How to choose credit cards for teens

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In a Nutshell

It's important to help young adults understand the basics of finances when the stakes are low. Here are some tips to help choose the best credit cards for teens.

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At a glance: Credit cards for teens

The Amex EveryDay® Credit Card from American Express                                                                                          While American Express doesn’t allow parents to co-sign credit cards for young adults under 21, there’s no fee to add your teen as an authorized user to your account.
Journey® Student Rewards from Capital One® Designed for students, making it easier to get approval with little to no credit history. Teens will still need to show proof of their own income, or a parent can co-sign.
Discover it® Secured Credit Card Offers cash back rewards with spending limits. Teens need to show proof of income to get approval for their own card, or a parent can co-sign.

First – can my teen open a credit card alone?

People under 21 can legally open a line of credit, but probably not on their own. Your child will likely need a co-signer or proof of income to open a credit card if they’re under 21.

If your child earns an income from a job, he may be able to apply and qualify on his own. If not, you may need to co-sign his first card.

Another option is to add your child as an authorized user to one of your existing credit cards. Or you could open a new card that you want to provide for your teen, and add him as an authorized user to the account.

A third option is to open a secured card. Secured cards require you to make a security deposit, which then usually acts as your initial credit limit. Just make sure the card issuer will report the activity from the card to credit bureaus, so your child can start building a positive credit history.


1. Prepare your teen for a credit card first

You can’t expect your teen to make smart decisions with credit if they don’t understand how it works. Cristina Guglielmetti, CFP® and president of Future Perfect Planning, suggests ensuring that you’ve covered the basics of credit cards.

That includes going over topics like the ones below:

  • How credit works and why it’s different from cash.
  • What interest charges are and how they accumulate.
  • What happens when you charge money to your credit card that you don’t repay.
  • Due dates and penalties for late payments.
  • Who is responsible for paying the bill and how to do it.
  • Any spending limits, in terms of dollar amounts or categories of spending.
  • The risks of using credit cards.

“Talk about the factors of a credit score and how credit utilization and on-time payments are very important ones,” adds Erin Lowry, author of “Broke Millennial: Stop Scraping By and Get Your Financial Life Together”.

Communication is key if you’re looking at credit cards for teens. Encourage questions and walk through the answers in as much detail as possible. There should be several conversations that take place before your child ever receives access to credit on his own.

2. Be honest: Are they ready for credit?

As the experienced adult, you need to look at the situation realistically: Is your teen capable of handling his or her own line of credit?

Lowry suggests giving your kid financial training wheels in the shape of a debit card or prepaid card, along with a budget. Then see if your teen can consistently stick to his budget and stay within a spending limit when using plastic instead of cash.

If your teen fails to do so, you might have him help pay for fees or interest charges to show his actions do have financial consequences, while still allowing him to practice and learn.

Guglielmetti adds that financial help extended to teens — be it cash or credit — should be looked at as “practice money.”

“You can’t really expect an 18-year-old to suddenly have good money-management skills without having had anything to try before,” she says.

But if teens continually fail to follow the rules and show they can’t manage their spending and bills, go back to the financial basics until they’re better prepared to take on the responsibility of credit.

3. Review card options carefully

Once you determine that a credit card is an appropriate option, you’ll need to determine which card is best for your child. Here are a few things to look for when choosing credit cards for teens:

  • Fees: Look for cards with no annual fees. Review each credit card’s terms and conditions to get a complete list of all fees and interest charges. If you’re tempted by a card with an annual fee, calculate how much you’d need to spend in a year to make the fee worthwhile.
  • APR: Mistakes happen, which means your teen might carry a balance now and then. Look for a credit card with a low APR so mistakes aren’t as costly in terms of added interest.
  • No frills: You don’t need to worry about rewards when looking for credit cards just for your teen. The ability to earn rewards could encourage overspending and make it harder for kids to stick to their spending limit.

Lowry advises parents to explain to teens that despite how much they could spend, they should keep their revolving balance to 30 percent of the card’s limit at most.


Good credit cards for teens

The Amex EveryDay® Credit Card from American Express

From our partner
See Details, Rates & Fees

This card might be a good card for you to open and add your teen as an authorized user, as there’s a $0 annual fee and no additional annual fee for added cards.

The card also offers 0 percent intro APR for the first 12 months on purchases and balance transfers (requested within the first 60 days of account opening). After that, your APR will be a variable rate, currently 13.99 to 23.99 percent, based on your creditworthiness and other factors.

Journey® Student Rewards from Capital One®

From our partner
See Details, Rates & Fees

This card can be a good option for teens thanks to its $0 annual fee and no foreign transaction fees. The card was designed for students, making it easier for those with little to no credit history who want to build their report and score to get approved.

That should help teens get their own card even without a credit history. But people under 21 who don’t have their own income will likely still need a cosigner, or they will need someone else to apply for the card and then add them as an authorized user.

Discover it® Secured Credit Card

This is a secured credit card that allows users to build credit while preventing them from spending more than they can afford, since it usually comes with lower credit limits and requires a security deposit in order to make charges. There’s no annual fee, and it’s one of the few secured cards that allows you to earn cash back rewards for spending.


Bottom line

Your teen will likely need your help in order to open their first credit card under the age of 21.

It’s up to you as the adult to lead open conversations about finance and work with your child to ensure he or she understands the basics of credit, how to use a credit card, stick to a budget, and pay the statements in full and on time.


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