The best time for young people to get a credit card

It may not seem like it, but it is possible to go through life without a credit card. That being said, when used responsibly, credit cards have numerous advantages over other payment methods. They're convenient, protect you from fraud and theft, and sometimes offer cash back and other rewards. They can help build the credit history you need if you want to borrow money to buy a house or car. Here are some things parents and their children should consider when deciding when to get that first card.

key takeaways

      For a young child, a debit card linked to a payment account may be a better idea than a credit card.

      Later, consider a low-limit credit card in a parent's name, but with the child as the authorized user.

      At college age, your child may be eligible for a student credit card, but be sure to shop around.

      Recent winners who have not yet had a credit card may need to start with a secured credit card.

High school

Why shouldn't you wait?

Parents who introduce the concept of credit management in their teens may be better prepared to use it responsibly in the future. However, a student credit card probably shouldn't be a great introduction to personal financial management.

Alternatively, some experts recommend opening a youth payment account with a debit card attached when the child is in high school. Parents can teach the child how to monitor the account balance and use their debit card wisely.

Then they can move to a low unlimited credit card when the baby is a little older. If the child is under 18, the card must generally be in a parent's name and the child must be listed as an authorized user.

Why should you wait?

High school students can adopt the same attitude that causes many adults to spend more on their credit cards than they can afford. Also, if the child is an authorized user of a parent's card, their excessive spending may negatively affect the parent and lower their credit score.


Why shouldn't you wait?

At age 18, students may be eligible for a credit card in their own name. If you don't have a credit history when you start college, getting a card now will help you establish one. That will be important when renting an apartment or applying for a mortgage.

Many credit card issuers have cards designed specifically for students, but like any other type of credit card, it's smart to look around and compare rates and terms. Investopedia publishes regularly updated lists of the best credit cards for students.

Why should you wait?

If a person has never had a debit or credit card when they enter college, it may be safer to start with a debit card linked to their own or a parent's checking account. Many student credit cards have high interest rates, so it's easy to get into debt, especially if you miss a payment or two.

Plus, parents can't easily monitor their kids' credit card spending habits while they're away from college, so it can be a bad place for them to try credit for the first time.

Wouldn't it be worse to wait until after graduation? Maybe, but if you pay cash or debit, they won't get in trouble. Starting life as an adult with high-interest debt and/or bad credit is a major drawback to recent scores and can be worse than no credit at all.


Paying your bills on time and not having too much outstanding debt are the two most important factors in building a strong credit score.

recently a college graduate

Why shouldn't you wait?

Getting a credit card is an easy way to establish a credit history and build a strong credit score. Also, a credit card is sometimes required for things like renting a car or reserving a hotel room.

Degrees that do not have sufficient credit history can make a normal credit card start with a secured credit card. That's a special type of card that requires the cardholder to deposit money with the lender; the deposit then serves as the credit limit on the card. After using a secured card for some time, and making all payments on time, the cardholder may be eligible for a regular unsecured credit card.

Regardless of the type of credit card they have, it's important that new rewards follow the rules for getting and keeping a high credit score. Credit scores are based on a number of factors, the two most important being payment history (does this person pay their bills on time?) and credit utilization ratio (how much credit are they using at any given time compared to how much credit do they have at their disposal?). A person whose credit cards are optimized will have a high credit utilization rate and their credit score will suffer as a result.

Even if the new degree isn't intended to apply for a mortgage, car loan, or other type of debt that requires a good credit score, that may change one day. Credit scores are also used for other purposes, such as setting insurance rates, and may also be scrutinized by prospective landlords and employers. Therefore, there are many ways to establish a good credit history.

Why should you wait?

Anyone who knows it will be difficult for them to manage their debt may want to get a credit card until their life is more settled. Credit card companies aren't going anywhere and you may change your mind later.

The bottom line

Credit cards are a fact of the financial world, and for many people, the pros and cons of using them outweigh the cons. How a person should get their first credit card will largely depend on how responsibly they (or their parents) think they will handle it. While it is important to establish a credit history, bad credit, due to childhood mistakes, can be worse than no credit at all. So there is no rush. If a young person isn't ready for a credit card yet, it's great to wait until they are.


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