Can I Get a Credit Card in My Child’s Name?

It is generally not possible to obtain a credit card in a child’s name as a primary cardholder. For those seeking to introduce children to financial concepts and credit building, alternative pathways exist that align with legal frameworks and promote responsible financial habits.

Legal and Age Restrictions

The primary reason a child cannot be a primary credit card holder is their lack of legal capacity to enter into contracts. In the United States, an individual must be at least 18 years old to enter into a legally binding contract. Minors, defined as individuals under 18, generally lack the maturity and judgment necessary to understand and be held responsible for the terms of a credit agreement. This means that any contract a minor enters into is usually “voidable” at the minor’s discretion, providing a layer of protection against potential exploitation.

The Credit CARD Act of 2009 mandates that individuals under 21 must either have an independent income sufficient to make payments or a co-signer who is 21 or older and agrees to be responsible for the debt. Most major credit card issuers no longer allow co-signers on applications, making independent income the typical requirement for those aged 18 to 20. The income declared on an application can include various sources, such as employment wages, self-employment income, or even an allowance, provided it is accessible to the applicant.

Authorized User vs. Primary Cardholder

While a minor cannot be a primary cardholder, they can be added as an authorized user on an adult’s credit card account. An authorized user receives a card linked to the primary account and can make purchases, but they are not legally responsible for the debt incurred. The primary cardholder remains solely liable for all charges, including those made by the authorized user, and for ensuring timely payments.

Adding an authorized user typically does not involve a credit check for the authorized user. Some card issuers may have a minimum age requirement for authorized users, with some allowing individuals as young as 13, while others have no specific age limit. It is important for the primary cardholder to verify the issuer’s policies regarding authorized user age and whether they report authorized user activity to credit bureaus, as this reporting is key for credit building.

Building Credit for Minors

Adding a minor as an authorized user can help them begin building a credit history. When the primary cardholder manages the account responsibly, with on-time payments and low credit utilization, this positive activity can be reflected on the authorized user’s credit report. This can provide a head start, potentially leading to a stronger credit profile by the time they are eligible to apply for their own credit products.

However, the success of this strategy depends on the primary cardholder’s financial habits. If the primary account experiences late payments or high balances, it can negatively impact the authorized user’s credit score as well. Therefore, open communication about spending limits and financial responsibility is crucial if the minor is allowed to use the card.

Not all credit card issuers report authorized user activity to all three major credit bureaus, or they may only do so once the authorized user reaches age 18. It is advisable for the primary cardholder to confirm the issuer’s reporting practices to ensure the arrangement effectively contributes to the minor’s credit history. Beyond authorized user status, fostering financial literacy through discussions about budgeting, saving, and the consequences of debt provides a solid foundation for a child’s future financial independence.