Wondering how to get a credit card at 16? It's a smart question: Learning about credit early can set you up for financial success down the road. However, as a teenager, the process isn’t as simple as just heading into a bank or filling out an online application and waiting for your shiny new card.
We’ll break down what you need to know about getting your first credit card, including alternative options and expert tips on how to make good use of this new responsibility.
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Credit cards for 16 years old: Understand the rules
If you’re 16 and thinking about money, here's the scoop: You can open a bank account, but you'll need your parent or guardian to sign off for you. “This is because minors cannot enter into legal contracts on their own,” says Josh Katz, certified public accountant and founder of Universal Tax Professionals.
For credit cards, it's even trickier. According to federal U.S. law, you can’t legally open a credit card in your name until you’re 18. But don't worry; there are still ways you can shop and start building credit at 16.
One of the most common options is becoming an authorized user on someone else’s credit card—typically your parent or guardian. “This is a great way to learn how credit works without diving in headfirst,” says Rhett Stubbendeck, financial expert at Leverage Planning.
How to get a credit card at 16: Becoming an authorized user
Becoming an authorized user is the simplest way for teenagers to have a credit card. An authorized user is someone who has permission to use another person’s credit card account. You’ll get your own card with your name on it, but the account holder is ultimately responsible for paying the bill.
Most credit card companies allow authorized users, but policies vary, so the first step is to check with the issuer. Then, if everything is good to go, make sure to communicate clearly with the account holder about spending limits and payment expectations.
Let's go over the pros and cons of being an authorized user:
Pros:
- Build credit early: You can start building a credit score based on the account holder's payments.
- Learn about credit: It’s a low-risk way to understand how credit works without the full responsibility.
- Emergency access: You have access to funds in case of emergencies.
Cons:
- Impact on credit score: If the account holder misses payments or carries a high balance, it can negatively affect your credit score.
- Limited control: You won’t have control over the account and might be limited in how you can use the card.
- Responsibility: Assure you have a good relationship and open communication with the account holder to avoid stress. If the relationship is already bumpy, adding money talk on top of that might be a bad idea.
In a nutshell, “the good side is learning financial responsibility early and building credit, and the downside is the risk of debt if you’re not careful and the potential for misuse,” Stubbendeck says.
Key considerations before getting a credit card
Being an authorized user of your parent's credit card is a great alternative, but you'll need to have a calm and detailed conversation with the account holder before starting swiping.
It’s important to discuss:
- Credit impact: Understand how the account holder’s credit behavior will affect your credit.
- Spending limits: Agree on how much you can spend. Establish a periodical budget, whether it's weekly, bi-weekly, or monthly.
- Payment expectations: Decide who will be responsible for paying the bill or how you will contribute to the final amount.
“Educating teens about maintaining a good credit score is fundamental, as it can affect future borrowing opportunities and interest rates,” Katz says. “They must learn about and understand the credit card terms, including the interest rate, fees, and rewards programs.”
Bonus tips for getting your first credit card as a teenager
Here are the golden rules of healthy credit card usage:
- Always pay the balance in full monthly to avoid interest charges and build a positive credit history.
- Never charge more than you can afford to pay off immediately.
- Keep track of spending to stay within a budget.
“When you get your first credit card, start small,” Stubbendeck says. “Use it for little things, always pay it off every month, and keep track of your spending to stay out of debt. This helps you avoid interest and build a good credit history.”
Other alternatives to consider
If becoming an authorized user of a credit card at 16 doesn’t seem like the right fit for you, there are other ways to manage money and build credit:
- Prepaid debit cards: These work like credit cards but only allow you to spend the money you’ve loaded onto the card. You can load the money yourself or discuss if your caretakers will be the ones responsible for establishing a budget.
- Secured credit cards: Some banks offer secured cards that are easier to get and can help you build credit. You’ll need to put down a deposit to act as your credit limit.
- Student checking accounts: Many banks offer checking accounts for teens that come with a debit card and help you learn to manage money.
“Before jumping into credit cards, think about these alternatives,” Stubbendeck says. “I always recommend prepaid debit cards or student checking accounts to my clients because they’re great for learning money management without the risk of debt.”
What’s the best option for you?
Deciding whether to become an authorized user, get a prepaid debit card, or wait until you’re 18 to get your own credit card depends on your financial goals and how comfortable you and your parents are with managing credit.
Just remember, no matter what option you choose, the most important thing is to use it responsibly. Building good credit habits now will set you up for a strong financial future.
Don't forget to start saving
If you're buying, you can also start saving at 16. “Set up a savings account to encourage saving habits and financial discipline,” Katz says. “These alternatives provide a safe way to learn financial responsibility before taking on the potential risks associated with credit cards.”
FAQs
Can you get a credit card at 16?
Legally, you cannot get a credit card in your name at 16. However, you can become an authorized user on a parent’s or guardian’s credit card, which allows you to use the card and begin building credit.
How to get a credit card at 16?
The best way to get a credit card at 16 is to become an authorized user on a parent’s or guardian’s credit card. This allows you to use the card responsibly while starting to build your credit history.
How to get a credit card at 16 without a parent's approval?
You cannot legally open a credit card account independently until you are 18. All financial institutions follow the law and require a parent or guardian’s consent to add a minor as an authorized user.
What card can a 16-year-old get?
A 16-year-old can be added as an authorized user to their parent's or guardian's card. Prepaid debit cards are another good option.
Can a 16-year-old build credit?
Yes, a 16-year-old can build credit by becoming an authorized user on a parent or guardian’s credit card. The account’s payment history and usage can contribute to their credit score.
Can I get my own card at 16?
No, you cannot legally obtain your own credit card at 16. You would need to wait until you are 18 or become an authorized user on someone else’s card.
Can a 16-year-old use their parent's credit card?
Yes, with their parent’s permission, a 16-year-old can use their parents' credit card if added as an authorized user. However, the primary account holder remains responsible for all charges.
Can a 16-year-old get a credit card with a co-signer?
It's illegal for minors to get a credit card, and having a co-signer doesn't change that. When you turn 18, a co-signer can help you to qualify for a card with better terms.
Can you get a debit card at 16?
Yes, many banks offer debit cards to teens as part of a checking account. With parental consent, you can open a student checking account that comes with a debit card, which allows you to manage your money. Pre-paid debit cards are also available.