If, for instance, you show an awareness of how compounding interest and/or late fees can make an unpaid balance skyrocket quickly, you may ease your parents’ minds about your likelihood of maxing out a card. See the relevant section of this article for information on the types of cards available to teens.
Your credit score basically reflects your ability to utilize credit and pay it off on time and in full. The higher your score, the more credit-worthy you will be judged by potential lenders. While only a small percentage of your overall credit score is affected by the amount of time you have utilized credit,[3] X Research source even small increases in your credit score can make securing loans and purchasing cars and a home easier in your future. Most parents love to hear that their teens are thinking about their future, so demonstrating knowledge and interest about your credit score may help get them to relent on a credit card.
Keep your spending under control. If you repeatedly blow your allowance on frivolous items, you will have a difficult time justifying being given access to even more money. Show that you can be thoughtful in your purchases, and can control your buying impulses. Start keeping records. Even if you don’t have a checking account yet, you can keep a simple logbook of your income and expenditures. Showing an interest in keeping track of your money may signal to your parents that you have the maturity to handle a credit card. Make your own money. If you are old enough to hold a part-time job, use it as an opportunity to demonstrate your responsibility with money. Many parents will want proof that you know that “money doesn’t grow on trees,” but instead requires hard work.
If you are under 18, it is virtually impossible for you to secure a credit card in your own name. Your best bet is to consider debit / prepaid card options, or to become an authorized user on your parents’ card. See the relevant section of this article for more on these options. If you are between 18 and 21, you now need to either have an adult co-signer or be able to prove that you have the income to pay the minimum monthly balance. In practice, unless you have a steady job, it will be difficult for you to secure a credit card on your own.
There are several prepaid debit cards marketed towards teens, such as the Visa Buxx card. [4] X Research source Prepaid debit cards require your parents to deposit funds in your account, and your spending ability is limited to that amount. Cards marketed for teens usually allow both you and your parents to easily track your spending and receive spending alerts. Such cards have no impact on your credit score (if you have one yet), but they work like a credit card at retailers and offer good practice in using a card and tracking spending.
Depending upon your age and the bank you use, you may need to open a joint account with your parent(s). Look for accounts with overdraft protection, especially if you or your parents are concerned about your ability to keep track of the money in your account. You don’t want to get hit with big fees for spending money you don’t have.
According to the 2009 CARD Act, this is your only real option to get a fully-functional credit card with your name on it if you are under 18. This is the point when the “trust factor” really has to kick in. As an authorized user, you are legally free to spend up to the credit limit on the card, and the primary account holder (your parent[s]) is liable for the charges. This is also when you can start building up your own credit. Credit reporting agencies typically include authorized user accounts when determining a credit score. However, they have methods in place to exclude “piggybacking” — that is, adding your name to an account strictly to improve your own credit score. [5] X Research source Expect and accept that your parent(s) will set strict spending limits except in cases of real emergencies (like a broken down car, not a sale at your favorite store!). They may also expect you to be able to pay your share of the bill each month. If they are a bit wary, your parents may want to open a new card with a low credit limit to provide a cap on your possible spending.
With secured credit cards, you deposit a small amount into a bank account — often $250 or $300 — and this becomes your credit limit. If you can’t pay your monthly balance, the amount is taken out of this account. So, similar to a debit card, your spending is connected to existing funds in an account. Unlike a debit card, however, you are incurring monthly credit charges and are expected to pay them off in full. In order to build a good credit score with a secured card, you need to be able to pay off your balance in full and on time each month. You don’t want to have to dip into your collateral funds. [8] X Expert Source Derick VogelCredit Advisor & Owner, Credit Absolute Expert Interview. 26 March 2020.
You may need to have a parent as a co-signer on your application (which means he/she shares responsibility for any debts), but try to convince him/her to make you the primary account holder. This means you will get the statements, and is a better way for you to build good credit card responsibility practices. Practice good credit card management by spending only money you have (or will have by the time the bill is due), and paying off your entire balance on time each month. [10] X Expert Source Derick VogelCredit Advisor & Owner, Credit Absolute Expert Interview. 26 March 2020. Instill good habits in yourself and, whenever possible, avoid sinking into credit card debt right from the start of adulthood. Keep your credit card balances below 10% of your credit limit. For instance, if your credit limit is $1000, don’t charge more than $100 each month. That’s the best way to maintain a good credit score. [11] X Expert Source Derick VogelCredit Advisor & Owner, Credit Absolute Expert Interview. 26 March 2020. A low-frills card, with a no annual fee, low interest rates, and a low credit limit is usually the best bet for a student credit card. Think of it as a card with “training wheels” before you move on to fully grown-up credit cards after age 21.
