Here are some tips on how a young person can obtain that very first valuable piece of plastic.
How to get a credit card at 18
Turning 18 is a milestone that comes with more responsibilities. You likely already have a driver’s license, and you gain the right to vote. You're ready to start being a grown-up with money, which means getting your own credit card.
If you're a parent reading this, you may be looking to get your child a credit card, so he or she can get started on good financial habits by using the card wisely.
Obtaining a credit card at age 18 can be tricky, but here are four ways to get one more easily.
1. Have a regular source of income
Credit card issuers will want to feel confident that a young cardholder will be able to pay the card bills. Eighteen-year-old applicants are more likely to be approved if they can show proof of a steady income.
The card companies want to see that a user will be able to keep up with payments and not fall behind or run the card into a lot of debt.
2. Obtain a student credit card
If you're an 18-year-old and don't have a regular income because you're in college, a student credit card can be the way to go. These cards work the same as regular credit cards but come with lower credit limits and are more likely to be approved.
They also offer benefits tailored to students, such as cash back if you get good grades or discounts on the sorts of things university students tend to buy. Student cards foster good spending habits and help build good credit.
3. Get a secured credit card
A secured credit card is another option for a young person who's brand-new to credit. Secured cards require a deposit, which the bank can tap into if the cardholder is unable to keep up with payments.
After you've used a secured card responsibly for at least a year, the card company will typically invite you to step up to full-fledged, unsecured credit card, and you'll get your deposit back.
4. Ask someone to be a co-signer
An 18-year-old who doesn't have a steady income, isn't in college and can't scrape together a secured card deposit might obtain a credit card by asking a family member with a good credit history to co-sign a credit card application.
A co-signer pledges to make the payments if the cardholder falls behind. Both parties need to understand what's at stake, because a co-signer can wind up stuck with debt, and if the bills go unpaid both the cardholder's and the co-signer's credit will be hurt.
Waiting until after age 18 to get a credit card
Fresh out of high school, many 18-year olds are busy preparing for their first year of college or their first full-time work. Between juggling studies, or navigating the ins and outs of a new job, having the responsibility of a credit card might be a low priority.
Waiting a few years can make getting a credit card much easier, because you'll be more likely to have a regular income and may have started building the foundation for a good credit history.
You might want to hold out until you're 21. By that time, you may be getting steady paychecks and already have a decent credit score if you're renting an apartment or paying for your own cellphone plan.
And maybe you'll be more mature by that time — and less likely to go crazy with a credit card and run up a mountain of debt.
Getting a card before 18
Many financially savvy teenagers already have reliable incomes.
If they or their parents decide that having a credit card before age 18 is the right move, there are a couple of options.
1. Become an authorized user on someone else's card
Though 18 is the minimum age to qualify for a credit card, you can become an authorized user on another cardholder's account at a younger age. A parent or other family member with an established credit history can get you your own card tied to their account.
The primary cardholder will still be responsible for the payments, so be sure that you'll be able to pay off your charges — to avoid family drama. Note that being an authorized user can put you on the radar of the major credit bureaus and help you establish your own credit history.
2. Use prepaid cards
Prepaid cards look like credit cards, and they function just like credit cards when you make a purchase. But they're similar to secured cards in that you (or your parents) must make a deposit, and spending with the card is limited to the deposit amount.
With prepaid cards, there's no risk of a young person running up debt. But because there's no borrowing involved, usage of a prepaid card isn't reported to the major credit bureaus, so the cards don't help build credit.
But they are good practice for using plastic.
Credit cards can be pretty awesome, as long as you pay off your balance every month and make your payments on time — to avoid interest charges and fees. Once you think you're ready for your very own card, be sure to explore your many options.
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