What’s the Right Age to Get a Credit Card?
Building and establishing a credit history can be imperative to making many large purchases in your adult life. So, for many Americans, the question is not if they will get a credit card, but when is the best age to get a credit card.
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Credit cards are powerful financial instruments that should be used responsibly. In fact, learning how to manage a credit card account from the beginning can be the key to building and maintaining a strong credit history throughout your adult life. Although the best age to get a credit card will vary from person to person (based on maturity and personality), read on for some general guidelines.
Credit Card Use Before Age 18
Although minors cannot apply for a credit card account in their own name, many credit card issuers allow them to be added to an adult’s account as an authorized user. For example, the Discover card allows primary account holders to add up to five additional authorized users at no charge. Authorized users will receive their own card with their name on it, and can use it to make new purchases. Yet the primary account holder is always responsible for making all payments towards the balance of the card.
As older children learn about money and how to make purchases, parents can consider adding them as authorized users to their accounts as a way to begin teaching them responsible credit card use. For example, parents could give their children a credit card to make specific purchases, or to have with them for emergency use only.
Another way to teach children responsible credit card use is allow them to make small discretionary purchases, which parents can deduct from the child’s savings or allowance. By showing children how their purchases directly affect their savings, they will begin to appreciate how credit cards work. Every child is different and the right age to get a credit card or start these other spending exercises might be very different from one child to the next.
Applying for a Credit Card as a Young Adult (18-20)
Young adults are able to apply for a credit in their own name, but with some restrictions. The Credit CARD Act of 2009 requires that credit card applicants between 18 and 21 years of age show proof that they can repay a loan, such as employment, other income or assets.
Ideally, parents can offer guidance to their adult children to ensure that they make a smooth transition from being authorized users to becoming a primary account holder. Applying for your first credit card is an important step toward financial independence.
Obtaining Your First Credit Card as an Adult
While many Americans are taught about credit cards at an early age, some become adults without any experience using one. Once you reach age 21, you can apply for a credit card as a primary account holder without any of the CARD Act restrictions, based on age. Nevertheless, it’s crucial to begin using credit cards responsibly in order to build a strong credit history.
The two most important ways to manage your credit card responsibly are to pay every bill on time, and to avoid carrying large balances. You can ensure timely payment by configuring email and text alerts on your credit card for when your statement is available and when your payment is due. You can also enable automatic payments each month.
To avoid carrying large balances, you will need to control your spending and make sure to pay more than the minimum payment each month.
The right age to get a credit card will be different for each person, as it’s a question of an individual’s level of responsibility, rather than their date of birth. By helping children take gradual steps toward credit card use, parents can help them to become responsible credit card users for life.
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