Credit cards are a great way to get started building credit, and they can be especially helpful for teens who may not have enough cash on hand or have a low income. A credit card can help them earn rewards for their spending and build up a strong credit history, while also teaching them how to manage their money responsibly.
How to get a teenage credit card
You may not know where to begin with financial responsibility as a teen. But by setting the foundation early, you can make sure your teen has all the tools they need to build up their credit as they grow up.
Step 1 Open a bank account for teenagers
It is important to open a bank and use it before applying for a credit card. This will help them learn the basics about budgeting, paying their bills on time and how to avoid debt. Some banks have options that are geared towards teens, with features such a teen credit card and online bank.
You can help your teen open an account by explaining the approval process and how to make purchases using their card. You can also discuss the importance to make payments on time. A late payment will affect your credit score.
You can help your teenager build credit by adding them as authorized users to your account. This will allow them to use your credit card to make purchases under your name. You should be aware that certain creditors may have an age restriction for authorized users under the legal age of 18. Check with your creditor before adding your teenager.
Step 2: Ask them to pay their bills on time
You can teach your teen the value of responsibility by having them pay their credit card bill. They can also establish a good payment history and demonstrate to credit bureaus their ability to pay.
Step 3: Set a spending limit for the card
If you're worried your teen may go over their limit, consider giving them a credit card with a set amount they can spend. This will let them know how much money they have to spend, while allowing you to watch their spending more closely.
Step 4: Ask them about their finances
As soon as your teen gets a credit cards, you should keep an eye on their spending and talk to them about their goals. This will allow your teen to ask questions and learn from you.
The best credit cards for teens are those that meet their goals and needs. Find cards that give your teen the opportunity to earn cash back or airline miles while building credit.