Young adult first credit card

[bgirldeb]

My 19 year old son wanted to build credit, then got turned down for no credit, so he opened a small secure card (secure with a cash deposit) and has it set up to autopay the entire balance.

 

[spiders]

I don’t want to sound like a jerk but if the applicant really needs to know the interest rate on a credit card then they shouldn’t be getting a credit card. Credit cards are absolutely wonderful as long as you pay off the balance. This would be a good opportunity to show her how she can spend $1000 and just pay the minimum balance to see just how much her $1000 purchase actually is.

 

[mjkacmom]

My kids have student loans, my graduates pay $1000 a month, plus they rented for several years. I know my 24 and 23 have credit cards, they have substantial savings so I doubt they carry balances (one is a CPA and the other works in finance).

 

[MamaMermaid]

Another vote for authorized user for awhile!

My parents added me when I was 16. My credit is great!

 

[QueenIsabella]

My DD18 starts college in the fall. We set her up with a debit/checking account, a savings account (well, she HAD that!), I added her as an authorized user on one of my cards, and she got a college credit card through Wells Fargo. Her personal card has a $700 limit.

She mostly uses her debit card, and has a job to pay her expenses. She'll spend the summer building up the checking balance some, then continue to work part-time during school, paying for her own incidentals. Interest rate doesn't matter--she knows to pay off the credit card balance every month.

With the "authorized user" card, she will let me know if she uses that one (it's not like I won't find out, anyway). The intent is, if she were stuck in pinch--say, traveling abroad--I want her to be able to afford a hotel room and a plane ticket home. In addition, it happens to be a Target card, which means free shipping and 5% off purchases--Target is very close to her school, so this will be handy for her. Aside from an emergency, I would expect her to pay for her own charges.

I did something similar with my older DD (now 25). We still have a joint credit card, but she only uses it for plane tickets home, or for the odd Uber. Since I want her to come home, and be safe after a night out, I don't mind paying these charges. It would be different if she was charging frivolously--she has another card for that. But, I have no idea if she's frivolous or not, since it's her problem, not mine.

 

[Moliphino]

My first credit card was through our credit union when I was in college. It had a $500 limit to start, so nothing could get out of hand.
My dad later added all of us kids as authorized users on his AmEx to use for gas and groceries, as he got cash back on that one. I still have the card, but never use it anymore.

 

[NotUrsula]

I added my DS as an authorized user just before he left for school; he was going to the other side of the country so I wanted him to have it for emergencies. We had a come-to-Jesus discussion about the use, and for any sizable non-emergency purchase he had to call me first. He followed the rules, and his credit rating was in the 750 range by the time he graduated.

Probably the best place for a student to get a first CC is the university credit union, which, if she is not using for banking, she should be. University credit unions tend to have incredibly good terms.

 

[mrodgers]

My DD is 20 and is a junior in college. She has never had a loan or a credit card. But, as her graduation into the real world is not that far away, we’ve been talking about getting her a credit card so she can establish a credit history and score.

so, I was looking at credit card options at our bank. Oh my word!!!!! The interest rates are so high. I guess I’m really out of the loop on these things. DH and I have a credit card, but it’s the same card we’ve had for years and years and we don’t carry a balance. I haven’t even looked to see what our interest rate is…perhaps I should know.

anyway, suggestions on where to look for a first credit card?

You gave hint to your issue yourself. "... for years and years and we don't carry a balance." I don't believe any young person should get a credit card if they expect not to utilize it such as this but instead will rack up the charges and carry a balance. No balance, doesn't matter what the interest rate is. Currently no credit card, thus no debt, getting a card and beginning to carry a balance is not the way to do it.

 

[SC Minnie]

DD has had an account with our credit union since she was born. When she turned 18 she got a credit card through them before going to college. It had a $500 limit. Enough for her to pay for gas or other things if she needed but not a large limit that we couldn't take care of it if or it wouldn't get out of control.

Of course over the past 9 years her credit limit has grown on that card but it was a good amount for her to start with and learn how to use a credit card smartly.

 

[AuntieMe3]

My daughter was an authorized user on one of our cards but didn't use it without asking first and repaying us for whatever she used it on. After a couple months she was offered her own rewards card through her bank and was able to get a great card with a great rate on her own, she pays off her card monthly and her credit score has really climbed. She's still on our card for emergencies but uses her own card for her purchases.

 

[Mrs. Ciz]

Both my kids got the Wells Fargo College Cards when they were seniors in college. They knew they’d need to have a credit score in order to sign apartment leases when they moved for their jobs after college graduation. The WF card was easy to get, had a low credit limit and allowed them to establish the credit they needed.

 

[MICKIMINI]

We set our son up as an authorized user in high school so he could buy gas for his car and other small items. He also had a checking account.

The minute he turned 18 he got a card through the same bank. They gave him a smallish credit limit, but it was increased in no time as he had a part time job and the deal was "pay in full each month". That was a great lesson. He and DIL are professionals making big incomes and they follow the 'pay in full each month" rule. No interest or fees ever! Good luck!

 

[MrsPete]

My DD is 20 and is a junior in college ... we’ve been talking about getting her a credit card ...

Definitely. I think she's overdue.

The interest rates are so high ... DH and I have a credit card, but it’s the same card we’ve had for years and years and we don’t carry a balance. I haven’t even looked to see what our interest rate is…perhaps I should know.

Don't you see the irony here? You don't pay attention to your own interest rate /never pay interest (nor do I). Your daughter can do the very same thing.

Be sure she understands that she should never charge more than she can pay off at the end of the month, and the interest rate won't matter. Is she generally good with money? Doesn't overspend whatever she has right now? Then she will be ready to manage a credit card. Just spell it out to her so she clearly understands it's not "free money". Be sure she understands that keeping a credit card "current" is easy, if you do it every month -- but if you ever "fall behind", it can become a big problem.

Off-shoot of this thought: choose a card with no annual fee.

My credit union offers pretty decent rates on their credit cards. Maybe try a local credit union and see what they offer?

Credit union beats bank every time.

My college-aged daughters both have Discover cards. They have them set to auto pay their entire balances every month. So far, so good!

Yes, Discover is our whole family's "card of choice". Their rewards are better than most other cards, and they allow you to get cash back at the grocery store, etc.

However, Discover is harder to get than other cards. My youngest was turned down initially, though she had a part-time job ... she applied again at the end of the summer when she'd worked full time, and she was accepted. They are likely to give a young person a lower credit limit -- that's not a negative. Let her have a $500 limit while she's in college; as she pays her monthly bill and proves herself, they'll "up" her limit.''

Also, Discover isn't accepted everywhere. For that reason, my husband and I also keep a VISA -- but we reach for the Discover first every time.

I think credit card use stole my generation's wealth

Respectfully, while many people are in trouble because of credit card debt, the cards themselves do not have the power to steal anything. They are merely a tool.

 

[aprilgail]

That conversation probably should have happened (and maybe did) when they were a teen but I agree that it's not an issue when you pay it off each month. At the same time if someone runs into an emergency and can't pay it it's good to weigh the pros and cons of the consequences to carrying over a balance as not all cards are the same on that.

I agree- by 15 my daughter had her own chase checking account with her own visa debit card and would be writing checks for her own needs at school yearbook/ pics/ clubs etc. At 17 she was in college and still used the visa debit card since she was not old enough for a credit card of her own. At 18 she applied for discover and capital 1 and got both of those I have her use the capital 1 card for things I would pay for and I pay that monthly so she has some credit history. When she was 19 she got a Jet Blue rewards credit card and that is the only one she uses, she charges everything to that each month and pays it in full before the bill even comes- her credit score is very high now and she has over 100,000 Jet Blue points so she can start traveling again soon LOL!

 

[cobright]

My DD is 20 and is a junior in college. She has never had a loan or a credit card. But, as her graduation into the real world is not that far away, we’ve been talking about getting her a credit card so she can establish a credit history and score.
...
anyway, suggestions on where to look for a first credit card?

Most CCs will allow you to add an authorized user or 'family member' account, complete with spending controls. And most CC companies will report all payment activity to all of the authorized user's credit reporting agency records. In this way, even if your daughter never or rarely uses the card, the usage you and husband put on it will count in her benefit.

 

[scrapquitler]

My DD is 20 and is a junior in college. She has never had a loan or a credit card. But, as her graduation into the real world is not that far away, we’ve been talking about getting her a credit card so she can establish a credit history and score.

so, I was looking at credit card options at our bank. Oh my word!!!!! The interest rates are so high. I guess I’m really out of the loop on these things. DH and I have a credit card, but it’s the same card we’ve had for years and years and we don’t carry a balance. I haven’t even looked to see what our interest rate is…perhaps I should know.

anyway, suggestions on where to look for a first credit card?

Interest rate is irrelevant if she pays it off every month, which should be the goal for building her credit score and establishing good lifelong habits.

My DD (now 24) applied for a Discover Card while she was in college, it was specifically aimed at College students as a first card. Credit limit was something like $500. We instructed her to buy something on it every month, and pay it off the day the bill came. She did exactly that, and before very long, her credit score started climbing and her limit increased. After about two years, she applied for and got another card because a couple of the places she spends money didn't accept Discover

 

[Bianca and Bernard]

So, if you add her to your already established credit card as an authorized user, it will boost her credit big time, it will show her as having had that card since you opened it. I would do that for maybe 6 months, and then have her apply for one on her own. My DD just graduated high school and I added her as an AU on one of mine for that reason, and I want her to have a card in case of emergencies when she's at college.

We have DS17 as an authorized user on two of our credit cards (Discover and Visa). He's also had a bank account since he was 15.

We weren't able to do it with the girls, as DD#1 didn't live with us, and when DD#2 was a teen, we ended up filing bankruptcy, so didn't have a chance with her. Trying to do it right with DS.

 

[PollyannaMom]

I'm confused by some of the advice here. My DS was an authorized user on one of DH's cards for quite a while, and it did not count toward getting his own when we tried recently. (And DH and I both have excellent scores.) I'm not sure if that has to do with where we live or where he was applying, but they advised him to pay his car loan (first ever, so he has no history) for several months before reapplying.

 

[AndreaDM]

I'm confused by some of the advice here. My DS was an authorized user on one of DH's cards for quite a while, and it did not count toward getting his own when we tried recently. (And DH and I both have excellent scores.) I'm not sure if that has to do with where we live or where he was applying, but they advised him to pay his car loan (first ever, so he has no history) for several months before reapplying.

I'm not sure what you mean by it didn't count, and I don't know if being an AU will always mean you're approved for a CC right away. However, the child's credit history should be established on the date that CC was opened. If you opened a CC in 2010, added him in 2015 as an AU, that CC should still show up on his credit report as having been established in 2010. Was it a card that was used frequently? If it was a card that wasn't used much, there wouldn't have been that much to report to the credit bureaus in terms of on-time payments, etc.

 

[tinkerhon]

I got DD (now 15) a Chase Debit/Credit card a few years ago--- called a HS account, and its linked to my Chase acct- Best thing Ive ever done-

DS10 has a "GoHenry" card-- (actually his says "GoDylan" ). -- Its excellent !!!