Credit cards are a great way to shop, build credit, and cover your expenses, but can teenagers get credit cards and use these benefits? By becoming an authorised user on a parent’s account, you can. However, if you want to apply for a credit card of your own, you’ll have to wait until you’re 18.

If you’re starting a small business as a teen, you want to build credit or take out a loan for another purpose, getting a credit card can be a good idea. 

However, there are many restrictions on credit card use before the age of 18 – and even before 21 – and several alternatives to credit cards are worth considering.

So, in this article, we’ll be answering: can teenagers get credit cards, should teenagers use a credit card and what other financial alternatives are there to consider?

Can Teenagers Get Credit Cards Under 18?

Some banks allow teens to get a credit card when they register as an authorised users of their parent’s bank account. However, no one under 18 in the UK can apply for a credit card of their own.

Understanding Credit Cards

What is a credit card, and how does it work?

Credit cards let you spend and shop up to a limit set by the card provider. At the end of the month, you use the money from your bank account to pay off the balance in full to build a good credit score. However, if you can’t pay it all off, you must at least pay off the minimum amount required by the card.

While credit cards are a great way to buy things teenagers want and build credit, they should be used cautiously. If you can’t pay off what you spend each month, then expensive, high-interest debt will accumulate that you’ll struggle to pay off. This will also serve to damage your credit score.

Before Credit, There’s Debit (and Prepaid)

If you can’t get authorised on your parent’s bank account, then the answer to ‘can teenagers get credit cards?’ is no, since only adults over the age of 18 can apply for a credit card of their own. 

Even if you can get a credit card via your parent’s account, you might find that there’s another card better suited to help you start spending. Before you rush into getting a credit card, there are two major card options.

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1. Prepaid cards

A prepaid card can be loaded with money and used as an alternative to cash or a debit card to do your spending.

Unlike other types of cards, prepaid cards aren’t linked to a bank account. Instead, money is transferred onto the prepaid card to provide a balance to spend. This can be done from more than one bank account.

For example, with a teens prepaid card, teens can transfer money onto the card from their current account. Their parents can also directly transfer money onto the card to give their children a monetary birthday gift or to give them chore money.

Features and benefits of prepaid cards

Several benefits come with using a prepaid card.

• Good for budgeting: Since you can only spend your balance on your prepaid card, you can load the card with a specific amount to stop overspending. Some prepaid cards also come with an app to help you track your spending and budget and save for the things you want and need.
• Makes travelling cheaper: Prepaid travel cards offer the best exchange rates to cardholders and don’t come with foreign transaction (FX) fees, unlike other cards.
• Great for young people: Before kids and teens are ready to open a bank account of their own, prepaid cards offer a great way to spend without using cash and shop online. Some kids and teen cards also come with parental controls so parents can prevent them from being too financially reckless.
• Can’t accumulate debt: Since you can only spend your balance on your prepaid card, it’s impossible to get into debt using one.

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Choosing the right prepaid card

Not all prepaid cards are created equal. When choosing the right prepaid card with the greatest advantages for you, you should consider:

• Fees: You have to pay for some prepaid cards, so try to find a prepaid card that works for you and doesn’t come with additional charges.
• Features: Some prepaid cards have features to help you save and budget; others even have an app to help you track your spending. Choose a prepaid card that will enhance your finances the most with its features.
• Age limit: Some prepaid cards are only available to those over 18, so teens should look for a provider that offers prepaid cards for teens.

2. Debit cards

A debit card is linked to a checking account you have with your bank. When you receive or spend with your debit card, the balance in your checking account increases or depletes. 

With a debit card, you may also have access to an overdraft – a way of borrowing money and spending more than you have in your checking account – though there are accompanying charges.

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Managing finances with a debit card

Though it’s not as easy as using an app to track your spending and budget, you can still use your debit card to help you budget, especially with the advent of mobile banking.

By using your debit card to make all your purchases, you can track your monthly spending by looking at your incomings and outgoings online or on your bank’s mobile app. You can then use this to create a budget and savings plan, moving your savings into a savings account each month while leaving some funds for discretionary spending.

Teaching Financial Responsibility

As a teenager, it’s crucial to begin learning good financial habits and practise financial responsibility. After all, in just a few years, teens become adults responsible for managing their finances.

Using a card as a teen, whether a prepaid card, a debit card, or a credit card, is a great way to start practising financial responsibility.

With the ability to spend instantly at your fingertips, it’s important to practise not overspending as a teen with a card – avoiding impulse spending – and practice saving, budgeting, and tracking your spending by tracking the outgoing expenditures on your card.

It’s also important to educate yourself on financial security and the risk of fraud that comes with having a bank account and using a card. This way, you can avoid future financial losses caused by scams and hackers.

Credit Options When a Teenager Turns 18

Can teenagers get credit cards to start building credit? When they turn 18, teens can start ‘building credit’ and enhancing their credit score.

Why is credit so important? Well, your credit score decides whether you can borrow money – as a loan or mortgage, for example – and how favourable the terms of these loans are, including how expensive the loans are to repay.

So, how can a young adult build credit? There are a few things you can do.

• Register to vote: Registering online to vote can give a quick boost to your credit score.
• Pay for a mobile phone contract: Paying your phone off each month on time is a great way to show lenders you can be relied on to make payments when you should.
• Record your rent: Rent is a regular payment many people make, but that often isn’t included in a credit score because it hasn’t been reported. You can get a rent reporter to ensure your regular rent payments contribute to your credit score.
• Apply for a credit card: Spending with a credit card – and paying your balance off in full each month – is one of the best ways to build credit. However, you might find it difficult to be approved for a credit card at 18 without building your credit in other ways first.

Learn About Saving and Spending Habits with HyperJar Today

If the answer to ‘can teenagers get credit cards?’ is no for you – if you can’t get authorised on your parent’s account, then a prepaid card might be your best bet. The HyperJar prepaid card for teens is a great way for teens to begin using a card to do their spending. 

What’s more, with the HyperJar app, young people can practise saving and budgeting to help them save for the bigger purchases that matter to them, such as festival tickets, holidays with friends, or the latest tech, whilst avoiding any risk of getting into debt. They can do this with a few taps on their phone, allowing them to budget conveniently. 

They can list their goal purchases as savings jars separate from their everyday spending categories like food and clothes to allow them to consistently save while still covering their more regular expenses.

Continue reading

If you want to learn more about finances for young people, check out more from the HyperJar blog. From small business ideas for teens to advice on saving, HyperJar has a wealth of articles to help teens become more financially savvy.