Getting a credit card for teens may seem controversial, but this step is actually quite common. Not only do credit cards for teens help them build credit early in life, but they can help parents teach positive financial habits while teens are still living at home and in their care. Credit cards for teens can also come in handy in emergencies, or for situations when it’s difficult to make certain purchases in cash.
But, the best credit cards for teens depend on a range of factors, including the age of the teenager in question. Teens under 18 will almost certainly need to start their credit journey as an authorized user on a parent’s credit card, whereas older teenagers may qualify for a student credit card, a secured card or a credit card for building credit.
This guide will offer information on the best credit cards for teens available today, how to pick one and potential benefits and risks for parents who introduce their teenagers to credit.
How to choose the best credit cards for teens
Choosing credit cards for teens to build credit is only part of the journey, as there are other factors to consider as well. For example, parents may want their teenagers to have access to any number of credit card benefits they enjoy, or they may want their teenager’s purchases to add to the family’s credit card rewards balance.
As we mentioned, teens under 18 will likely need to start out as an authorized user on a parent’s credit card. Teens ages 18 and older may be able to get approved for their own credit cards, but typically only for student credit cards, secured credit cards and other credit-building products.
Here are some factors to consider as you pick a credit card for your teen:
- Cardholder benefits: Some credit cards for teens come with perks like free credit score monitoring, purchase protection or extended warranties. Credit cards that let parents add teens as an authorized user may come with travel benefits like included travel insurance or airport lounge access.
- Eligibility: Student credit cards like the card_name require applicants to prove enrollment in a college or university, whereas secured credit cards like the card_name require a cash deposit as collateral. Credit cards for 18-year-olds also require a proven and reliable income stream. If a student is added as an authorized user on a parent’s credit card account, on the other hand, they can sidestep typical approval requirements.
- Fees and other costs: Check for credit card fees and charges that might apply, including credit card interest rates, annual fees and late fees. Note that the best student credit cards and secured credit cards don’t usually charge an annual fee.
- Reports to the credit bureaus: Make sure credit cards you’re considering report to all three of the credit bureaus to help build credit. Fortunately, the vast majority of them do.
- Rewards for spending: You can also look at cards that offer rewards for spending, which may come as travel points or cash back as a percentage of each purchase. Examples of student credit cards that earn rewards include the card_name and the card_name.
➤ SEE MORE:Best student credit cards
Benefits of credit cards for teens
Getting your teenager their own credit card may seem risky in some ways, but they will need to use credit at some point in their lives. There are also benefits that come with letting a teen have their own card, including the following:
- Build credit history early on: The best credit cards for teens help them build positive credit history earlier than normal, although activity on authorized user credit cards adds less weight than credit cards 18-year-olds get on their own. In either case, keeping debt levels low and making on-time payments each month can help young people build their credit while increasing their scores.
- Convenience when making purchases: Having a credit card makes it easy to shop online and in-person without the need to carry around a wad of cash. Credit cards also list all purchases made on a monthly statement for easy tracking, which can help teens learn how to budget their income and avoid financial waste each month.
- Earn rewards for spending: Some credit cards for teens offer cash back or flexible rewards for spending that they can use on their own or pool with family members. For example, Apple Card Family from the Apple Card lets all users in a family unit share a credit limit and pool all rewards in one place. However, only those ages 18 and over in an Apple Card Family build their own credit history.
- Have credit for emergencies: Giving teenagers a credit card for emergencies can grant parents considerable peace of mind. Teens may not have permission to use their card for anything they want, but they can use it when they’re in a bind or need to make an unplanned purchase on the fly.
- Learn positive credit habits with supervision: Finally, teenagers with their own credit card get the benefit of learning how to responsibly use credit with parents on-hand to help. Lessons they can learn include how to track and manage spending, how to avoid overspending and how to pay bills early or on-time each month.
➤ SEE MORE:Guide to adding children as credit card authorized users
Risks of getting a teenager a credit card
Giving teenagers their own credit card comes with a certain level of risk, although parents who are overseeing the use of an authorized user card can avoid most problems by monitoring their child’s card usage.
Risks that come into play when teens have their own credit cards include:
- Credit score damage: Teens who are at least 18 and have their own credit cards can damage their credit scores if they rack up too much debt or make late payments on their cards. This type of damage can take years to fix, which is the last thing they should want.
- Delayed consequences for spending: Credit cards can instill a “buy now, pay later” mentality in some teenagers since they can charge purchases and worry about paying for them later.
- Overspending: Teens who are new to credit may also find they spend a lot more than they realize, leading to budgeting problems and even long-term credit card debt. Parents who add their kids as an authorized user on their own credit cards can keep tabs on their child’s purchases to spot this problem early on.
While these risks can apply any time a teen is introduced to credit, it’s important to remember that young people often make mistakes. However, mistakes made with credit (like overspending) can actually help teens in the long run if they take time to realize what happened, learn from past problems and avoid making the same mistakes in the future.
➤ SEE MORE:Which credit cards let you set a spending limit for authorized users?
The bottom line
Teenagers can benefit from having their own credit card for a plethora of reasons, although these vary from child to child. For example, teens under 18 and still living at home get the benefit of learning about credit under the supervision of their parents. Meanwhile, those ages 18 and older can use credit cards to build credit history, access a range of cardholder benefits and earn rewards for each dollar they spend.
That said, there are all kinds of credit cards that can work for teens on the market today. With some, parents will need to apply before adding their teen as an authorized user. Other types of cards, including secured credit cards and student credit cards, can be accessed by young adults who are at least 18 years old and have their own income to report.
In either scenario, the best credit cards for teens come with valuable benefits, rewards and low fees. Since so many cards fit that criteria, you should spend some time comparing the best credit cards on the market before you apply.
