18 year old first credit card recommendations

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rai
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18 year old first credit card recommendations

Post by rai » Sun Jul 16, 2017 3:50 pm

My daughter is in college has a summer job $1000/month or so.

I wanted her to get a credit card to build up a credit history.

Best recommendation?

Of course no annual fees and if possible good reward points or sign up bonus.

Also is it best to use the card every month like getting gas etc to build up a credit history? And **Will pay off balance every month naturally.
Last edited by rai on Sun Jul 16, 2017 5:09 pm, edited 1 time in total.
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Mike Scott
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Re: 18 year old first credit card recommendations

Post by Mike Scott » Sun Jul 16, 2017 4:26 pm

My kids have all started with Discover cards as students. After a year or so using it for gas etc they have been able to get new cards with better rewards.

mhalley
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Re: 18 year old first credit card recommendations

Post by mhalley » Sun Jul 16, 2017 4:31 pm

She might find it difficult being in college as the made it harder to get student cc until age 21 to get the college credit card. You could make her an authorized user on one of your cards. Her best bet might be a local credit union with a fresh start program. There is no need to make monthly purchases to build credit rating, as long as the cc is in good standing it contributes to the fico score.

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Hawaiishrimp
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Re: 18 year old first credit card recommendations

Post by Hawaiishrimp » Sun Jul 16, 2017 4:32 pm

rai wrote:My daughter is in college has a summer job $1000/month or so.

I wanted her to get a credit card to build up a credit history.

Best recommendation?

Of course no annual fees and if possible good reward points or sign up bonus.

Also is it best to use the card every month like getting gas etc to build up a credit history? Will pay off balance every month naturally.
Discover Card follow by American Express. AmEx has really GREAT customer service especially for long time members. I hate Chase or Citygroup, so they will never get my business again.
I save and invest my money, so money can make money for me, so I don't have to make money eventually.

indexonlyplease
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Re: 18 year old first credit card recommendations

Post by indexonlyplease » Sun Jul 16, 2017 4:38 pm

The only card she should have is a debit card attached to her savings or checking account. First you must learn to manage money or the lack of discipline will get you in debt (like many other americans). Why does a young adult need credit anyway. This is something the credit card companies push. The more you are in debt the better for them.

When my son graduated high school and got a part time job while going to college full time, he opened a debit card to his checking account. He is now 21 and still only has the debit card. So, he was only able to spend what is in the bank.

This is the best way to help your daughter. A credit card will just get her in trouble and you.

Don't be fooled by the mistakes other have made.

rai
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Re: 18 year old first credit card recommendations

Post by rai » Sun Jul 16, 2017 5:05 pm

indexonlyplease wrote:Why does a young adult need credit anyway. This is something the credit card companies push. The more you are in debt the better for them.
People need a credit card to build a credit rating.

She will not going into debt.

Did you see on the first post where I said will pay off each month?
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mortfree
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Re: 18 year old first credit card recommendations

Post by mortfree » Sun Jul 16, 2017 5:19 pm

When I was in college in the late 90's I had a credit card that I used to buy books.

I think the credit limit was $500 to start.

I'd try to find one with a small amount available.

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prudent
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Re: 18 year old first credit card recommendations

Post by prudent » Sun Jul 16, 2017 5:57 pm

With no history yet, and a very small income, she's probably won't get approved for the best cards (rewards/sign up bonuses). I would start by having her apply for a credit card where she banks. It won't be the top of the line, but chances are she can get a no-annual-fee card that costs nothing when paid in full every month. The important thing is to get an approval and get some credit history started. She may not have any credit history, but she will have banking history with her own bank, and if her account has been handled well (no overdrafts, no bounced checks), she'll probably get approved.

The worst thing to do is to apply for a number of great rewards cards with bonuses that she gets declined for, and have those inquiries on her record.

123
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Re: 18 year old first credit card recommendations

Post by 123 » Sun Jul 16, 2017 6:00 pm

Four years ago one son started with a credit card in college from the same bank that he had a savings and checking accounts with that started in high school. Initially got a credit limit of something like $700 and now it's up to something like $2000. Most months the amounts that have been charged have been under $100, things like his monthly cell phone bill which is on auto-pay. Some other small expenses once in awhile. While in college we paid the bill as soon as it arrived.

The banks want to build customer loyalty for students so if the student has an existing savings or checking account that may be the best place to apply for their initial credit card.
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indexonlyplease
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Re: 18 year old first credit card recommendations

Post by indexonlyplease » Sun Jul 16, 2017 6:02 pm

rai wrote:
indexonlyplease wrote:Why does a young adult need credit anyway. This is something the credit card companies push. The more you are in debt the better for them.
People need a credit card to build a credit rating.

She will not going into debt.

Did you see on the first post where I said will pay off each month?
That is what every person that has a credit card states when they first open the card.
The average credit card debt per person has increased over the past decade. In 2009, the average debt hovered around $4,100 per person

Everyone starts out with good intentions until the credit card increases the credit limit. Yeh more to spend and go into debt. Then just claim bankruptcy.

Again, why would a 18 yr old need to establish credit?? What is the 18 yr old college student going to buy that they can't pay for with cash or debit card??

Maybe when they graduate college get the first full time job and save for large purchase then worry about credit.

If not get back with me in 5 years and let me know what her credit card balance debt is.

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whodidntante
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Re: 18 year old first credit card recommendations

Post by whodidntante » Sun Jul 16, 2017 6:14 pm

I agree with the OP that establishing a credit history is useful. I would also add that learning to use credit responsibly is useful in life. Credit cards are not to be avoided, but should be used rationally.

On her own, it may be a struggle and she will not be eligible for the most attractive offers. I would think her options would be cards that specifically target students or people with no/bad credit. Worst case, she can get a secured card or be added as an authorized user. If you are a member of a credit union, you could see what they would offer her.

richardglm
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Re: 18 year old first credit card recommendations

Post by richardglm » Mon Jul 17, 2017 4:18 am

This notion that all 18 year olds are incapable of managing a credit card is absolutely ridiculous. There are plenty of 18 year olds are perfectly mature enough. When I was in college I managed all my own finances including a credit card. I was told once, "don't spend more than you have in your bank account, otherwise you'll pay interest" and I listened to that.

Here are some other things many 18 year olds somehow manage do in college:
  • Drive motor vehicles (extraordinarily dangerous for young people)
  • Live in the same room with a total stranger, who may be nice or may be horrible
  • Be surrounded by copious amounts of dangerous alcohol
  • Not flunk out of a $50k/year school
  • Engage in "activities" which require "protection"
along with many, many other risky activities available. It is true that some, perhaps many, people get sucked into the debt trap. But honestly, if someone is not mature enough to handle a simple credit card, I would think they are not mature enough to handle the much higher stakes things on my list which can end in much, much worse outcomes.

Since using a credit card has large material advantages over using a debit card, such as cash back, fraud protections, avoidance of balance holds, and purchase protections like extended warranty, a sufficiently mature adult should be using credit cards in most cases.

The CARD Act has now made it more difficult for under-21s to get credit cards than it was when I was in college, as they cannot count parents' income anymore on a CC application without a parent cosigning. However, if an under-21 person has their own personal income they can apply using that ($3k-4k summer job income should be more than sufficient for a $500-$1k credit limit) Otherwise, cosigning or adding the under-21 as an authorized user is an excellent approach. In fact, if credit building is the goal, you may want to add her as an authorized user on several cards (instead of or in addition to opening her own line of credit)

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Re: 18 year old first credit card recommendations

Post by miamivice » Mon Jul 17, 2017 4:51 am

rai wrote:
indexonlyplease wrote:Why does a young adult need credit anyway. This is something the credit card companies push. The more you are in debt the better for them.
People need a credit card to build a credit rating.

She will not going into debt.

Did you see on the first post where I said will pay off each month?
You don't need to start building credit at 18. I wouldn't push her into credit card, let her figure out when she wants one and when is responsible enough to use one.

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LiveSimple
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Re: 18 year old first credit card recommendations

Post by LiveSimple » Mon Jul 17, 2017 4:54 am

Capitalone and CitiBank credit cards, worked well for us.
Only those two banks issued credit card, with the limited income / credit history.

After a year or so, moved to chase credit card, as well.

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Re: 18 year old first credit card recommendations

Post by MotoTrojan » Mon Jul 17, 2017 5:12 am

123 wrote:Four years ago one son started with a credit card in college from the same bank that he had a savings and checking accounts with that started in high school. Initially got a credit limit of something like $700 and now it's up to something like $2000. Most months the amounts that have been charged have been under $100, things like his monthly cell phone bill which is on auto-pay. Some other small expenses once in awhile. While in college we paid the bill as soon as it arrived.

The banks want to build customer loyalty for students so if the student has an existing savings or checking account that may be the best place to apply for their initial credit card.
This route worked well for me. Did my banking with Wells Fargo and got a no-fee, 1% cash-back card from them while in college. I believe they opened me up with a $1000 limit. At 25 years old, and without any requests, that limit is now $6300. I never use the card as I have better benefits now (2% back), but still have the account open.

indexonlyplease
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Re: 18 year old first credit card recommendations

Post by indexonlyplease » Mon Jul 17, 2017 6:11 am

richardglm wrote:This notion that all 18 year olds are incapable of managing a credit card is absolutely ridiculous. There are plenty of 18 year olds are perfectly mature enough. When I was in college I managed all my own finances including a credit card. I was told once, "don't spend more than you have in your bank account, otherwise you'll pay interest" and I listened to that.

Here are some other things many 18 year olds somehow manage do in college:
  • Drive motor vehicles (extraordinarily dangerous for young people)
  • Live in the same room with a total stranger, who may be nice or may be horrible
  • Be surrounded by copious amounts of dangerous alcohol
  • Not flunk out of a $50k/year school
  • Engage in "activities" which require "protection"
along with many, many other risky activities available. It is true that some, perhaps many, people get sucked into the debt trap. But honestly, if someone is not mature enough to handle a simple credit card, I would think they are not mature enough to handle the much higher stakes things on my list which can end in much, much worse outcomes.

Since using a credit card has large material advantages over using a debit card, such as cash back, fraud protections, avoidance of balance holds, and purchase protections like extended warranty, a sufficiently mature adult should be using credit cards in most cases.

The CARD Act has now made it more difficult for under-21s to get credit cards than it was when I was in college, as they cannot count parents' income anymore on a CC application without a parent cosigning. However, if an under-21 person has their own personal income they can apply using that ($3k-4k summer job income should be more than sufficient for a $500-$1k credit limit) Otherwise, cosigning or adding the under-21 as an authorized user is an excellent approach. In fact, if credit building is the goal, you may want to add her as an authorized user on several cards (instead of or in addition to opening her own line of credit)
Maybe it worked for you. But if that is true for everyone than why are so many young people in debt. Yes, I did the same went to college worked part time and only spent what I earned. Left college with no student loans, no credit card debt. Was easy no because full time college and working is not easy but can be done. Or the other answer is leaving college and being in debt for the next 30 years paying off credit cards and student loans. You only have to look what the average young person owes to credit card, student loans, bank loans ect. Wonder why people complain they can't get ahead.

Also, I had no prepaid college and no help from parents. So yes it can be done.

I have to add this. The only reasons someone would need credit that young would be to purchase a car. So now not working full time or just starting full time you have a car payment. Most would agree a car payment is a sure way for the average person to stay broke.

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Re: 18 year old first credit card recommendations

Post by Gufomel » Mon Jul 17, 2017 6:35 am

I don't have any specific recommendations on credit cards, but just wanted to provide the other side to "why would an 18 year old need a credit card?".

I've always been very responsible with money and it would have made no difference to me as far as my spending habits whether I had a credit card or debit card at 18 . When I went off to college, my parents got me set up with a local credit union checking account with a debit card. Never had a credit card. My wife and I finally decided to open a credit card a few months after we got married (I was 25). I'm now almost 29. With a credit card now open for a little over 3 years, and a mortgage that we just took out a few months ago, my average years of credit is only just about to hit 2 years and I'm almost 30 years old. We have no debt (except the mortgage now) and all our other credit factors are strong, so ultimately we didn't have an issue getting a good rate on the mortgage; however, I still wish my parents had me open a credit card at 18 and just use it like a debit card.

On the other hand, although I *say* that I would have used a credit card like a debit card, maybe I wouldn't have. Maybe it would have changed my spending habits and I would have been doomed to credit card debt for the rest of my life. I seriously doubt it, but I guess I can't say it wouldn't have been a possibility.

Only you know your kid (and even then you might be wrong). The downside risk is definitely worse with getting the kid a credit card as opposed to not getting one. But a responsible kid can handle a credit card and 10 years down the road they'll be glad they got one early in life. As an aside, personally I think it's ridiculous that an 18 year should need a credit card, but it's a fact of our culture/economy that it's needed for building credit and securing lowest cost financing.

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Re: 18 year old first credit card recommendations

Post by Jags4186 » Mon Jul 17, 2017 7:02 am

I would definitely go with Discover It card for students or if for some reason she can't get that the secured Discover It card. They don't charge any fees. After a year she can get a Visa or Mastercard from a prime bank with no fees.

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Re: 18 year old first credit card recommendations

Post by MikeG62 » Mon Jul 17, 2017 7:45 am

123 wrote:Four years ago one son started with a credit card in college from the same bank that he had a savings and checking accounts with that started in high school. Initially got a credit limit of something like $700 and now it's up to something like $2000. Most months the amounts that have been charged have been under $100, things like his monthly cell phone bill which is on auto-pay. Some other small expenses once in awhile. While in college we paid the bill as soon as it arrived.

The banks want to build customer loyalty for students so if the student has an existing savings or checking account that may be the best place to apply for their initial credit card.
+1. Exactly what both of my daughters did.

Since spending is likely to be quite modest, no need worry about getting the best reward card. Just get the credit history built up. Once they graduate from college and start working, they can get more sophisticated/fancy with their CC choices.

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Re: 18 year old first credit card recommendations

Post by rec7 » Mon Jul 17, 2017 8:20 am

mhalley wrote:She might find it difficult being in college as the made it harder to get student cc until age 21 to get the college credit card. You could make her an authorized user on one of your cards. Her best bet might be a local credit union with a fresh start program. There is no need to make monthly purchases to build credit rating, as long as the cc is in good standing it contributes to the fico score.
I wonder if an 18 year old was not a college student could they get a credit card on their own?
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Re: 18 year old first credit card recommendations

Post by flamesabers » Mon Jul 17, 2017 10:13 am

OP,

I would recommend your daughter trying to get a credit card with her local bank if possible. It would probably be best she try to get a Mastercard or Visa since those brands are more widely accepted then Discover and American Express. At her age and with a minimal amount of credit history, it's doubtful she'll be eligible for any credit cards that offers a signing bonus and/or cashback.

Does she have any student loans in her name? If so, those will help to build up her credit history even if she can't get a credit card right now.

If she can get a credit card, I suggest she makes a small monthly purchase or two. I'm not sure how quick banks are to close newly opened credit cards that don't have any activity, but regardless, it would be good to get her into the habit of keeping track of her charges and paying them off every month.

If she's unable to get a credit card, I recommend adding her as an authorized user for the time being. She can still learn how to responsibly handle credit cards this way. Once she starts working full-time she can try applying again for a credit card.

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Re: 18 year old first credit card recommendations

Post by Brewman » Mon Jul 17, 2017 1:18 pm

I would definitely go with Discover It card for students or if for some reason she can't get that the secured Discover It card. They don't charge any fees. After a year she can get a Visa or Mastercard from a prime bank with no fees.
We used discover also for our two daughters the summer before they went to college. Initially we had trouble getting the first daughter one from other card companies but after talking to the Discover Rep she suggested adding her as an authorized user then apply for her own after about 6 months of usage. We elected to open second Discover card under my name with a limit of $500 and add her as an authorized user rather than add her to my main card. After about 6 months she actually got an offer from Discover in the mail so we promptly sent in the app and she was approved. Similar for the second daughter only I was able to drop daughter number one off the original $500 card that I kept and add daughter number two - then I watched for a special at discover and they had one where you got a signing bonus and they double your cash back at the end of the year :sharebeer - signed her up and she was approved. Both are very responsible and have never missed paying off in full every month.

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Re: 18 year old first credit card recommendations

Post by jdbee » Mon Jul 17, 2017 2:56 pm

I applaud your attempt to start building good credit for your adult child. Credit is like fire (or a good tool); used properly it provides many benefits and gets the job done. Credit/debt used improperly or without discipline can lead to a painful learning experience. But used properly there is no reason to fear fire. Credit checks/scores are used in most things, including job applications and apartment rentals, so "good credit" is a "cost of doing business" in life that affects everyone whether they like it or not.

Suggestions: If your child can prove w-2 income there's a chance they may get a low-limit unsecured card (Discover It card?). Discover is not accepted as widely as Visa/MC but they have an attractive student program that could lead to a better card down the road. If no verifiable income/no credit history, you will likely end up with a secured or collateralized credit card eg. put up $500 deposit and you get a $500 credit limit. I used this method previously as I did not want to co-sign, kid has skin in the game, and they can't exceed the credit limit. Try your existing bank, your credit union, or search online. Capital One has a secured MC that looks attractive but says it has a low $200 credit limit; I called today and they said they could go up to $1,000 and they would walk kid/me through it as anyone under 21 will have to apply online (limit over-ride needed).

I would not co-sign when there are better and less risky (to parent) options available. The financial training wheels for your kid are coming off... good luck!

SheReadsHere719
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Re: 18 year old first credit card recommendations

Post by SheReadsHere719 » Mon Jul 17, 2017 4:18 pm

If you or your daughter has access to USAA, they have a great intro credit card. Starts with a $500 limit, and the credit is established in their name, plus USAA has excellent customer service should she run into any issues or lose her card. Worked well for me!

rai
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Re: 18 year old first credit card recommendations

Post by rai » Tue Jul 18, 2017 4:52 pm

Both kids have credit cards (in our names), I mean we are co owners on the CC (one is a minor). But I think it might be best for the adult to get something in her own name will try either Discover Student or at the bank she currently has checking and savings account with debit card also.
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rob65
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Re: 18 year old first credit card recommendations

Post by rob65 » Tue Jul 18, 2017 7:18 pm

Both of my kids had Discover cards with $500 or $750 credit limits.

I think this is a good idea in terms of building and learning to use credit.

I also felt better knowing they had a card that could be used in emergencies. (Did have to discuss with dear daughter that not liking the dining hall options at dinner was not an actual life or death emergency. :) )

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Re: 18 year old first credit card recommendations

Post by dratkinson » Tue Jul 18, 2017 7:46 pm

Mike Scott wrote:My kids have all started with Discover cards as students. After a year or so using it for gas etc they have been able to get new cards with better rewards.
+1.

I applied for my first CC in my late teens in the late '60s. It was a Discover CC and more than once saved me from being stranded.

Recall receiving other CC offers after that. I chose the ones with the best rewards, used the Discover CC less but kept it as a backup.

A CC is not a problem if the child/student follows the golden rule of CC use. Always pay in full each month, then a CC is always a convenience, never a problem.



Might want to get the student a copy of The Only Investment Guide You'll Ever Need by Andrew Tobias. Wish I'd learned its advice sooner.

And if the bank of Mom&Pop could offset the annual contributions, I'd suggest a Roth IRA as the target of some of the summer's earned income.
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gasdoc
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Re: 18 year old first credit card recommendations

Post by gasdoc » Tue Jul 18, 2017 7:46 pm

My 18 year old daughter is an authorized user on my credit card, and her card stays in my office, in my desk. I have given it to her for special situations. Otherwise, she is perfectly happy with a checking account, a savings account, a debit card (and a new Roth IRA at Vanguard). She agrees to do without a credit card, and I agree to continue to support her in college. By allowing her to be an authorized user on my card, she is building a credit history for when she graduates from college, med school, or whatever. It works for us!

gasdoc

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Re: 18 year old first credit card recommendations

Post by marcopolo » Tue Jul 18, 2017 10:09 pm

gasdoc wrote:My 18 year old daughter is an authorized user on my credit card, and her card stays in my office, in my desk. I have given it to her for special situations. Otherwise, she is perfectly happy with a checking account, a savings account, a debit card (and a new Roth IRA at Vanguard). She agrees to do without a credit card, and I agree to continue to support her in college. By allowing her to be an authorized user on my card, she is building a credit history for when she graduates from college, med school, or whatever. It works for us!

gasdoc
I didn't think authorized users build a credit history. I believe you have to be a joint account holder to build a credit history.

I added my son as an authorized user to our card when he got his driver's license (age 16) for him to have in emergencies. When he turned 18, we got a separate card where he is a joint account holders.

When we checked his credit history on one of the credit reporting firms (Experian?) recently, it showed the card from the joint account with clean payment history, but no entries for the 2 years he was an authorized user on our card.

He uses the (cash back) card for most of his expenses, and is responsible for paying the full balance every month, using money we give him as spending money while he is in college. The account is with Fidelity (2% rewards), same as our main cards, so i can keep an eye on his payments (make sure he does not miss one) when i do my own payments. I am hoping this teaches him good habits before he strikes out on his own. Credit card training wheels...
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Doom&Gloom
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Re: 18 year old first credit card recommendations

Post by Doom&Gloom » Tue Jul 18, 2017 11:04 pm

My recommendation:

Step 1) AU on parent's AMEX card. After 6 months (or more) without issue, proceed to:

Step 2) Discover It on their own.

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Re: 18 year old first credit card recommendations

Post by takeshi » Wed Jul 19, 2017 7:28 am

rai wrote:Best recommendation?

Of course no annual fees and if possible good reward points or sign up bonus.
Probably doesn't matter much for someone just starting out. You don't get something for nothing so cards with significant bonuses are likely to come with AF's. If she doesn't want an AF then expect a more basic card which is just fine for one starting to build credit history.

I'd suggest Discover as they seem to be ok with thin but clean credit profiles. Credit unions are also a general recommendation for those just starting to build credit. Making her an AU on your cards as suggested above can help her with starting out. You don't have to give her the card if you make her an AU.

"Good rewards points" isn't really relevant in this case IMO. "Good rewards points" are going to depend on one's spend and how one can leverage a given rewards points system. Most rewards points systems tend to benefit one the most when running massive amounts of spend through them. It doesn't sounds like she's going to do this. From a rewards perspective I'd recommend looking for a no AF cash back card. There are plenty of 2%, 1.5%, etc cash back cards with no AF that could be a good long term card to have and would be better suited to her situation than a rewards points card.
rai wrote:Also is it best to use the card every month like getting gas etc to build up a credit history? And **Will pay off balance every month naturally.
Doesn't really matter from the credit history perspective. Payment History is basically good (i.e. paid on time) or bad (not paid on time). However, usage may be necessary to avoid closure due to inactivity and regular usage & paying in full can help her to build good credit habits which would also be beneficial.
indexonlyplease wrote:Why does a young adult need credit anyway.
Financial responsibility is certainly a must but for a credit profile, age is a factor and starting off early can certainly help even if one doesn't immediately need credit. That said, there are those who don't use credit. It's up to each to determine the specific path to follow.
indexonlyplease wrote:Don't be fooled by the mistakes other have made.
Don't assume that what works best for you works best for everyone. It is certainly possible to build credit from a young age without going into debt. One doesn't need to go into debt to build credit with credit cards. The OP should understand and consider the risks but the OP understands the OP's daughter best in order to make such a decision.
indexonlyplease wrote:That is what every person that has a credit card states when they first open the card.
The average credit card debt per person has increased over the past decade. In 2009, the average debt hovered around $4,100 per person
That's not how averages work. Do not conflate "average" with "everyone". Do not assume that you know the OP and the OP's daughter and can predict how they will handle things based on averages. Yes, there is the potential for falling into a debt spiral but it is not a given.
marcopolo wrote:I didn't think authorized users build a credit history. I believe you have to be a joint account holder to build a credit history.
If a card reports for an AU then the history is reported and is considered. However, accounts where one is an AU don't quite factor in the same as accounts where one is the original cardholder (or joint cardholder).
marcopolo wrote:When we checked his credit history on one of the credit reporting firms (Experian?) recently, it showed the card from the joint account with clean payment history, but no entries for the 2 years he was an authorized user on our card.
Some cards do not report for AU's.
Last edited by takeshi on Wed Jul 19, 2017 7:55 am, edited 4 times in total.

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Re: 18 year old first credit card recommendations

Post by niners9088 » Wed Jul 19, 2017 7:43 am

I think it's an excellent idea to open a card early to establish good credit history. I had my first roughly around the same age and allowed me to refinance my student loans at a great rate, eventually get a low car loan shortly after graduation, and get approved for cash back cards.

I would suggest getting a low limit and I'd suggest opening it in her name but putting you as an authorized user so you can view the statements.

Any credit card to start with is a good idea. I had a Capital One but I've heard good things about Discovery but sometimes they aren't accepted at as many locations as a MC or Visa.

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Re: 18 year old first credit card recommendations

Post by retiringwhen » Wed Jul 19, 2017 8:09 am

jdbee wrote: I would not co-sign when there are better and less risky (to parent) options available. The financial training wheels for your kid are coming off... good luck!
I have three children (all adults now.) I learned the hard way to not co-sign for a credit card. I did that with one son at my local credit union and voila he got into a lot of trouble with that card (among other things). I found out that being a co-signer is about the worst possible fiscal position I could be in. I basically had to bribe my son by paying off the debt and forced him to physically go to the credit union to cancel the card (The co-signer has no authority to do that.)

With my other two children, we have followed the process of giving them each authorized user accounts under big name (Chase) bank cards I used for my own business travel expenses. I did this when they were still minors. I had them use them only for expenses that I authorized (school books, auto repairs, [pickup stuff for me at the Pharmacy, etc.) They learned that mechanics of credit card usage with training wheels.

Once adults, they are able to apply for Discover, etc. and get that initial card for $200 for $400 credit line, but they already understood the mechanics with having the mystique of free money burst. So far that has gone well. My second child got the Discover card two years into college (he had a part time job) with a $200 credit limit, 4 years later, Discover just keeps adding to his credit limit and I think it is over $2,000. It has worked well.

BTW, I have had a Discover card in my name for nearly 30 years now. I can't remember that last time I tried to use it and the merchant did not honor it.

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Re: 18 year old first credit card recommendations

Post by indexonlyplease » Wed Jul 19, 2017 9:54 am

takeshi wrote:
rai wrote:Best recommendation?

Of course no annual fees and if possible good reward points or sign up bonus.
Probably doesn't matter much for someone just starting out. You don't get something for nothing so cards with significant bonuses are likely to come with AF's. If she doesn't want an AF then expect a more basic card which is just fine for one starting to build credit history.

I'd suggest Discover as they seem to be ok with thin but clean credit profiles. Credit unions are also a general recommendation for those just starting to build credit. Making her an AU on your cards as suggested above can help her with starting out. You don't have to give her the card if you make her an AU.

"Good rewards points" isn't really relevant in this case IMO. "Good rewards points" are going to depend on one's spend and how one can leverage a given rewards points system. Most rewards points systems tend to benefit one the most when running massive amounts of spend through them. It doesn't sounds like she's going to do this. From a rewards perspective I'd recommend looking for a no AF cash back card. There are plenty of 2%, 1.5%, etc cash back cards with no AF that could be a good long term card to have and would be better suited to her situation than a rewards points card.
rai wrote:Also is it best to use the card every month like getting gas etc to build up a credit history? And **Will pay off balance every month naturally.
Doesn't really matter from the credit history perspective. Payment History is basically good (i.e. paid on time) or bad (not paid on time). However, usage may be necessary to avoid closure due to inactivity and regular usage & paying in full can help her to build good credit habits which would also be beneficial.
indexonlyplease wrote:Why does a young adult need credit anyway.
Financial responsibility is certainly a must but for a credit profile, age is a factor and starting off early can certainly help even if one doesn't immediately need credit. That said, there are those who don't use credit. It's up to each to determine the specific path to follow.
indexonlyplease wrote:Don't be fooled by the mistakes other have made.
Don't assume that what works best for you works best for everyone. It is certainly possible to build credit from a young age without going into debt. One doesn't need to go into debt to build credit with credit cards. The OP should understand and consider the risks but the OP understands the OP's daughter best in order to make such a decision.
indexonlyplease wrote:That is what every person that has a credit card states when they first open the card.
The average credit card debt per person has increased over the past decade. In 2009, the average debt hovered around $4,100 per person
That's not how averages work. Do not conflate "average" with "everyone". Do not assume that you know the OP and the OP's daughter and can predict how they will handle things based on averages. Yes, there is the potential for falling into a debt spiral but it is not a given.
marcopolo wrote:I didn't think authorized users build a credit history. I believe you have to be a joint account holder to build a credit history.
If a card reports for an AU then the history is reported and is considered. However, accounts where one is an AU don't quite factor in the same as accounts where one is the original cardholder (or joint cardholder).
marcopolo wrote:When we checked his credit history on one of the credit reporting firms (Experian?) recently, it showed the card from the joint account with clean payment history, but no entries for the 2 years he was an authorized user on our card.
Some cards do not report for AU's.
On my quotes. Really what is the percent of people you know that are debt free compared to in debt. And I am not talking about the house debt. It all starts at a young age. Once you are in debt good luck getting out for most. Than it just becomes a way of life. Have you read how many Americans are in debt?? You can't go into debt with the debit card. After a young person learns how to manage the debit card then they can worry about credit. Like I said before. Why would a 18 yr old need credit. Unless they are going to get in debt buying a car.

My 21 yr old son works part time while going to college. He only has a debit card. So he must have no credit. So what. He does not need it now. And is learning how to manage money. Meaning, you can only spend what you make. What a great concept for a young person.

Want them to learn more how managing money. Have them open a checking account. Then a year later see how many bounced checks and overdrafts they haver paid.

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Re: 18 year old first credit card recommendations

Post by Quickfoot » Wed Jul 19, 2017 10:12 am

I'd recommend she get a secured credit card with a limit of not more than $500. That way if she goes crazy the card can be closed and paid off with the deposit, many credit unions also will do secured loans against a CD with VERY low interest that help build credit.

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Re: 18 year old first credit card recommendations

Post by Crisium » Wed Jul 19, 2017 10:17 am

I got one in college (although not until Junior year) specifically to gain credit knowing eventually I'd need a car. Great decision. Just paying that off for a couple years helped me qualify for a low rate loan once I got a job.

All it takes is the simple understanding that you must pay it off in full every month. A little less simple but still relatively easy is to understand that your CC balance must stay below your bank account that you pay it with or else the previous sentence becomes impossible. Some people cannot handle this. It's up to you to judge your kin here if they can.

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Re: 18 year old first credit card recommendations

Post by flamesabers » Wed Jul 19, 2017 10:29 am

indexonlyplease wrote:On my quotes. Really what is the percent of people you know that are debt free compared to in debt. And I am not talking about the house debt. It all starts at a young age. Once you are in debt good luck getting out for most. Than it just becomes a way of life. Have you read how many Americans are in debt?? You can't go into debt with the debit card. After a young person learns how to manage the debit card then they can worry about credit. Like I said before. Why would a 18 yr old need credit. Unless they are going to get in debt buying a car.

My 21 yr old son works part time while going to college. He only has a debit card. So he must have no credit. So what. He does not need it now. And is learning how to manage money. Meaning, you can only spend what you make. What a great concept for a young person.

Want them to learn more how managing money. Have them open a checking account. Then a year later see how many bounced checks and overdrafts they haver paid.
I agree that a credit card isn't for everyone. Young adults who lack the necessary self-discipline to not overspend on their credit cards shouldn't be getting a credit card. However, just because a lot of Americans are irresponsible with their credits cards doesn't mean the OP's daughter will be. Not everyone has to learn the hard way that not paying off your credit card every month is a costly habit. When I was 16 my father made me an authorized user on one of his credit cards and he never once lectured me about the downsides of a credit card because he already knew I was responsible enough to manage credit cards properly.

One good reason for responsible young adults to get credit cards sooner then later is to build up their average age of accounts. When you have a stellar credit history going back to when you're 18, you're in a much better position in the future to get the best rewards credit cards and the lowest interest rates on mortgages and other loans.

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Re: 18 year old first credit card recommendations

Post by indexonlyplease » Wed Jul 19, 2017 10:45 am

flamesabers wrote:
indexonlyplease wrote:On my quotes. Really what is the percent of people you know that are debt free compared to in debt. And I am not talking about the house debt. It all starts at a young age. Once you are in debt good luck getting out for most. Than it just becomes a way of life. Have you read how many Americans are in debt?? You can't go into debt with the debit card. After a young person learns how to manage the debit card then they can worry about credit. Like I said before. Why would a 18 yr old need credit. Unless they are going to get in debt buying a car.

My 21 yr old son works part time while going to college. He only has a debit card. So he must have no credit. So what. He does not need it now. And is learning how to manage money. Meaning, you can only spend what you make. What a great concept for a young person.

Want them to learn more how managing money. Have them open a checking account. Then a year later see how many bounced checks and overdrafts they haver paid.
I agree that a credit card isn't for everyone. Young adults who lack the necessary self-discipline to not overspend on their credit cards shouldn't be getting a credit card. However, just because a lot of Americans are irresponsible with their credits cards doesn't mean the OP's daughter will be. Not everyone has to learn the hard way that not paying off your credit card every month is a costly habit. When I was 16 my father made me an authorized user on one of his credit cards and he never once lectured me about the downsides of a credit card because he already knew I was responsible enough to manage credit cards properly.

One good reason for responsible young adults to get credit cards sooner then later is to build up their average age of accounts. When you have a stellar credit history going back to when you're 18, you're in a much better position in the future to get the best rewards credit cards and the lowest interest rates on mortgages and other loans.
Still again, how many people you know are debt free vs in debt. Credit card use the rewards to suck you into going in debt. They love the idea of people paying 18% for years. Until they finally claim bankruptcy. Have you seen the increase in bankruptsy. Also, they just reported that less than 10% of people redeem their airline miles.

I have a feeling my 21 year old son will be ok in the future and be able to buy what he needs. He has used the debit card for 3 years. And that is only because he has a part time job while going to college. It's funny how he tells me the money taking from his account when he has a busy weekend going out with friends. So he looks all the time to check his money. You think someone with a credit card does this????

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Re: 18 year old first credit card recommendations

Post by PandaBear » Wed Jul 19, 2017 11:07 am

rai wrote:My daughter is in college has a summer job $1000/month or so.

I wanted her to get a credit card to build up a credit history.

Best recommendation?

Of course no annual fees and if possible good reward points or sign up bonus.

Also is it best to use the card every month like getting gas etc to build up a credit history? And **Will pay off balance every month naturally.
When I was in college, I was more concerned with getting good grades than building credit history. That said, I did open up a Capital One credit card. It had a small credit line, something to the tune of $500 or $1000, I forget the exact number. In any event I used it for two things: emergencies (never had one in my college career, but it was nice to know it was there if I needed it), and to pay my monthly internet bill which at the time was something like $20/month (for everything else I used my debit card).

The argument of how many people are in debt vs. debt-free is a good one. However, you have to weigh the pros and cons of waiting to have a credit card. If a person is taught early on to carry as little debt as possible, then having a credit card likely won't change that behaviour (I can use myself as an example for this). On the other hand, if someone is not taught to be fiscally responsible then I think the cons will outweigh the pros of building a credit history early on (I can think of a few friends that carry multiple maxed-out credit cards). Being a Boglehead, I imagine you've taken the time to teach your daughter about finance and responsibility. If that's the case, I see no harm in getting a credit card.

Now then, the meat of my post. What cards are good for people starting to build their credit history.

My first choice would be The Journey Student Credit card by Capital One . https://www.capitalone.com/credit-cards ... y-student/
My reason being that it's a Visa, so it will be accepted almost everywhere and it rewards you for on-time payments by giving you an extra 0.25% rewards for a max of 1.25% rewards. The incentive to make on-time payments is good to build good behaviour. It has no annual fee too, which is a plus when you're a ramen-eating student.

My second choice is the Discover it for students. It is arguably the better card. Taken from nerdwallet:
This card offers 5% cash back (on up to $1,500 in spending per quarter) in categories that change every three months. Recent categories have included Amazon, gas stations and restaurants. It pays 1% cash back on all other spending. New cardholders will get their cash back matched at the end of their first 12 billing periods, and students who maintain a 3.0 GPA are eligible for an annual $20 reward. There’s no annual fee or foreign transaction fee and no fee for paying late once. Late payments will never increase your annual percentage rate.
The downside of course, is that it's a Discover card, which isn't as ubiquitous as MC or Visa.

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Re: 18 year old first credit card recommendations

Post by flamesabers » Wed Jul 19, 2017 11:13 am

indexonlyplease wrote:Still again, how many people you know are debt free vs in debt. Credit card use the rewards to suck you into going in debt. They love the idea of people paying 18% for years. Until they finally claim bankruptcy. Have you seen the increase in bankruptsy. Also, they just reported that less than 10% of people redeem their airline miles.
In real life I consider finances to be a private matter, so I couldn't say how many people I know are in debt or are debt-free. The only other person's finances I'm aware is my mother's and that's because she wants me to be familiar with her finances so it's easier to manage her estate after she passes away. She's never had any problems with being trapped in credit card debt.

I don't disagree that people can misuse credit cards to the point of financial ruin. However, I don't think that means everyone should have to wait until they are 25 or 30 before applying for their first credit card. For young adults who can properly manage their credit card, I think it's a good idea for them to get one at age 18.

As for airline miles, I don't have a credit card that gives me airline miles. The credit cards I have give me cashback and I most certainly use that reward! :)
indexonlyplease wrote:I have a feeling my 21 year old son will be ok in the future and be able to buy what he needs. He has used the debit card for 3 years. And that is only because he has a part time job while going to college. It's funny how he tells me the money taking from his account when he has a busy weekend going out with friends. So he looks all the time to check his money. You think someone with a credit card does this????
I do regularly check the balance on my credit cards, so it's not like I don't know what my statement balance will be at the end of the month. There has never been a time when I charged more on my credit cards then what I had in the bank.

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Re: 18 year old first credit card recommendations

Post by indexonlyplease » Wed Jul 19, 2017 2:23 pm

flamesabers wrote:
indexonlyplease wrote:Still again, how many people you know are debt free vs in debt. Credit card use the rewards to suck you into going in debt. They love the idea of people paying 18% for years. Until they finally claim bankruptcy. Have you seen the increase in bankruptsy. Also, they just reported that less than 10% of people redeem their airline miles.
In real life I consider finances to be a private matter, so I couldn't say how many people I know are in debt or are debt-free. The only other person's finances I'm aware is my mother's and that's because she wants me to be familiar with her finances so it's easier to manage her estate after she passes away. She's never had any problems with being trapped in credit card debt.

I don't disagree that people can misuse credit cards to the point of financial ruin. However, I don't think that means everyone should have to wait until they are 25 or 30 before applying for their first credit card. For young adults who can properly manage their credit card, I think it's a good idea for them to get one at age 18.

As for airline miles, I don't have a credit card that gives me airline miles. The credit cards I have give me cashback and I most certainly use that reward! :)
indexonlyplease wrote:I have a feeling my 21 year old son will be ok in the future and be able to buy what he needs. He has used the debit card for 3 years. And that is only because he has a part time job while going to college. It's funny how he tells me the money taking from his account when he has a busy weekend going out with friends. So he looks all the time to check his money. You think someone with a credit card does this????
I do regularly check the balance on my credit cards, so it's not like I don't know what my statement balance will be at the end of the month. There has never been a time when I charged more on my credit cards then what I had in the bank.
We are not talking about you. We are talking about the 18 yr old daughter that just graduated high school. Or we could say we are talking about all the other people in debt. Like I said "How Many People Do You Know Debt Free" . That should be the Capital One commercial.

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Re: 18 year old first credit card recommendations

Post by Crisium » Wed Jul 19, 2017 2:52 pm

It's important to remember the OP is the important one to have the conversation with, not necessarily the general posters. Rai already responded that the daughter will pay it off in full, and that the daughter already has a credit card (in the parents name). For a general discussion you make valid points, but I am unsure if it is helpful to this situation.

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Re: 18 year old first credit card recommendations

Post by flamesabers » Wed Jul 19, 2017 3:04 pm

indexonlyplease wrote:We are not talking about you. We are talking about the 18 yr old daughter that just graduated high school.
I'm going by how the daughter is described by her parent. I assume most parents are a good judge of their children's character. While I agree that not all 18 year olds are ready to have a credit card, the important part is the OP thinks his/her daughter is ready to have a credit card. If on the other hand the OP said or hinted that the daughter has trouble managing money and such, I would agree with you that she's not ready to have a credit card.

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Re: 18 year old first credit card recommendations

Post by gasdoc » Thu Jul 20, 2017 11:11 am

marcopolo wrote:
gasdoc wrote:My 18 year old daughter is an authorized user on my credit card, and her card stays in my office, in my desk. I have given it to her for special situations. Otherwise, she is perfectly happy with a checking account, a savings account, a debit card (and a new Roth IRA at Vanguard). She agrees to do without a credit card, and I agree to continue to support her in college. By allowing her to be an authorized user on my card, she is building a credit history for when she graduates from college, med school, or whatever. It works for us!

gasdoc
I didn't think authorized users build a credit history. I believe you have to be a joint account holder to build a credit history.

I added my son as an authorized user to our card when he got his driver's license (age 16) for him to have in emergencies. When he turned 18, we got a separate card where he is a joint account holders.

When we checked his credit history on one of the credit reporting firms (Experian?) recently, it showed the card from the joint account with clean payment history, but no entries for the 2 years he was an authorized user on our card.

He uses the (cash back) card for most of his expenses, and is responsible for paying the full balance every month, using money we give him as spending money while he is in college. The account is with Fidelity (2% rewards), same as our main cards, so i can keep an eye on his payments (make sure he does not miss one) when i do my own payments. I am hoping this teaches him good habits before he strikes out on his own. Credit card training wheels...
I have a Chase card, and they told me that as an authorized user, DD is building a credit history.

gasdoc

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Re: 18 year old first credit card recommendations

Post by Tyler Aspect » Thu Jul 20, 2017 12:43 pm

I think it is a good idea to get a debit card for a young person as training wheels. Wait a few years, then start off on a credit card limiting its use to grocery shopping only. That way the balance is predictable and manageable each month.
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