Getting a Credit Card Early Can Save You Money Later On

/ BY / Credit 101

Since the implementation of the Credit Card Accountability, Responsibility, and Disclosure (CARD) Act on May 22, 2009, it has become more challenging for young adults and young college students to qualify for a student credit card, or any card at all. The CARD Act excludes anyone under the age of 21 from being issued a credit card. To read more about the CARD Act and its effect on young adults, go to Official White House Website

If you are a young adult or college student, building your credit early can help you qualify for lower interest rates when they really count—like when you finance a car or your first home. It can also help you find lower insurance rates, rent an apartment, or land your first job after graduation.

Student credit cards are just one of many types of credit cards young adults may be able to qualify for as they work to build a solid credit history.

The CARD Act and People Under 21

While the CARD Act specifically forbids the issuance of credit cards to those under the age of 21, there are a few exceptions:

  • Young adults and college students may qualify for a card if they can prove they earn an income sufficient to repay their probable debt.
  • Young adults and college students may qualify for a card if they can provide a co-signer.

Carefully research the credit cards you may qualify for before applying for your final selection. Be sure that you are getting the best rate and lowest fees available to you. Also, be sure that you meet the credit criteria; making several applications can actually lower your credit score.

Consider Piggybacking

When parents add their child as an authorized user of their credit card, they are piggybacking their child onto their account. Although they do not need to qualify for the account and are not held responsible for the debt, the piggybacked child receives the same credit rating on that account as that of their parents.

Parents who want to help their young adult children establish their credit by adding them as authorized users should set firm guidelines concerning card use and repayment. Otherwise, their own credit could suffer as a result.

Secured Cards—A Foot in the Credit Door

If you don't have a job or can't find a co-signer, don't despair. By applying for and obtaining a secured credit card, you can begin to build your credit.

A secured card is a credit card that is secured by a cash deposit that you make. For instance, if you apply for a card with a $500 limit, you will be required to deposit $500 plus fees and charges.

Be sure that the secured credit card you apply for:

  • Reports your payment history to a credit agency
  • Charges a low interest rate
  • Has affordable fees and charges

Capital One credit cards and Orchard Bank credit cards are examples of companies that offer secured cards.

Some Final Options

Store credit cards and those offered by gasoline companies are often easier to qualify for than a standard credit card. They do not carry as much weight as a credit card issued by the major credit card companies, but they do report your payment history and will help you begin to build a credit history. Set spending limits for yourself and never be late for even one payment.

By establishing a strong credit history early on, young adults can save money and build a strong financial foundation for the future.

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Please note your financial situation is unique and our tips & advice presented here may not be appropriate for your situation. recommends that you seek different advice & opinions from your own accountant or financial adviser who understands your individual circumstances before making any important decisions or implementing any financial strategy.