Can Minors Get a Credit Card? How It Works

A credit card is a financial tool issued by a bank or financial institution, allowing individuals to borrow money for goods and services. It provides a line of credit that you repay later. Many people wonder about credit card accessibility for younger individuals.

Understanding Credit Card Age Restrictions

In the United States, federal law requires individuals to be at least 18 years old to apply for a credit card in their own name. This age requirement is tied to the legal capacity to enter into contracts, as a credit card agreement is a legally binding document. Financial institutions need assurance that an applicant can understand and fulfill the terms.

For those between 18 and 20 years old, additional requirements apply due to the Credit CARD Act of 2009. Applicants in this age group must demonstrate independent income sufficient to make minimum payments. Without verifiable income, approval for a primary credit card account is not possible, or a co-signer may be required, though co-signing is less common with major issuers today. These provisions protect young adults from accumulating unmanageable debt.

Pathways for Young People to Access Credit

While direct credit card applications are restricted for those under 18, several avenues exist for young people to gain exposure to credit.

Authorized User Accounts

One common method for minors is becoming an authorized user on an existing credit card account. A parent or guardian can add a minor to their account, providing them with a card that carries their name. The primary cardholder remains legally responsible for all charges. This arrangement allows the minor to learn about credit usage while the primary cardholder maintains oversight.

Activity on the authorized user card can be reported to credit bureaus, helping the minor establish a credit history before they turn 18. Some card issuers have minimum age requirements for authorized users, with ages typically ranging from 13 to 16, though others have no specific age floor. This pathway offers a practical way for parents to provide a controlled environment for their children to understand credit.

Options for Individuals 18 and Older

For individuals aged 18 and older, several options become available.

##### Student Credit Cards

Student credit cards are designed for college students with limited or no credit history. These cards often have more lenient eligibility criteria compared to standard cards, though proof of enrollment in an accredited institution and sufficient income are typically required. They serve as a bridge for young adults to build credit independently.

##### Secured Credit Cards

Another option is a secured credit card. These cards require a cash deposit, which typically becomes the credit limit. This deposit acts as collateral, reducing risk for the issuer and making it easier to qualify. Secured cards function like traditional credit cards, with purchases and payments reported to credit bureaus, making them an effective tool for establishing or rebuilding credit.

##### Joint Accounts

A less common option for individuals 18 and older is to apply for a joint account with a parent or guardian. In this scenario, both individuals are legally responsible for the debt incurred. This differs from an authorized user relationship where only the primary cardholder is liable.

Responsible Credit Management

Establishing access to credit is only the first step; managing it responsibly is important, especially for young individuals. Financial literacy plays an important role in empowering young adults to make informed decisions about their money. Understanding how credit works helps prevent issues and fosters sound financial habits.

Parents or guardians should set clear spending limits and regularly monitor credit card usage for minors. This oversight helps ensure charges remain within budget and prevents overspending. Reviewing statements together can also provide valuable lessons in tracking expenses.

Making timely payments is the most important habit for building a positive credit history. Payment history heavily influences credit scores, and even a single late payment (30 days past due) can negatively affect a credit report for several years. Paying the full balance each month, if possible, avoids interest charges, which are fees for borrowing money, typically expressed as an Annual Percentage Rate (APR). If carrying a balance is necessary, understanding the APR and potential fees helps manage the cost of credit.

Building a positive credit history through responsible use can offer significant benefits for future financial endeavors. A strong credit profile can lead to better terms on loans for major purchases like a car or a home, and can influence insurance rates. It demonstrates financial trustworthiness to lenders and sets a foundation for long-term financial well-being.