Can a Parent Open a Credit Card for a Minor?
Clarify how minors can use credit cards via parental involvement and the steps to establishing their own credit later.
Credit cards are a common financial tool, but their availability is generally restricted for individuals under a certain age. In the United States, the ability to independently obtain a credit card is tied to the legal capacity to enter into binding contracts. Minors, typically defined as individuals under 18 years old, generally lack this legal capacity, which impacts their direct access to credit products. Therefore, individuals under 18 cannot typically apply for their own credit card. Financial institutions adhere to these age requirements due to the legal principle that contracts with minors are often voidable.
Options for Minors to Use Credit Cards
While direct credit card ownership is not an option for minors, there are primary methods through which a minor can gain access to a credit card. The most common approach involves becoming an authorized user on an existing credit card account belonging to a parent or legal guardian. In this arrangement, the minor receives a physical credit card with their name on it, which is linked to the primary account holder’s credit line. The parent remains the sole primary account holder, retaining full control and responsibility.
Joint accounts are extremely rare for minors. Financial institutions do not offer joint credit card accounts involving minors due to the complexities surrounding contract law and liability. Unlike an authorized user, a joint account holder shares equal responsibility for the debt, a legal obligation that minors cannot assume. The authorized user mechanism effectively bypasses this legal hurdle by placing all contractual responsibility on the adult primary cardholder.
Understanding Authorized User Accounts
An authorized user is an individual granted permission to make purchases using a credit card account owned by someone else, known as the primary cardholder. When a parent adds a minor as an authorized user, they provide the issuer with the minor’s name and date of birth; some issuers may also request an address. The issuer relies on the primary cardholder’s credit history for the account, rather than the minor’s.
The primary cardholder is solely responsible for all charges made on the account, including those incurred by the authorized user. This financial responsibility extends to timely payments and adherence to the cardholder agreement. While an authorized user receives a card and can make purchases, they are not legally obligated to make payments to the credit card issuer. The minor’s activity on the account may or may not be reported to credit bureaus, depending on the issuer’s policies, which can influence their future credit profile.
Transitioning to Independent Credit
Upon reaching 18, individuals attain the legal capacity to enter into contracts, including credit card agreements. This allows young adults to begin establishing their own independent credit history. However, federal law imposes additional requirements for individuals under 21 seeking their own credit card. They must demonstrate sufficient independent income for minimum payments, or they may need a co-signer, though most issuers no longer offer co-signed credit cards.
For young adults with limited credit history, common first steps include secured credit cards or student credit cards. A secured credit card requires an upfront security deposit, typically ranging from $200 to $2,500, which often serves as the credit limit and mitigates risk for the issuer. Student credit cards are tailored for college students and offer more lenient approval criteria. These independent accounts differ from authorized user arrangements: the young adult becomes the primary account holder, directly responsible for charges and payments, building their own credit profile.