How old do you have to be to get a credit card?

Oct 19, 2019

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One of the happiest unintended consequences that’s come with the explosion of travel rewards is the demystification of credit cards. While many people still think I’m crazy when I tell them that I have opened more credit cards than years I’ve been alive, an increasing number of people understand that if I handle them responsibly, I’m actually improving my credit score in the long run and not hurting it at all. In fact, since I started collecting points and miles at the ripe age of 20 years old, my credit score has jumped more than 100 points and just broke 800 for the first time this month.

Still, credit applications are not something to be taken lightly, and TPG has worked tirelessly to debunk myths about having too many credit cards, help people understand their credit scores before they get started and stop people from making some of the costlier mistakes that are possible in the points world.

But just how early can you get started earning points and miles, and building up your credit score, with a credit card?

There’s law and there’s policy

The Credit Card Accountability Responsibility and Disclosure Act of 2009, also known as the CARD Act, reshaped the way card issuers are allowed to market to younger people. Before the CARD Act, it wasn’t uncommon to see card issuers posted up on college campuses offering free T-shirts, pizza or frisbees to get students to sign up for a card with complex terms and high-interest rates they probably didn’t understand. Now, issuers have to be at least 1,000 feet away from a college campus if they’re giving out free gifts in exchange for applications.

The CARD Act also prohibited banks from issuing credit cards to anyone under 21 unless they have a co-signer or enough income to pay off the card. This means that banks are allowed to ask for verification of your income, though of the ~15 credits cards I applied for before my 21st birthday, not a single one asked for any sort of income verification.

College students take note: You cannot count financial support you receive from your parents (help with rent, food, tuition, etc.) as income on a credit card application until you turn 21. The following text appears when you hover over the “annual income” box on a Citi credit card application:

Even if you have ample salary of your own to pay for a credit card, the earliest you’d be able to get one is 18 years old. If you bother to read (or search) through the pages and pages of terms, conditions and fine print that come along with a credit card application, you’ll see that they all include some variation of the following: “offer is only available to U.S. residents age 18 or older.”

Some banks add further restrictions beyond this. Chase, for example, requires you to be 19 or above if you live in Alabama or Nebraska, and 21 or older if you live in Puerto Rico. It’s unclear whether the banks would even allow you to proceed with an application if you don’t meet the age requirements, but a quick search through the terms and conditions of the offer page could potentially save you a huge headache and a wasted credit pull.

Why you should start young

About 15% of your credit score is based on your length of credit history, also known as average age of accounts. Banks use this as a serious factor in determining how creditworthy you are, and they’re more likely to extend you a line of credit if you have a long history of paying it back on time.

Even if your kids aren’t ready to dive into travel rewards just yet, opening a no-annual-fee cash-back card in their name could help them get some rewards for their spending and start them down the right path to a great credit score, all while teaching them how to responsibly handle credit at a younger age.

Another option to consider would be adding them as an authorized user on one of your older cards so that account will show up on their credit report. You will be responsible for any purchases the AU makes, but you don’t need to even give your kids the card to get this benefit. You can add them to your account and shred the extra card, or put it safely out of reach in a drawer somewhere. Some issuers will even let you cap how much an authorized user can spend on their card, lowering your risk if your kids end up making bad decisions.

This was actually the strategy I used to jumpstart my own points hobby, and it worked incredibly well. My dad added me as an authorized user on his ~15-year-old United Club Card. In a matter of weeks, I went from having no credit history to having a credit report that showed over a decade of on-time payments. With that in my back pocket, I had no trouble getting approved for the Chase Sapphire Preferred Card as my first card, and I didn’t have to waste any time building credit on my own. Obviously not everyone will feel comfortable doing this, but as long as you keep the physical credit card in your possession, there isn’t any real risk to adding a child as an authorized user.

Bottom line

The CARD act and other federal guidelines were created to protect young and inexperienced kids from banks looking to sign them up for cards with promises of everything from frisbees to free pizza. Credit cards are not inherently good or bad; it all depends on how you use them.

If used correctly, not only can they help kids of any age unlock thousands of dollars of free travel rewards, but they can also be an important tool in financial education. If kids understand the long-term stakes associated with their credit report, they’re more likely to take it seriously and budget, not overspend, and pay off their bills on time.

Editorial Disclaimer: Opinions expressed here are the author’s alone, not those of any bank, credit card issuer, airlines or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

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