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

Credit cards serve as a fundamental financial instrument, enabling convenient transactions and providing a pathway to establishing a financial reputation. While beneficial for managing finances and building credit, they come with specific eligibility criteria and responsibilities. Understanding these requirements, particularly those related to age, is an important first step for individuals considering entering the world of credit.

The Minimum Age for a Credit Card

In the United States, the minimum age for independently obtaining a credit card is 18 years old. This age aligns with the legal capacity to enter into contracts, which includes credit card agreements. Federal law, specifically the Credit Card Accountability Responsibility and Disclosure (CARD) Act of 2009, established this minimum age. The CARD Act was enacted to promote fair practices and consumer protections for young adults.

While 18 is the minimum age to apply, the CARD Act introduced additional stipulations for applicants under 21. These rules aim to ensure that young adults possess the means to repay their debts, preventing them from accumulating unmanageable credit card balances.

Obtaining a Credit Card Under Age 21

For individuals aged 18 to 20, the CARD Act imposes specific conditions for credit card approval. Applicants in this age bracket must demonstrate independent income sufficient to make the minimum payments on the credit card debt. This independent income can include earnings from full-time, part-time, or seasonal jobs, self-employment, and certain public assistance or regular allowances. However, it typically excludes income from others, such as parents or guardians.

Alternatively, if an applicant aged 18 to 20 cannot meet the independent income requirement, they may qualify with a co-signer who is 21 or older and has the ability to repay the debt. However, many major card issuers no longer widely permit co-signers for primary cardholders. For those under 18, the primary pathway to accessing credit is becoming an authorized user on another person’s account, typically a parent or guardian. An authorized user receives a card linked to the primary account, allowing them to make purchases, but the primary cardholder remains legally responsible for all payments.

Becoming an authorized user can potentially help a young person begin to build a credit history, provided the card issuer reports authorized user activity to the major credit bureaus and the primary account is managed responsibly. For individuals aged 18 or older who lack established credit or sufficient income, a secured credit card presents another viable option. Secured cards require an upfront cash deposit, which typically serves as the credit limit and acts as collateral. Responsible use of a secured card, including consistent on-time payments, can help establish a credit history and may eventually lead to qualifying for an unsecured card.

Building Your Credit History

Once a credit card is obtained, whether as a primary cardholder or an authorized user, responsible management is important for building a positive credit history. The most significant factor influencing a credit score is payment history; consistently making payments on time is important. Late payments can have a negative effect on a credit score, making it harder to access future financial products.

Keeping credit utilization low is another important aspect of credit management, referring to the amount of credit used relative to the total available credit. Experts recommend keeping credit utilization below 30% of the total credit limit to positively impact a credit score. For example, if a card has a $1,000 limit, maintaining a balance under $300 is advisable. Lower utilization rates often correlate with higher credit scores, demonstrating effective credit management to lenders.

Maintaining a long credit history also contributes to a strong credit score. Closing old accounts, especially those with a positive payment history, might negatively impact the length of credit history. Using the card for small, manageable purchases and paying the balance in full each month helps demonstrate responsible usage without incurring interest charges. These practices collectively contribute to a robust credit profile, which is valuable for future financial endeavors such as securing loans, mortgages, or even renting an apartment.