The myth that credit cards are only for older, more financially stable individuals is a thing of the past. Today, millennials make up a considerable portion of the credit cardholders demographic, looking to build their credit profiles while enjoying the added benefits that credit cards can bring. However, before you embark on your journey to responsible financial management, it's essential to make sure you know the legal age for credit cards, so you're not unknowingly stepping into a world of trouble. In this Flik Eco guide, we will dive deep into the age requirements and other factors you should be aware of when applying for a credit card.
Legal Age For Credit Cards Table of Contents
Legal Age for Credit Cards: The 18-year-old Rule
Typically, the legal age to obtain a credit card in the United States is 18 years old. This is when an individual is considered old enough to enter into legally binding contracts, which is a crucial aspect of managing credit card accounts. However, simply being 18 may not guarantee approval for a credit card.
Factors That Affect Credit Card Approval
From the credit card company's perspective, being of legal age doesn't always equate to financial responsibility. Take note of these factors that could potentially affect your ability to get approved for a credit card:
1. Credit History
As an 18-year-old, you might have a limited or non-existent credit history. Credit card companies rely on credit history to evaluate your creditworthiness, which means assessing your risk as a potential borrower.
In some cases, credit card issuers require individuals to have a certain level of income, ensuring that the cardholder is capable of paying off their debts.
3. Co-signers and Authorized Users
If you're under 21 and don't meet the credit history or income requirements, you may need a co-signer or become an authorized user on someone else's account – ultimately placing some responsibility on another individual for managing the credit account.
Under 18: Solutions for Building Credit
Taking steps to build your credit history before reaching 18 can be extremely beneficial. This can be done through:
- Being added as an authorized user on a parent's or guardian's account
- Signing up for a secured credit card, which requires a cash deposit serving as collateral in case of default on payments
- Applying for a starter credit card with a low credit limit
Understanding Credit Reporting and Scores
For millennials considering obtaining a credit card, understanding how credit reporting and credit scores work is critical. Your credit report includes your borrowing history, and credit scores are calculated based on this report. Payment history, debt levels, and the length of credit history are significant factors in determining your credit score.
Legal Age For Credit Cards Example:
Emma is an 18-year-old college student who wants to apply for a credit card. She has a part-time job, so she believes she meets the income requirement. Emma understands the importance of building a good credit score and wants to start as early as possible. She applies for a starter credit card but is initially declined due to her limited credit history.
Concerned but determined, Emma talks to her parents about her options. They suggest that she should first be added as an authorized user on her father's account. This way, Emma can start building her credit while her father oversees her spending habits.
After six months as an authorized user and demonstrating responsible financial behavior, Emma re-applies for the starter credit card. This time around, she is approved. As she begins her journey towards establishing good credit, she makes sure to pay attention to her expenses, consistently make on-time payments, and keep her balance low.
Understanding the legal age for credit cards and what it takes to become a cardholder is an essential step in successfully managing your finances. And as millennials, it's never too early to start building your credit profile and gaining the lifelong benefits it affords. While obtaining a credit card as a young adult comes with responsibilities, the rewards are abundant – from better interest rates to fulfilling long-term financial goals. Share this Flik Eco guide with friends and family, and explore other articles to continue your path to financial enlightenment.