured card. And, of course, have them do some research, then review it together to make sure the card they apply for is the best one for them.

Good Grade Reward only available to new cardmembers on or after 7/23/2015 who indicate on their application that they are currently enrolled in college, and whose accounts are current and remain open when the Good Grade Reward is requested. Students with a Discover it® or Discover it® Chrome card who have a GPA of 3.0 or higher (or equivalent) during a School Year (September - August) may apply at Discover.com for a $20 statement credit ("Good Grade Reward"). One Good Grade Reward per School Year, per account, up to a maximum of five (5) consecutive years from the date your account is opened. Terms of Good Grade Reward Offer are subject to change.

Discover refunds deposits two ways: 1) automatic monthly reviews starting at eight months to see if your account qualifies to "graduate" after showing responsible use of all your credit over time, or 2) when you close your account and pay in full we will return the security deposit to you, which can take up to two billing cycles plus ten days. See other issuers' websites for their details.

Legal Disclaimer: This site is for educational purposes and is not a substitute for professional advice. The material on this site is not intended to provide legal, investment, or financial advice and does not indicate the availability of any Discover product or service. It does not guarantee that Discover offers or endorses a product or service. For specific advice about your unique circumstances, you may wish to consult a qualified professional.