Worrying about your child’s health and safety is part of being a parent, but what about their financial future? In a society where credit scores have so much influence, helping your child establish healthy financial habits early on can make a huge difference when it comes time to send them off into the world.
While you might be reluctant to slap a credit card in your teen’s hand, teaching them how to be a responsible borrower now can help prep them for financial independence as they get older.
Best cards for 13- to 17-year-olds
Legally, your child can’t get a credit card in their name until they’re 18 years old — but they don’t need their own credit card to get the ball rolling. By adding your teen as an authorized user to a card in your name, your child can start the process of building their credit history before they actually need it.
Assuming your credit habits are sound, your child’s credit record will get a bit of a head start. Exactly how much of a bump their credit will receive depends on the scoring model, as different models weigh credit factors differently.
But before you add your child to your credit card account, keep in mind that, at the end of the day, you’re solely responsible for the account. Teaching your child proper spending habits shouldn’t come at the cost of your own credit. Even if you don’t give them a physical credit card to use just yet, they can still benefit from being on your account.
If and when you decide to drop some more responsibility in their lap, you’ll be able to monitor their spending, and, with some credit cards, you can even set limits on how much they can spend altogether. The best part? You’ll not only be helping your child build their credit history but they’ll also be helping you earn points, miles, or cash back every time they swipe their card — with your approval, of course.
Not all credit cards are created equally, though, so here are a few options that stand out as good choices for adding your kid as an authorized user:
Amex EveryDay Credit Card
With the Amex EveryDay Credit Card, you get rewarded for the spending you do all day, every day — no matter the purchase. This can be a good option for earning rewards on your kid’s spending, regardless of what they’re spending on, though it won’t give you the highest earnings rate available.
You can set spending alerts and limits as low as $200 to help you keep track of their spending, and charges for each additional cardmember are separated on your monthly statement for easy expense tracking. Additionally, there’s no fee for authorized users, and while you can add your children to your account once they’re 13 years old, credit isn't reported under their name until they turn 18.
Chase Freedom Unlimited
The Chase Freedom Unlimited may be as close as it gets to a perfect credit card for authorized users. Its straightforward rewards structure offers a competitive earnings rate on all purchases; for the first year, you’ll earn 3% cash back on all purchases up to $20,000, then 1.5%.
While you don’t have the ability to set spending limits, there’s no age requirement for authorized users, and adding an additional cardmember doesn’t cost a thing.
Citi Simplicity Card
There may not be any rewards with this card, but the Citi Simplicity Card boasts a 0% intro APR (annual percentage rate) on purchases for 12 months and a 0% intro APR on balance transfers for 21 months — as well as no late fees, no penalty rate, and no annual fee, ever.
If you’re looking to take advantage of the lack of fees and the generous intro APRs while also teaching responsible spending habits, this may be a great option. Like the Chase Freedom Unlimited, the Citi Simplicity Card has no age requirement for authorized users and no fees for adding them to your account.
Top cards for 18- to 20-year-olds
Once your kid becomes a legal adult, everything changes. They’re now able to take on credit products in their own name, though there are still requirements they’ll need to meet in order to get approved. If your child is under 21, credit card issuers likely won’t approve them for a card unless they have verifiable income or, at the very least, a cosigner with income that can be verified.
Getting your first credit card at this age is a great way to really start building your credit. While there are plenty of opportunities to utilize the many benefits of a credit card, mishandling and abusing credit can take a toll very quickly, especially since your child is just starting out.
Now that your kid’s options for credit cards are expanding, here are some of the best cards for young adults:
Discover it Secured
One of the best options for a first credit card is a secured card. Credit limits are set by a refundable deposit that the cardholder makes on the account, and, just like an unsecured credit card, all of the activity is reported to the three major credit bureaus — Experian, Equifax, and TransUnion. Proving yourself a responsible borrower is key to strengthening your credit score; this includes paying your balances in full and not carrying a balance from month to month.
The Discover it Secured has no annual fee, so your kid can simply focus on making payments on time, and it provides 2% cash back at gas stations and restaurants on up to $1,000 in purchases each quarter. After eight months, Discover will automatically review your account to see if you can transition to an account with no security deposit.
Discover it Student Cash Back
Once your kid qualifies for an unsecured card, the Discover it Student Cash Back may be a great option. With a $0 annual fee and a $20 statement credit each year for college students who maintain a GPA of 3.0 or higher, your kid can start getting a taste of credit card benefits while staying focused on schoolwork.
This card also boasts rotating 5% cashback categories at different places each quarter, such as gas stations, grocery stores, restaurants, Amazon.com, and more, up to $1,500. These categories need to be manually activated in order to earn. Your kid will earn unlimited 1% cash back on all other purchases.
Need more? Discover will match all the cash back your kid earns at the end of their first year — and there’s no limit to how much Discover will match. Credit needed for this card ranges from fair to excellent, so focus on having the best score possible in order to increase the odds of approval.
Journey Student Credit Card from Capital One
With the Journey Student Credit Card from Capital One, cardholders can earn earn 1% cash back on all purchases and 1.25% cash back each month you make an on-time monthly payment. There’s no annual fee to worry about, no foreign transaction fees if your child heads abroad, and they can access a higher credit line with Credit Steps after making their first five monthly payments on time. To be approved for this card, your kid will need average credit.
OpenSky Secured Visa
No credit check needed for this one. Since the OpenSky Secured Visa is a secured credit card, you set your credit line with an initial refundable deposit — as low as $200 and up to $3,000. To ensure you’re building your credit, all activity is reported to the three major credit bureaus. It’s an alternative to the Discover it Secured card, but it lacks the earnings rate offered by Discover.
The groundwork for maintaining good credit can start at a young age. As an authorized user, your child can benefit not only from being able to practice proper spending habits but also lengthier credit history. Once they turn 18, they can leverage their very own credit card and continue their record as a responsible borrower.