What is the Best Credit Card for Teenagers?

Last Revised on November 18, 2010

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The role of credit cards has changed over years; the sole purpose of credit card used to be for purchasing things that people can’t afford to pay right away, and they pay the card company later with interests. But now there is an addition to this role – to build credit now so that you can become eligible for buying home mortgage or car financing later on. Teenagers can benefit from either of the purposes of credit cards, even though there are many factors to consider first.

How Can Teens Apply for and Get the Best Credit Card Offer Deals?

Eligibility. Is the teenager old enough to apply for a credit card? Age requirements might vary from one state to another, but usually the minimum age is 18 or older. Often times, those under age 21 aren’t granted credit cards if there is no co-signer. That’s the first step during sign up process. Young teen kids may need their parents consent and  require them to co-sign along too. The main reason they ask for age is because it is usually synonymous with responsibility.

Credit or Debit Card differences. If a young adult wants a credit card just so he or she doesn’t have to carry around cash, then debit card might be a better option. The difference between the debit and credit card is that with debit card you money before using it to make any purchases, whereas with credit card you spend first and then pay the card company later. Debit cards doesn’t charge you any interest rates; some will even offer you interest instead so you can earn back some money, so it’s a good alternative to credit cards.

Prepaid Cards. These cards are pretty much same as debit cards, except teens don’t have to constantly deposit money every month or so. They have to put a certain amount money they desire in their prepaid account and that’s the amount they are limited to spending until it runs out.  With debit cards, teenagers can still use card to make purchases even after all the deposits are gone; this is called overdraft, and fines and fees charged to compensate by the company. With prepaid cards, it won’t allow you to make purchases if the account balance is zero; thus, young teens are protected from overdrafting fees. It is usually preferred that the teenagers get a prepaid reloadable cards with parental monitoring service.

Interest Rates. Most important thing a teenager should be paying when applying for credit cards besides eligibility and requirements is the interest rates. You will hear it as APR, annual percentage rates. The lower the interest rate, the better it is. Also look out for late fines and other fees.

Build Credit Score. Like we explained in the beginning, one of the most important benefits of getting a credit card as a young kid is having the capability to build credit history early on. However, some card companies don’t report the account activities of members to credit bureaus who does the credit score rating; this defeats the main advantage. Therefore, it is important that before signing up for the credit card either the teenager or their parent or guardian make sure that the company does the reporting to authorized organizations.

Store Cards. The most confusing of all cards for teenagers is the cards offered by retail stores. Whether it’s a grocery chain, electronic store or a clothing outlet center, they all offer cards and some target teenagers specifically. The similarity ends there because all these store cards have different terms and conditions; some charge no interest while other allow you to start with zero cash down. As teens are not used to reading lengthy brochure, they might fall in prey to getting one of these complicated cards. They should always talk with their parents or somebody who understands these cards before getting one, and not just tempted by the financial incentives offered by the store in the beginning.

Keep Records and Read Statements. When teenage kids get a credit card, they should learn to keep records of all their spending on the account. Being able to read statement diligently will also help monitor any fraudulent activities now and in the future. Teenagers these days are very savvy computer users, most of them go on the internet every day. They can use their internet knowledge to do online credit card monitoring and banking. Often times credit card companies cut down on fees when the users go paperless and accept online billing statements.

Specials for College Students. When teens graduate from high school and go to college, they might have to apply for student loans. If they want to keep any of the extra money after tuition payment and other billing dues, they can save them in their college student cards. Some companies offer special credit card programs just for the college students and often times they are really good deals. The private student loan companies might even offer one too with no or low maintenance fees.

Do Direct Deposits. If you get a job, see if your employer offer direct deposit options. What it does is that it deposits your paycheck directly into your preferred credit card or bank account. This saves a lot of time. It also helps you stay ahead so that you have money in your account.

Make Payments On Time. As a teenager you got credit card to build good credit history, but if you don’t make payments on time your credit history will be worse than not having any. Remember, we talked about age requirements earlier? It was there so that the creditors can know a little bit about your responsibility to financial obligations, which is making payments before due dates.

Best Tips for Teenagers Using Credit Cards. Use it wisely; don’t spend more than you can afford to pay back. Your account history will be there forever and will be used to help you buy your own house or start a business later on. Visa, Master Cards, American Express, Capital One, Citi Group are some of the biggest credit card companies. Always look for alternatives such as low-limits if you know the card is doing you more harm than good. You don’t want to go into deep debt as a teenager, it is too early for that.

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2 Responses to “What is the Best Credit Card for Teenagers?”

  1. What you need to know about Credit Cards for Teens Says:
    January 2nd, 2011 at 6:05 pm

    Here are some tips for getting best credit cards for teenagers with no credit. Teens usually have no credit since they use the cash they parents supply them. Without credit, teens can start with prepaid debit cards from opening a small free bank account. Then as time goes by and they learn the responsibility of carrying and using cards, they can get credit cards as they would have build some credits. But teenagers need to know how the credit cards works; otherwise they will end up spending excessively.

  2. Julie Ischiao Says:
    January 3rd, 2011 at 10:12 am

    Teenagers can get credit cards as long as they are old enough to qualify for eligibility and have steady income from a job rather than from parents pocket. The reason they should get cards such as Visa, MasterCard or American Express is so that they can learn at the early age the pros and cons of owning one. Besides if they are making money on a daily basis, even if they get charged few hundred dollars here and there, they will eventually learn the lesson. Better learn from the mistakes now than later in life. Although I do agree that parents should help develop foundation for teens who are planning to get credit cards.

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