Credit card for teen

[Pembo]

We got ds a student cc from USAA. It had a $300 limit which is more than he needed.

 

[runwad]

I made my DD an authorized user on my card at 16. She finally got her own Discover card 6 months ago, age 20. She goes in after every purchase and pays the card off so she never has a statement balance. She gets excited to see her cash back total go up and to see her high credit score 741

 

[elgerber]

I checked with our bank and they do not issue credit cards. After looking online, I'm thinking about the Capital One Journey Student Rewards. I'm curious whether we should only enter the income from her part-time jobs?

My daughter got this card last year, at age 19. She had her first part time job, and we used just that income. She got instant approval.

 

[QueenIsabella]

We got ds a student cc from USAA. It had a $300 limit which is more than he needed.

That's great that the $300 limit works for you, but it really depends on the student. In our case, DD21 had traveled abroad (without her parents) twice in HS, and a semester abroad was always in her college plans. I wanted her to have a high enough credit limit that she could always buy an emergency plane ticket home. Initially, the bank gave us (me and her) something like a $25k limit, based on my credit score. They lowered it at my request.

Once DD graduates, I'll take my name off the card so she can fly solo. She won't be buying a house or car right away, and should be able to improve her credit score as needed once she's working.

 

[ICF]

My son was made an authorized user on my AMEX at 16 -- we were told he had to be 18 to get a card in his own name.

We were going to put him on one of our Chase Visa cards, as Visa is accepted anywhere -- but they would only give him the same credit line as we have.....and I didn't really want him to have a $15K credit line!!

Amex let us set whatever limit we wanted, so we were able to start him at 1000.

 

[arlinar]

Have her try a secured credit card. I got one from Discover. You can put anywhere from $200 to up to $2,000 on a lot of them. Granted the APR is a bit higher but it does help for those just starting or rebuilding credit. After about a year, you can get upgraded to an unsecured credit card.

.......I will tell you, personally speaking, if you can get your child a credit card at age 18 it will help them in the future. Some of my friends weren't allowed to get a credit card as their parents feared they wouldn't manage it well.. and unfortunately those friends are now having issues because they have a lot less credit history than me.

My sister-in-law in fact is one of them. Despite making a very good salary she was denied twice from a car loan because she lacked enough credit history and ended up needing her parents to co-sign on the loan. She only in the last 2 years (she just turned 25) got a credit card.

I'm one of those people as well. My grandparents refused to cosign anything for me. They either bought the car and wouldn't let me cosign or flat ot refused to get me a credit card (finacial gurus they like watching always discouraged cosigning) People around my age are buying much newer cars and houses while I'm stuck in bad credit car loans due to lack of credit history (age of accounts and number of accounts)

 

[davper]

1) Having a credit card does not equate to teaching someone that consumer debt is the norm. It is unfortunately the way our society works in that credit in general (having a good score and history) drives much of the decisions entities make regarding a person. ETA: having a credit card is only one of many ways to build good credit history but it def. is a big one.


2) You have completely oversimplified the situation. The scenario you described regarding a CD would not guarantee the best rates and an A+ credit for a car or home loan...have you actually bought a home recently? When we went to get a mortgage for our home in early 2014, granted we were having our house built instead of buying a home already built but still process was the same, we had to give paystubs for each month during the 7 month building process, were under strict guidelines to watch our credit like a hawk aka do not in any way buy something like furniture, we had to provide bank statements, 401k statements and have our credit report run for both of us.

We both have excellent credit and had good income so we got the best rate available at that time.

Here's just a few items that the credit bureaus looked at on our credit reports:

~Pay bills on time
~How much you owe creditors
~Time since most recent account was opened
~Length of time revolving accounts have been established
~Length of time accounts have been established
~Length of credit history
~Length of revolving credit history
~Loan balances to loan amounts
~Amount owed on accounts

If the purpose is to build good credit it might not be a bad idea for the OP to seek professional assistance.

Actually it is that simple. My wife had no credit. She paid all her bills on time and paid cash for everything. But we were going to buy a house in a few years so we did exactly as I described x3. after 3 years, her credit score was about 750. Because of her, we nailed a 2.875% 30 fixed mortgage rate back in 2009.

 

[Mackenzie Click-Mickelson]

Actually it is that simple. My wife had no credit. She paid all her bills on time and paid cash for everything. But we were going to buy a house in a few years so we did exactly as I described x3. after 3 years, her credit score was about 750. Because of her, we nailed a 2.875% 30 fixed mortgage rate back in 2009.

Things in 2009 are not the same in 2014 nor in 2016. After the housing issue it is more difficult to secure a good home loan.

 

[georgina]

Adding children as authorized users will build their credit history. I have had no problems with my kids using our cards inappropriately. They always ask if they need to charge something. I would never consider having them take out a loan they didn't need! We have excellent credit despite the fact that we haven't had any long-term debt or loans in 25 years.

 

[QueenIsabella]

Adding children as authorized users will build their credit history. I have had no problems with my kids using our cards inappropriately. They always ask if they need to charge something. I would never consider having them take out a loan they didn't need! We have excellent credit despite the fact that we haven't had any long-term debt or loans in 25 years.

Me, either. It seems pretty silly. Besides, my DD will have student loans (which she already has a plan for paying back). Given the responsibility she's shown over the past few years, I have no worries about her credit rating. And in any event, it's hers, not mine--if she mucks it up, that's on her.

DH and I have excellent credit. When we bought our house last year, one lender told us I had the highest credit score he'd ever seen. I've never bothered with weird tricks to improve my score, and I've been a SAHM for 20 years. I just do the usual--pay of my bills on time, don't keep a revolving balance, etc. I don't see the point in needlessly complicating matters.

 

[supersnoop]

Adding children as authorized users will build their credit history.

That's only true of some cards. Many (most?) banks don't report on authorized users, since they aren't the ones legally responsible to pay the bill.

 

[Mackenzie Click-Mickelson]

That's only true of some cards. Many (most?) banks don't report on authorized users, since they aren't the ones legally responsible to pay the bill.

I can vouch for that part. My husband about a month and a half ago or maybe longer can't remember exactly got the SWA credit card. I am an authorized user on the account and have my own card with my name on it...but it doesn't go towards my credit period-they don't ask for SSN or other details for their authorized users.

 

[hsmamato2]

one of the free cards,definitely. no annual fee, maybe some small rewards for use/paying it off,like a Chase freedom? one of my kiddos got a no fee citi type card to start out,very low credit limit. He learned to use it after a few cycles,and to pay it off when it was due or he'd have to pay finance charges.(he learned that fast) It's not about consumer debt, it's about getting a loan if you need it, job apps even look at credit ratings! it's important to have history as an adult.

 

[georgina]

That's only true of some cards. Many (most?) banks don't report on authorized users, since they aren't the ones legally responsible to pay the bill.

Interesting. My kids all had a card on my LL Bean Visa card through Barclays. I chose that card because they all have different account numbers, so if they ever lose their card we won't have to cancel ours. It did show up on their credit history, and the longevity reflected how long WE had the card, not how long they were authorized users.

 

[Mackenzie Click-Mickelson]

Interesting. My kids all had a card on my LL Bean Visa card through Barclays. I chose that card because they all have different account numbers, so if they ever lose their card we won't have to cancel ours. It did show up on their credit history, and the longevity reflected how long WE had the card, not how long they were authorized users.

That would mean it would be a good idea for anyone who is adding someone as an authorized user should double check if it actually goes towards their credit and/or credit history. Not all cards do-as I mentioned with my SWA.

 

[manning]

Good old fashion cash. You tend not to overspend.

 

[QueenIsabella]

Good old fashion cash. You tend not to overspend.

That works fine, right up until the part where your kid is stranded in a foreign country.

And actually, it's not true that all college kids struggle with finances. My DD does fine with a debit card for 99% of her purchases. Her bank has an app that tracks them for her.

Right now, she's in a large city with a lot of theft (out of the US). She uses cash much more than her debit card, but has to be careful about how much she carries. I don't think she brings her credit card with her at all, but I want her to have one, just in case something happens--I don't want her stranded.

Now, I fully recognize that every college kid is different--DS19 doesn't have a credit card, he lives at home and commutes to college, and has no interest in studying abroad. We have to monitor his debit card use, as he struggles with impulse purchases. Even he would tell you that a credit card would be too much temptation at this time in his life (here's hoping he matures over the next few years). In his case, he would have a worse credit score WITH a credit card than without one, because he'd flush his score down the toilet.

 

[ICF]

Good old fashion cash. You tend not to overspend.

You also don't earn free rewards, establish a credit history and if lost or stolen are out of luck.......

 

[bjscheel]

I have no worries about her overspending. She puts almost 100% of her paychecks in her savings account and lives on the $17/month allowance I give her. She's very budget conscious.

We'll see if she can qualify for the Capital One card after she turns 18. I looked at their pre-qualify app on their website, but you have to be 18 to do it, so we'll check it out in a month!

 

[manning]

You also don't earn free rewards, establish a credit history and if lost or stolen are out of luck.......

Those "free rewards" are not free they are factor into the cost. Nothing is free. One way or another you pay for it.