Credit cards are a great tool for travelers looking to earn and maximize points and miles. They are also a great tool to have when it comes to accessing airport lounges and other travel benefits. However, credit cards also come with interest rates, the potential for overspending, and have a direct impact on your credit score. So, you might have asked yourself if it makes sense to get your teen a credit card.
While credit cards can negatively impact your credit score if you fail to make payments on time or overutilize your credit limit, they can also have a positive impact. A potential positive impact on your teen’s credit score is one of the possible benefits of getting them a credit card. However, the reverse is also possible. That is, if your teen abuses their credit card it could impact both their credit score as well as your credit score.
So, what exactly are the benefits of getting your teen a credit and what are the risks? Is it even possible to get a credit card for someone under the age of 18? In this post, we’ll answer these questions and more.
Should You Get Your Teen a Credit Card?
It might be worthwhile to first give readers a little background as to my experience with credit cards as a teenager. I received my first credit card when I was 16. I was able to get a credit card despite being under the age of 18 by being added as an authorized user on my parent’s American Express Gold Card.
The rationale behind why my parents thought it might be worthwhile to add me to their account was two-fold. First, as an authorized user, I would benefit from my dad’s strong credit score. However, this positive score would not get reported until I was 18 as American Express doesn’t report authorized users under the age of 18. Second, at the time, the American Express Gold Card still allowed users to access the American Express Centurion Lounge.
Looking back at this decision, I am grateful that my parents made the decision to add me as an authorized user. When I turned 18 and began exploring credit cards independently, I already had a credit score as a result of being an authorized user on their account. I also learned some valuable lessons about spending using a credit card.
So, let’s look closer at the question of whether or not it makes sense to get your teen a credit card.
There’s Not a Clear Yes or No Answer
As is the case in many decisions related to personal finance, there is no clear yes or no answer to the question of whether or not you should get your teen a credit card. It’s entirely dependent on your specific situation.
Is Your Teen Ready for a Credit Card?
The first question you need to ask yourself is whether or not you believe your teen is ready for a credit card. The answer to this question has a lot to do with the benefits they would get from being added to an account if they’re mature enough to take on that responsibility.
I am sure there were some days that my parents regretted adding me as an authorized user. However, it’s important to remember that you will have full control over their use of any credit cards linked to your account.
I should reiterate that any teen under 18 will be added as an authorized user. So, while they will have their own credit card, it won’t be entirely under their name. Rather, the score, credit limit, and agreement will remain in the account holder’s name.
This leads us to the first benefit of getting your teen a credit card. They can begin building their credit score even before they turn 18.
Letting Your Teen Build Credit Early
Adding your teen as an authorized user may allow them to start building their credit score early. However, this is not always going to be the case.
Some credit card issuers won’t report authorized users to credit bureaus. If authorized user activity is not being reported to the major credit bureaus, there won’t be an impact on your teen’s credit history.
If your credit card does report authorized users to credit bureaus then your teen will already start building a credit history. However, as an authorized user, the impact on their score may be less significant than when they have their own line of credit.
So, let’s say you add your teen to your account as an authorized user and their activity is reported to credit bureaus. Good news, right? Not necessarily.
If Your Credit is Poor, You Shouldn’t Add Your Teen to Your Account
Your teen’s credit score as an authorized user will be heavily influenced by your credit, specifically on the account that you add your teen. If you have a high credit line usage or have been delinquent on payments, this could negatively impact your teen’s credit history.
Additionally, if you were to give your teen free reign and not set spending limits on their card, their behavior could also hurt their credit history as well as your own.
Your Teen Can Benefit from Your Good Credit
If you are in good standing on the account and don’t have a high credit utilization, adding your teen as an authorized user will be a positive mark on their credit history.
Setting spending limits, especially if you have any concerns about their spending habits, is a must. Most credit cards allow you to set up custom spending limits and card usage notifications for authorized users.
Setting these limits will give you peace of mind as well as prevent situations in which your teen has racked up a balance they can’t pay off.
Adding a Teen as an Authorized User
Adding your teen as an authorized user on an account is a pretty simple process. There are a few things to know before trying to add them to your account.
There Are Limits to Who Can Be an Authorized User
You might be thinking, “My credit card account is in perfect standing, why don’t I add my toddler to my account so they have an extensive credit history by the time they are 18?” Unfortunately, this is not possible.
Nearly every major card issuer and bank has age requirements for authorized users. This can be as low as 13 years of age or as high as 18 years of age. Some card issuers don’t expressly note these requirements and may have different requirements depending on the credit card or product.
Here is an overview of minimum age requirements for authorized users for major credit card companies:
- American Express: 13 years or older
- Bank of America: none
- Barclays: 13 years or older
- Capital One: none
- Chase: none
- Discover: 15 years or older
- US Bank: 13 years or older
- Wells Fargo: 18 years or older
Authorized User Checklist
If you’ve decided to add your teen as an authorized user on an account, there are some steps you will want to take before presenting them with their card.
Set Limits
I highly recommend setting limits on their card. Even if you trust that they will use their card responsibly, these limits ensure you have total control over the card. Limits will also prevent the unlikely event of your teen racking up a hefty balance. You can set limits under the card management tabs on a credit card issuer’s website.
Set Notifications
I also recommend setting up email or text notifications. Most card issuers let you set up notifications for authorized user activity. For example, you can set up notifications for when an authorized user makes a purchase over a certain amount.
Discuss Responsibility and Payment
When you add a teen as an authorized user, you are, in a way, taking on the role of the card issuer. Just like you have an agreement with a card issuer, your teen should have an agreement with the card issuer. Before allowing them to use their card, outline your expectations and communicate limits. You will also want to discuss how your teen will pay you each month.
I highly recommend you communicate that all monthly spending activity should be paid back in full. This will teach your teen the best practice of not carrying a balance on their credit cards. Most card issuers will let you link an authorized user’s bank account. You might want to consider linking your teen’s bank account and teaching them about making on-time payments each month.
Will My Teen Earn Points and Miles as an Authorized User?
In most cases, yes. Any account activity on your teen’s account will earn points and miles. These points or miles will be added to the overall account balance which gives you access to the points and miles they’ve earned. However, unless you proactively restrict their ability to use any available points, they will also have access to the points they’ve earned and the points you or any other authorized user has earned.
The Benefits of Adding Your Teen as an Authorized User
Let’s review the benefits of adding your teen as an authorized user to your account, assuming you’re in good standing on the account:
- They may benefit from your credit score and payment history as they will be able to “piggyback” on your credit
- Having a card as an authorized user allows you to teach your teen about responsible credit card use
- You will have full control over their card
- Credit cards are a safe and convenient way to pay
- They will receive any cardholder benefits (like lounge access)
- Their spending earns points or miles
The standout benefit here is your teen’s ability to build a credit history before they turn 18.
The Downsides to Adding Your Teen as an Authorized User
Now that we’ve taken a look at the benefits, let’s also take a look at some potential downsides to adding your teen as an authorized user:
- Any negative credit history you incur could influence their credit history
- If you don’t set up spending limits, they have full access to your line of credit
- There may be an annual fee on their card as an authorized user
In short, there aren’t a ton of downsides as long as you proactively set spending limits and ensure your teen spends and makes payments responsibly.
Are There Other Ways to Get My Teen a Credit Card?
United States law makes it so the only way someone under 18 can access credit cards is by being an authorized user. So, no, there is no way to get your teen a credit card aside from adding them as an authorized user on your account.
Best Credit Cards for Teenagers
To continue your teen’s credit-building journey, it’s also a good idea to start researching the best credit cards for teens so that, when they turn 18, you can steer them in the right direction.
Even if you’ve added your teen as an authorized user, their credit history will still be quite limited when they turn 18. That being said, they won’t have access to premium travel rewards credit cards. Luckily, there are plenty of student credit cards designed for teens and young adults.
This list is designed to help you and your teen find the right first credit card once they turn 18.
Best Overall Credit Card for Teens: Discover it® Cashback Credit Card
- Why? – Earn unlimited 1% cash back on all purchases.
- Approval Odds: High even with limited credit history
- Annual Fee: $0
- Other Benefits: Rotating quarterly 5% cash back categories, Unlimited cash back matched during your first year with account
- Learn More
Best Travel Rewards Credit Card for Teens: Bank of America® Travel Rewards Credit Card for Students
- Why? – Earn unlimited 1.5x points on all purchases. New cardholder welcome bonus after qualifying spend.
- Approval Odds: High even with limited credit history
- Annual Fee: $0
- Other Benefits: No Foreign Transaction Fees
- Learn More
Credit Card with Benefits for Teens: Capital One SavorOne Rewards for Students
- Why? – Earn unlimited 3% cash back on dining, entertainment, popular streaming services & at grocery stores. New cardholder welcome bonus.
- Approval Odds: Good even with limited credit history
- Annual Fee: $0
- Other Benefits: 8% cash back with Capital One Entertainment, Extended Warranty Protection, No Foreign Transaction Fees, Access to Capital One Travel
- Important Note: This card is exclusively for students enrolled in higher education. See terms and conditions for details.
- Learn More
Secured Credit Card for Teens: Self Visa® Credit Card
- Why? – You choose what portion of your savings progress from your Self Credit Builder Account ($100 or more) is used to secure your card and set your limit.
- Approvals Odds: Very high even with limited credit history. Must have Self Credit Builder Account and meet minimum qualifications.
- Annual Fee: $0
- Self Credit Builder Account: This card is only available to applicants with a Self Credit Builder Account. Applicants must first open a Self Credit Builder Account and meet minimum qualifications to be eligible for this card. Minimum qualifications include: Making your first 3 monthly payments on time, Having $100 or more in savings progress, Adding or updating income and expenses, Keeping account in good standing
- Learn More
Consider a Credit Building CD from Self:
Self is something I used during the early days of my credit history. When I turned 18, I opened a Self Credit Builder Account. You build credit through this account by opening a loan that is held in a Certificate of Deposit (CD) and then making monthly payments. Each time you make a monthly payment on this loan, this payment is reported to all major credit bureaus. At the end of this loan, you will receive your initial payment back minus interest and fees.
To be eligible for the Self Visa Secured Credit Card, you must have a Self Credit Builder Account. You can learn more about Self via this link.
The Bottom Line
Credit cards can offer significant benefits for teens, such as building credit early, learning financial responsibility, and providing a safe and convenient payment method. However, they also come with risks like potential overspending and negative impacts on credit scores.
Deciding whether to get your teen a credit card depends on their maturity and your ability to manage their usage effectively. Weigh the pros and cons carefully to determine if this financial step makes sense for your family.
Does your teen have a credit card? Have you ever added a teen as an authorized user to your account?
