Navigating the world of credit cards can be tricky, especially if you're under 21. With a plethora of options and restrictions, it's easy to feel overwhelmed or lost as a young adult. But fear not, millennials, Flik Eco is here to help you make informed choices and find the perfect credit card to suit your needs.
Credit Cards For Under 21 Table of Contents
Understanding Credit Cards for Under 21s
Before diving into the available options, it's crucial to understand the specific challenges facing under 21s when it comes to credit cards. The Credit Card Accountability Responsibility and Disclosure (CARD) Act of 2009 introduced stricter measures for young people to obtain a credit card. This includes:
- Proof of income or means to pay for applicants under 21
- A cosigner above the age of 21 in case of inability to provide proof of income
- Limited credit limit increases for cardholders with cosigners
Types of Credit Cards for Under 21s
There is no one-size-fits-all answer when it comes to choosing a credit card. That's why we've put together this list of the best credit card types for under 21s, each catering to specific needs and priorities:
Secured Credit Cards
With a secured credit card, the cardholder needs to provide a security deposit upfront, usually equal to the card's credit limit. This reduces the risk for issuers, making it a popular choice for young adults or those with limited credit history.
Student Credit Cards
Student credit cards are specifically designed for college students and offer rewards, perks, and lower fees. These are great for building credit history while enjoying reward benefits. However, they often require proof of enrollment at an accredited college or university.
Prepaid Credit Cards
Although technically not credit cards, prepaid cards can help under 21s learn budgeting and financial responsibility. They don't require a credit check or cosigner, but they won't help build credit history as other credit cards do.
Authorized User Credit Cards
Becoming an authorized user on a family member's credit card can be a start for under 21s who lack credit history. You'll gain access to the primary cardholder's credit limit, and their responsible usage can help boost your credit score.
Credit Cards For Under 21 Example:
Finding the Right Card: Sarah's Story
Sarah is a 19-year-old college student looking for a credit card to help build her credit history. She has a part-time job and can prove a source of income. After considering her options, Sarah decides to apply for a student credit card. Not only does it have a lower interest rate, but it also offers rewards and perks for young adults like her.
Upon receiving her student credit card, Sarah makes a point of using it for small purchases and paying off the balance in full every month. She also takes advantage of the card's reward program by using her points on textbooks and other necessary college expenses. Over time, her responsible usage results in a growing credit score and a better financial future.
Congratulations, you're now equipped with the knowledge and confidence needed to find the perfect credit card for your unique needs as an under 21-year-old. We hope this guide has made the complex world of credit cards more manageable and exciting. Don't forget to share this article with your friends and explore other Flik Eco guides for more valuable personal finance and investing tips.
