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Introducing Credit Cards to Your Teens: When’s the Right Time?

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Financial responsibility is a lesson many parents wish to impart well on their kids at an early age. Traditionally, piggy banks and savings accounts are just some of the many ways parents teach their kids about wise spending and smart investments. But with the conversation of financial responsibility and children also comes the topics of cards, particularly answering the question “How old do you have to be to get a credit card?”

Kids see mom and dad swipe a card whenever they make big purchases. It’s natural for them to be curious — if not want — to have their “magic card.” The “How old do you have to be to get a credit card?” discussion becomes more challenging when a child reaches 16 years old. Is your teenager responsible enough to get one? But can they even get a credit card now or is 18 the legal age?

If you are a parent with a teenager asking about credit cards or a curious teen wondering when you can get your hands on one, here’s everything you need to know.

How Old Do You Have to Be to Get a Credit Card?

In general, all credit card holders must be at least 18 years old.

However, if you’re under the age of 21 and have a bad credit history or lack a credit history, most credit card issuers will require you to offer any evidence that proves you can pay for your bills.

You can be an authorized credit card user if you are 13 years old, but if you want to sign up for your first credit card, you must be 18.

Applicants of legal age must be ready to show some documentation when applying for their credit cards. The CARD Act of 2009 requires applicants between the ages of 18 and 21 to show proof of income, which includes investment statements, commission checks, tax returns and pay stubs. This prevents lenders from qualifying young applicants for high-limit credit cards, especially if they don’t have the resources to pay them back.

Another option for 18-year-old applicants is applying with a co-signer (e.g. a parent, spouse, legal guardian or anyone who can pay credit card bills). In this case, both the applicant and the cosigner share equal legal responsibility for paying off the card, even if the applicant is the only one using the card.

How Does Getting a Credit Card at 18 Help Teens?

wallet with cards
Photo by Stephen Phillips – Hostreviews.co.uk on Unsplash

Getting a credit card at 18 is one of the few financial lessons that parents can impart to their kids before they embrace independence 100 percent.

With a credit card, teens can start building credit at an early age.

One of the most important factors in achieving a good credit score is the length of your credit history, aka the period you’ve credited accounts in your name. Potential lenders use the credit score to determine if a person can maintain good standing for years to come.

So how does building good credit now help teens later? A good credit score can help you qualify for the best rates on credit cards and loans. It can also impact your home and auto insurance rates. If your child maintains an excellent credit score, they can also qualify for the best credit card rewards. In many cases, maintaining a good credit history can also increase your chance of scoring a promotion. Take this opportunity to teach them about credit scores.

Another reason to encourage your teen to get a credit card at 18 is to keep them from being credit invisible. A person is considered “credit invisible” when they don’t have any record of borrowing money. According to the Consumer Financial Protection Bureau (CFPB), approximately 26 million Americans (one in 10 adults) are credit invisible.

Can Children Under 18 Get a Credit Card?

As mentioned above, teens below 18 and above the age of 13 can become an authorized users of the parent’s, guardian’s or a family member’s card. Like standard credit cards, the minimum age per card varies by issuer. Typically, the age range is from 13 to 16 years old.

Being an authorized user is different from being a co-signer. Unlike co-signers, authorized users have immediate access to the credit limit and account and have no obligation to pay the outstanding balance. Parents who let kids between the ages of 13 to 16 can benefit from signing up their kids as authorized users. Many credit issuers report authorized users to the credit bureaus, which means you’ll have a healthy credit score — as long as your kids have healthy spending habits.

When is it Wise To Get a Credit Card for a Child Under 18?

blank credit card

When is it a good idea to have your 18-year-old sign up for their first credit card or to let your younger teens become authorized users of your card?

Consider the following:

  1. Credit history. Most minors don’t have a credit score or report yet. Starting them with one now opens the doors for more financial opportunities in the future. With authorized users, their responsible credit usage paves the way for more approvals, better loan rates and more.
  2. Education. Parental guidance with credit cards can help your teens learn how to manage their credit and unlearn bad money habits. Use their credit card to teach them the importance of keeping credit utilization low, paying balances on time and spending within their means. They can’t just check out everything on eBay or Amazon whenever they like.
  3. Safety. Fortunately, many credit card companies offer stronger consumer protections. When it comes to defense against fraud or purchase protection, credit card issuer policies and federal laws make credit cards safer to use.

Is Your Child Ready for a Credit Card?

How do you know if your teenager can handle their own card?

Ask yourself:

  1. Can they follow your rules? Can your child abide by the limitations you put on the card? Assess their current financial habits. Before you get them the card, settle on a few things in advance, such as where they can use their card, if they’ll pay the bill or reimburse you for all the spending and what they can buy.
  2. Do they understand how credit cards work? Kids don’t have to be financial geniuses to figure out how credit cards work. However, a basic understanding of balances, interest rates and credit limits is important. Their previous experience with money is a good assessment point in seeing if they can handle an additional source of cash.
  3. Is your credit ready? We’re talking credit card size here.  Authorized users can benefit from your credit history, but they can also damage your history if their spending goes unchecked.

How Old Do You Have to Be to Get a Debit Card?

On the other side of the coin is the debit aspect of finances. How old do you have to be to get a debit card?

Some banks and financial institutions don’t allow minors to have debit cards under their name until they are at least 16 years old. However, there are banks that let children 13 years old or younger apply for a debit card. Some banks even set the age limit at 15 while other kids can wait until they turn 16 before they can open an account. In most cases, kids can only open a debit account without a parent once they reach 18 years old.

To start, choose a teen debit card for your kid. These are often debit cards linked to a joint account (most often the parents’ account), which enables parents and guardians to monitor the child’s spending, limit their account, download transaction data and more. A teen debit card also gives parents more visibility into how their children are spending or saving their money.

Another thing to keep in mind when your child has their first debit card (or credit card): make sure that they understand that debit card numbers, PIN numbers and banking credentials are sensitive data they should keep private. They must never share these details with anyone.

A credit or debit card is a big step for any teen. It is also an effective way to teach them financial literacy. So if you want to take this step with them, get in touch with your local bank today.

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