How to Get a Credit Card for Your Child
Guide your child toward financial literacy. Learn to safely acquire and manage a credit card for them, building responsible spending habits.
Helping children learn about personal finance is valuable, and introducing them to credit can be part of this education. While minors generally cannot own credit cards, parents can guide their children in understanding responsible credit use through supervised options. This provides practical experience in managing financial tools under parental oversight, laying a foundation for future financial independence.
Types of Credit Card Options
Adding a child as an authorized user on an existing parental account is a common approach. The child receives a card linked to the primary account for purchases. The primary cardholder, typically a parent, remains solely responsible for all charges and timely payments. Many issuers permit authorized users, with minimum age requirements varying, sometimes as low as 13 or with no specified age.
A secured credit card is another option, particularly for older teens. This card requires a cash deposit, which typically serves as the credit limit, minimizing risk. For example, a $200 deposit usually results in a $200 credit limit. Secured cards help individuals build or rebuild credit history, as responsible use and on-time payments are reported to credit bureaus. While individuals must generally be at least 18 to open a secured card, parents can assist their children in saving for the deposit.
Student credit cards are tailored for students aged 18 and older enrolled in higher education. These cards often have more lenient eligibility criteria regarding credit history than traditional unsecured cards. However, applicants under 21 typically need independent income or a co-signer to qualify. Student credit cards often feature lower credit limits, mitigating debt risk while allowing students to establish a credit profile.
Prerequisites for Application
Before applying for a credit card, several requirements must be met. A primary account holder must be at least 18 years old. However, due to the CARD Act, applicants under 21 face additional stipulations. They must either have a co-signer over 21 responsible for payments or demonstrate sufficient independent income to cover potential card debts.
Income verification is a significant component, particularly for younger applicants. While those 21 and over may include household income, individuals aged 18 to 20 must report their own independent income. This income can stem from employment or allowances, and must be adequate to make minimum payments. Required personal information for both parent and child includes full legal name, date of birth, physical address, and a Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN).
A parent’s creditworthiness is assessed, especially when adding a child as an authorized user. The primary account holder’s credit history and score directly influence the authorized user’s credit profile. Responsible management with timely payments and low utilization can positively impact the child’s developing credit history. Conversely, poor management negatively affects both parties. Proof of income and identification for both parties may be requested during the application.
Submitting the Application
Once all necessary information is gathered, submit the credit card application. Applications can be completed online, in-person at a bank branch, or via phone. Online applications are often the fastest, providing a streamlined process for inputting details. When applying online, navigate to the card issuer’s website, locate the form, and accurately enter all personal and financial data.
After completing the form, applicants submit their information electronically. For in-branch applications, a representative guides the process. The card issuer reviews the application, which may result in instant approval or denial. Some applications might be placed under review, requiring a few days for a decision. Approved applicants generally receive their physical credit card within 7 to 10 business days.
Should an application be denied, the issuer is required to provide a letter explaining the reasons. This helps applicants understand any deficiencies and address them before reapplying. Setting up online account access and alerts immediately after approval is advisable to facilitate initial management.
Account Management for Minors
After a credit card is obtained for a child, active management of the account becomes important. For authorized users, parents can often set spending limits, though this capability varies by issuer. Even without a formal limit, parents can establish clear spending expectations with their child and monitor usage closely. Discussing a budget and agreed-upon spending guidelines helps to reinforce responsible habits.
Regularly monitoring account activity is important to track transactions and identify unusual spending patterns. Parents can review monthly statements, physical or digital, and set up alerts for purchases. Many credit card issuers offer online portals or mobile applications for real-time tracking. This oversight helps prevent unauthorized use and ensures adherence to spending limits.
Payment responsibilities must be clearly defined and consistently reinforced. For authorized user accounts, the primary cardholder is legally responsible for all charges and ensuring timely payments. Failure to make payments can negatively impact the credit scores of both the primary cardholder and the authorized user. Planning accordingly is important to avoid late fees.
The credit card serves as a practical tool for financial education. Parents can use monthly statements to discuss budgeting, interest, and avoiding debt. This ongoing dialogue can cover topics like credit utilization ratios, late payments, and the benefits of paying the full balance each month. Actively involving the child in understanding these aspects instills lasting financial literacy.