Credit cards for teens?
Posted on August 1st, 2007 – 12:17 PMBy Kara McGuire
I just finished a series of interviews for an upcoming column about how teens make, spend and save money.
I was surprised that not one of the 18 year olds I interviewed had a credit card. They relied on debit cards, but even a couple of those in possession of debit cards chose to operate mostly on cash.
It’s a response I should be getting used to by now. Many teens and even college upperclassmen I speak with don’t have credit cards. When I point out the empty card slots in their wallet, most say something like “I guess I should be building a credit history.” But the worry that the temptations and potential pitfalls that come with a credit card are too great.
I received my first credit card at age 16, a World Perks card attached to my dad’s line of credit. After I used that card responsibly, I opened my own account. By the time I left college, I was charging most everything and paying the balance off in full at month’s end.
I still haven’t gotten into using a debit card. I’m all about credit.
When do you think it’s appropriate for a young person to get credit? Sometimes I worry that students aren’t learning how to use credit because they fear it so. Will they magically learn how to manage credit just because they enter the real world with a few more candles on their birthday cakes?
Share your opinion and your stories– both good and bad– about credit cards for young adults.
13 Responses to "Credit cards for teens?"
Students aren’t taught about credit. I know I wasn’t. And my first job involved promoting a credit card, so my review was partly based on activated accounts. So to hit (rather vastly exceed) my numbers, I set up shop at a university and hired somebody to man the table for me.
I think 18 is a good age to start, culturally and legally the start of adulthood. But I wish we (parents, teachers, whomever) would do a better job at educating on credit. But given that the main reason the stock market is struggling lately is tied to consumers’ understanding of credit (mortgages in that case), everybody, not just students, could use better education in credit.
I think that young adults need to start building a credit history almost as soon as possible. I got my first card at about 16, I think that the limit was $250 or maybe $500, and it was tied to my parents’ account. I learned quickly about paying it off in full. Now when I went to get a car loan, I had enough credit history with that and my student loans that my rate was the best available from my bank.
By contrast, my girlfriend has been doing everything by debit card, and because of that, simply doesn’t have a credit history. So getting a good rate on a car loan was much more difficult for her.
22 is the appropriate age to get one’s first credit card.
No such thing as magic. One should not be able to receive a credit card unless they can prove they are employed and can pay back the potential debt within 6 months.
I’d much rather have kids fear credit than embrace it. What’s the benefit of credit when the other option is to teach a young person restraint and to only spend that which they have?
I got my first card at 18 or 19, and never really used it in college, relying on cash almost entirely. But I’m a cheapskate, and can’t stand paying any more than I have to for any purchase outside of the “biggies”: college, car, home. The thought of carrying a balance on a credit card makes me sick to my stomach, so I’ve never done it.
I only ran into the “credit history problem” once, with my first car, and I just shopped around until I got a loan. It wasn’t the best rate, but I survived. I paid my bills every month and have never suffered a credit history problem or low credit score since….so I think the “buildup a credit history” issue is a bit overblown.
Even if I’m wrong, I seem to remember reading recently that FICO scores (or maybe it was lenders who focus on immigrants and low-incomes) are going to start taking things like timely payment of utility bills and other non-credit “evidence of responsibility” when figuring a credit score. So these debit-card relying teens might have hope yet. If they’ve never had an overdraft, that alone shows they’re at least a little bit on top of their finances.
I think the real issue is that teens (and everybody) need to be better educated on both money and credit management. And I don’t think it’s too much the teens fault for being scared, they don’t like history, yet we cram it down their throats all thru high school and college.
It’s interesting that we’ve got a culture of “don’t benefit the big business” in MN but are naive enough to get a few extra points higher interest rate on a car because we’re such a cash and check culture. This could translate into a few hundred to a few thousand extra dollar given to a big bank in interest on the life the loan, money you could have spent on something worthwhile. Simply get a credit card, pay it off every month, build the rating, and save some money. Then the banks make no more money on you than need be (true they make money off the merchant fees, but the merchant was gonna charge you the same price whether you paid cash or charge). In addition, you get the added benefit of cash back, points, miles or whatever.
I got my first credit card at 19. I’ve consistently paid it off in full at the end of each month, not only because I didn’t want to be wasting my hard earned pennies on interest but also because my parents instilled in me a good education whenit came to having and using money. I think that this is also akey part that is missing these days - kids learn by example and are smart enought to see through something a parent may be saying, if they aren’t living it as well.
I applied and received my first credit card at 18– the limit was something like $500. Even now at 24, some things are better paid for with a credit card: online and overseas purchases, airline tickets, and things you just need to put off paying for a few weeks (always pay the bill in full!).
Adding to SM’s interest on car rates: when I bought a car a few months ago, I had to tell the finance guy over and over that I had already secured a loan through my credit union. I’d rather pay interest to an organization that gave me my first credit card, that provided savings options when I was younger, and has actual people answering the phone when I have a question/problem (even after the sale). So what if they end up with a few hundred dollars extra? They’ll also be the ones who get my mortgage when I buy a home.
The education of credit/money begin before a child learns how to count money and make change (2nd-3rd grade). Their culture and thier home enviornment supplements thier dna and ability to control impulse spending. Therefore, the age at which a youth should get a credit card should vary based upon their level of responsiblity. The last option to establish credit is to open a credit card with one that is secured by cash.
I got my first credit card at 18 when I went to college. My bill was sent to my mom’s house and she paid it with money from my account that she had access to. So she knew that I wasn’t carrying a balance with the card. I think it was good to start my credit history but with supervision.
I got my first debit card at 18 and used it through college, mostly because my parents had scared me off of credit. Then I graduated and realized that if I ever wanted to buy a house or get an auto loan I would need credit history, so when I was 21 I picked up 3 cards and rotated them, paying them off in full at the end of every month. I love my credit cards and pay for everything with one primary card that gets the best rewards - this allows me to stick it to the credit card companies (they pay ME to use their card) and keep track of my spending month to month.
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