If you ever want to rent an apartment, buy a house or car, acquire auto insurance, or even buy a cell phone, you’ll need to have a solid credit score. Although the majority of these significant life events may seem far off at the age of 16, it’s never too early to begin developing healthy credit habits.
Because credit cards are generally simple to get approved for, using one is one of the simplest ways to begin establishing credit. Even at the age of 16, there are ways to obtain credit card authorization with the assistance of a parent or another responsible adult.
Can Someone Age 16 Apply for a Credit Card?
You won’t be able to obtain your own credit card until you are 18, as most states require that you be 18 to enter into a credit card arrangement.
There are some restrictions when applying for a credit card on your own after turning 18 though. Your income must be sufficient for monthly credit card payments, according to the credit card providers. If you don’t have a job or make enough money, you can still receive a credit card, but you’ll need a co-applicant who is at least 21 years old.
You can begin using credit cards before becoming 18 years old. If a parent, sibling, or friend who is at least 18 years old is prepared to assist, there are some opportunities for obtaining a credit card at that age.
How Authenticated Users Operate
Depending on the conditions of the credit card provider, you can typically be an authorized user on someone else’s credit card, such as a parent, by the time you are 15 or 16. You are not legally obligated to make payments even though you are an authorized user who can use the credit card to make purchases. You will be given a credit card with your name on it, but the account owner will also split the credit limit.
What Licensed Users May Do
While some cardholder benefits will be shared by you as an authorized user, some credit card services won’t be accessible.
You will be able to do things like make purchases and payments, check your account’s balance, report a lost or stolen credit card, file billing disputes, and unsubscribe from the account, for instance. You won’t be able to ask for higher credit limits, more authorized users, a lower APR, or account closure.
How to Add People
Any grownup who has the legal capacity to do so can add you to a new account or add another person as an authorized user. It might be a friend, family member, or another adult who gives them the go-ahead to add you to their account. By entering into their online account, using the mobile app, or by calling the credit card provider, the account owner can add you to the credit card. To complete the request, they must provide the credit card company with your name, birthdate, and Social Security number.
Benefits of Credit Score
You can develop healthy credit card usage habits by adding yourself as an authorized user, but it isn’t the only advantage. Additionally, you can establish a new credit history. If the account history is good, it can help establish and improve your credit by being added to and reported on a monthly basis.
Consequences of Spending Too Much
It’s crucial not to overcharge the card you’re using. Your credit score is partially based on how much credit you have available, and having a bigger balance can lower your score.
Maintaining a low amount with manageable monthly payments is essential for maintaining a sound financial status. If you charge too much, it could be difficult for you to make your payments on time, and paying late will result in fees. Payments that are over 30 days overdue are typically reflected on your credit report and could lower your credit score.
Options for Additional Payments for 16-Year-Olds
For 16-year-olds who might not have an authorized user, there are various payment methods available than credit cards.
With a prepaid card, you can spend money that has been pre-loaded onto the card. Without a credit check or a necessity for a monthly payment, your purchases are deducted from the available balance on your card. Numerous retail establishments, including CVS, Walgreens, and Walmart, provide card purchases and reloads.
Fees are the main thing to watch out for because they might gradually reduce your balance. Monthly fees, transaction costs, reload fees, and paper statement fees are typical fees associated with prepaid cards.
Similar to a prepaid card, a debit card is connected to a checking account. Your checking account balance is debited for purchases made with a debit card. Purchases that go beyond your available balance could result in an overdraft fee if you don’t opt out. When you turn 16, you must open an account with your parent.
Using a linked account—a bank account, debit card, or credit card—payment applications let you send (and receive) money to friends and some companies. For programs like Cash App, PayPal, and Venmo, you must be at least 18 years old, or the age of majority in your state.345 If you and your parent have a joint bank account, your parent could be prepared to open an account for you, but the payment app account won’t be in your name.
Families with iPhones, iPads, or Apple Watches can share a payment app more easily by using Apple Pay. You can use the app to send money or make purchases at participating stores if a parent adds you to Family Sharing.