Credit cards can be useful tools because they offer greater purchasing power. They’re also safe to use, in terms of being protected from credit card fraud and preventing personal bank account information from being compromised.
In an era where digital payments are becoming more popular, having a credit card almost seems like a necessity in some cases. Anyone 18 and over can apply for many kinds of credit cards, but can children?
Not Able to Apply
No, children under 18 cannot apply for credit cards on their own. Even when they turn 18, there may be some extra steps they have to take in order to be granted credit cards. Those could include proving income or having a cosigner on the card.
Authorized Users
The exception is that children can become authorized users of credit cards. This means that children can have their own physical cards that have their names on them.
They’re not responsible for the payment of these cards, though, since they’re not the primary account holders. As authorized users, minors can make purchases anywhere that credit cards are accepted, just like if they had their own cards.
Benefits of Becoming Authorized Users
There are many ways why families might consider this option. According to SoFi, a credit card for 16 year old can “build their credit history.” By having a history with credit cards, a credit score can be established. When those children grow older and apply for cards or loans on their own, this would work in their favor, as long as the score is on the higher side. Families who pay off their credit cards each month shouldn’t have a problem keeping up that credit score.
Aside from this, credit cards could make sense for many younger teens. It would allow them to make purchases online and pay for things in emergencies. With credit cards, they won’t have to remember to ask for cash so frequently, and they’ll always have the right amount of funds to pay for specific events.
For the families, having authorized users make purchases could help earn rewards. Many cards offer cash back, airline miles, hotel points, or other benefits, and buying more equates to more rewards. Having multiple people work towards those rewards can be smart.
Potential Issues
Of course, overspending could be a concern. It’s important to set a budget for children and discuss the consequences of overspending. Minors will also have to make sure they keep track of their credit cards.
Alternatives
Cash is an obvious alternative, but cash has become less prevalent in an increasingly digitized financial world. Children below 18 may be eligible to use debit cards or pre-paid cards if they need to use something other than cash. However, debit cards don’t build credit scores, nor do they help families earn credit card rewards.
Many people who aren’t quite 18 like the idea of having credit cards, and so do their parents or guardians because of their convenience. While minors cannot get their own cards, they can become authorized users tied to responsible adults.
