In a previous post, I talked a bit about the how and why to add your kids to your credit cards as authorized users. Now it’s time for the next steps — what to do once they turn 18. Of course, every child and family is in a different situation, but here are guidelines of what you’ll want to prepare your children for when they turn 18 and start to enter the world of miles, points, credit cards and financial responsibility.
Signing Up for a Credit Card When You’re 18
The Credit Card Accountability, Responsibility and Disclosure (CARD) Act of 2009 changed a few things about how, who and when people could get credit cards. Most of the changes introduced were positive for consumers, including giving individuals enough time to pay their bills, no retroactive rate increases and making it easier to pay off debt.
Another change from the CARD Act is that 18 year olds can no longer sign up for a credit card without either proof of independent income or a co-signer (until they’re 21), eliminating the whole university campus “sign up for this card and get a free T-shirt” using your parents income situation that used to exist.
But for those of us with responsible teenagers, it does make things a little more complicated. I’ve personally told my children that I own their credit until they’re 21, and it’s one of my parental duties to teach my children about responsible use of credit as well as set them up with a great credit score by the time they’re 21. Oh, and how to use their excellent credit to score tons of free travel, of course. Thus far, they are all happy with that arrangement.
Another important reason to start signing up your kids for credit cards when they turn 18 (along with adding them to your credit cards as authorized users) is that the average age of accounts is one of the biggest factors in determining your credit score. So acquiring (and keeping!) a card when you’re young can really give a boost to your credit score as you get older.
Best Credit Cards to Get When Your Kids Turn 18
So, with all that being said, here are a few cards worth looking at for your kids as they turn 18 and start to apply for their own cards. Notice that you won’t see any Chase Sapphire Preferred Card or Chase Sapphire Reserve cards here.
In fact, most of the cards listed below aren’t going to have the huge welcome offers or perks of the premium cards that many of us with established credit histories typically sign up for. Remember, this is a marathon, not a sprint, so it’s going to take time to build up your kids’ credit to a place where they will qualify for cards with better rewards.
Because average age of accounts is so important to your overall credit score, as mentioned earlier, you’ll want to help your child pick at least one or two options that are no annual fee cards that they plan to keep long-term. Having one or two really old cards will help their credit score down the road.
Here are a few options to consider:
- Discover it® Student Cash Back — The Discover it® Student Cash Back card is (duh) targeted to students. That means depending on your income situation, you may be able to apply for it without a co-signer. Enroll every quarter to earn 5% cash back on up to $1,500 in purchases made in various categories throughout the year, and Discover will match all cash back earned for the first year of having the card. You also earn a $20 statement credit for each school year that your GPA is at least 3.0, up to the next five years.
- Journey Student Rewards from Capital One — The Journey Student Rewards card is targeted toward those with minimal credit history. It pays 1% cash back on all purchases and gives a 25% bonus if you pay your bill on time (totaling 1.25% cash back for that month).
- Bank of America Cash Rewards credit card — The Bank of America Cash Rewards card offers a $150 welcome offer for $500 spent on purchases in the first three months, but will likely require a co-signer for applicants under 21. You get 3% cash back in one category of your choice (gas, online shopping, dining, travel, home improvement/furnishings or drug stores) and 2% cash back at grocery stores and wholesale clubs with a quarterly max (up to $2,500; then 1%) on bonus categories. There’s no annual fee, and if you also are a Preferred Rewards member, you can increase your cash back bonuses.
The Bank of America Cash Rewards card has a fairly attainable welcome offer, as well as no annual fee. (Photo by Sara Wass/TPG) - Citi Rewards+ Student Card — The Citi Rewards+ Student Card gives 2,500 ThankYou points after spending $500 in the first three months of having the card. You’ll also earn 2x ThankYou points at gas stations and supermarkets up to $6,000 per year; then 1x.
- Wells Fargo Cash Back College℠ Card — The Wells Fargo Cash Back College card doesn’t have a welcome offer, but it does earn 3% cash back on gas and groceries, up to $2,500 for the first six months, with no annual fee. The information for the Wells Fargo Cash Back College Card has been collected independently by The Points Guy. The card details on this page have not been reviewed or provided by the card issuer.
Another option is a secured credit card, where you deposit money to your account before you use it. This is somewhat counterintuitive but it allows you to make payments on the card that are reported to the credit bureaus to help build your score.
Bottom Line
One final note — watch out for targeted mailers. My 18-year-old daughter is constantly getting targeted mailers from American Express for the Gold Delta SkyMiles® Credit Card from American Express. But, sadly, I have learned in the past that for most credit card issuers, the marketing departments don’t always talk to the issuing/underwriting departments. Even with these targeted mailers, it’s unlikely that my daughter with limited credit, job history and income would be approved for a card like the Delta SkyMiles card that typically requires good or excellent credit.
I hope these suggestions have helped. What are your top tips for first credit cards for 18 year olds?
Need to know more about credit? Here are some resources:
- How Old Do You Have to Be to Get a Credit Card?
- 7 Great Picks for Your First Credit Card
- How Closing a Credit Card Impacts Your FICO Score
- 10 Reasons You Can Be Denied for a Credit Card and What You Can Do About It
- 5 Lesser-Known Things that Affect Your Credit Score
- Getting Started With Points, Miles and Credit as a College Student
- 6 Starter Cards for College Students and Recent Graduates
- The Points & Miles Backpacker: Why College Students Should Have a Credit Card
- 7 Tips for Building Credit and Getting Started With Cards in College
- Best Cashback Credit Cards For Students
- How to Talk to Teens About Credit
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