Is it possible to get a credit card for a 16-year-old?
It is important to learn how to manage your credit early in life. A credit score does not only affect your ability to get credit in the future. It could also impact the job you apply for, how much your rent and the cost of auto insurance.
A credit card responsibly used can help build a credit history that will be used to calculate credit scores. Is it possible for 16-year-olds to have their credit card?
Read on to find out your options if getting a credit card of your own is on your “sweet sixteen” list.
Can You Get Credit Cards at 16?
This is the simple answer to your question: you can’t legally open a credit card account of your own until age 16. The only way to get a credit card is to become an authorized user of another’s credit card account. While a parent is the best option, any adult over 21 with a credit card account that allows authorized users and is in good standing can add you to your authorized user. It doesn’t necessarily have to be a relative.
You will receive a credit card with your name if you are added as an authorized user to another account. However, it will not be your account. While it will remain the primary cardholder’s account, you have many of the same privileges.
You have the privilege of using your issued credit card to purchase, which is the same as the primary cardholder. However, you cannot make any account changes, such as asking for a credit limit increase or closing the account. These are reserved actions for the primary cardholder.
The authorized user is not responsible for any changes made to the credit card. However, the primary cardholder is 100% responsible for all purchases made with their card. If you agree with your primary cardholder to repay them for your purchases, you will need to reimburse them for those purchases.
You must be 16 years of age to become an authorized user on credit cards that allow authorized users. Some card issuers don’t have minimum age requirements. This is because authorized users cannot legally enter into a contract with credit card issuers. The primary cardholder is simply granting them a third-party purchasing privilege.
When can you get a credit card?
18 is the minimum age to get a credit card in the United States. The Credit CARD Act of 2009 requires that a card applicant under 21 years old proves their ability to repay any credit card debts they might have. If this proof is not available, an applicant who is over 21 but not yet 21 may only open a credit account if there is a signer.
Most card issuers won’t accept cosigners, making it more difficult for 18- to 20-year olds to obtain a credit card. This means that unless you are independently wealthy or have a steady source of income, you may not be approved for a credit line until you turn 21.
What does becoming an authorized user affect a credit account?
Depending on how the card issuer reports account activity to the three major consumer credit agencies, it could impact your credit. Some card issuers report account activity for both the primary cardholder as well as the authorized user. This could be an opportunity to obtain a credit card and build credit history early by becoming an authorized user of another account.
However, any activity by both parties will be reported. This will reflect in both parties credit reports, both good and bad. You only want to be an authorized user of the account of someone with good credit, who makes regular, on-time payments, and who manages the account responsibly. Your credit report could show a negative credit history, before you are old enough to apply and get a credit card.
Some credit card issuers may not report account activity that appears in both the credit reports of the parties. Credit One Bank reports account activity that appears in the credit reports of authorized users only if the authorized user is the spouse of the primary cardholder.
Other options besides credit cards for 16-year-olds
There are many options if you’re 16 and want a credit card so that you don’t need cash.
- Debit card: As long as you have enough money to pay for the purchase, a debit card can be used as a cash substitute. Like a credit card, a debit card offers better protection from loss, theft, fraud, and phishing than cash.
- Gift Cards: You can use a gift card to make purchases if you have received one. With the retailer that issues the gift card, it is just as valid as cash.
- Prepaid cards:These cards can be purchased from specific merchants and loaded with a certain amount of money. A prepaid card is usually able to be reloaded, unlike a gift card that is worthless once its balance has been exhausted.
All three options are cash-less and convenient, but they do not help you build credit history. If the card issuer reports account activity, it will reflect in both credit reports. This is how you can become an authorized user of another account.
