Home Consumer debt Do I need a co-signer for my credit card if I’m under 21?

Do I need a co-signer for my credit card if I’m under 21?

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Getting a credit card in your name can help you build a good credit history, which can come in handy later when you’re ready to buy a car or a house. But do you need a co-signer for a credit card if you’re new to using credit?

If you are under 21, the general answer is yes, unless you have independent income. The Credit Card Accountability and Disclosure (CARD) Act of 2009 created new rules for card issuers regarding applicants under the age of 21. debt.

Unfortunately, most major credit card issuers have stopped allowing co-signers. While that doesn’t mean you can’t get a credit card at all if you’re under 21, it can limit your options.

Why you might not qualify for a credit card on your own

Technically, you can apply for a credit card at 18. However, the CARD Act requires card issuers to exercise discretion when approving young applicants. To get a credit card in your name before age 21, you must have one of the following:

  • A co-signer willing to share responsibility for the card
  • Proof of independent income

These rules are designed to protect young consumers from abusive credit card practices that could lead them into debt. They can also help young adults develop good credit habits. You may be less likely to have a high balance, for example, if your parent has co-signed your card and is monitoring account activity.

Having a co-signer also benefits the credit card company because there’s someone else who can be held responsible for the debt if you can’t pay. The credit card company can take collection action against the co-signer, including suing them for the debt. But getting a credit card with a co-signer has become more difficult because most major card issuers no longer allow co-signers.

This means that if you are under 21, your ability to get a credit card in your name will depend on your income or not. However, the CARD Act does not specify a certain amount of required income. If you don’t have independent income, which may be the case if you go to school full time or have a job but don’t earn much, you are less likely to be approved.

What credit cards allow co-signers?

Most major card issuers have stopped allowing co-signers of any kind. As of January 2022, the list of card issuers that do not allow co-signers includes:

Bank of America offers an alternative to the traditional cosigner arrangement. If you apply for a Bank of America credit card and are approved, you can ask them to add a co-applicant to your account. However, this is not exactly the same as having a co-signer up front. And if you’re under 21, you’ll still need to show proof of income to be approved.

You may be able to find credit cards issued by smaller banks or credit unions that still allow co-signers. If you have a student checking account with a local bank or credit union, this might be a good place to start looking for cards that allow co-signers. Or you can check with your parents’ bank to see if they’ll co-sign a credit card on your behalf.

Alternative: Become an authorized user

If you can’t get a credit card in your name because you’re under 21 and don’t pass the income test, there’s another option. You could become an authorized user on someone else’s credit card account.

An Authorized User is someone added to the Account by the Primary Cardholder. As an authorized user, you will have your own credit card with your name on it which is linked to the account. You can use the card to make purchases, but you are not responsible for any debt created. You won’t be able to do things like:

  • Request credit limit increases
  • Add other authorized users
  • Redeem rewards unless authorized to do so by the primary cardholder

Becoming an Authorized User can be a backdoor way to establish credit since most major card issuers report Authorized User status to the three major credit bureaus. As long as the primary cardholder has good credit habits (paying on time, keeping balances low, etc.), your credit score can benefit. The impact is not exactly the same as having a card in your name alone. But you can always piggyback on someone else’s good credit to help you build your own credit history.

There are pros and cons to being an authorized user, with the main benefit being the ability to build credit. On the other hand, you may not receive any credit benefits if the card issuer does not report authorized user status to the credit bureaus. And if the primary cardholder pays late, has high credit usage on the card, or worse, defaults on the balance, your credit score could be negatively affected.

Overall, it’s worth considering becoming an authorized user if you’re trying to get a credit card before age 21. If you’re considering asking someone to add you to one of their credit card accounts, be sure to choose someone who has a history of responsible credit use. And it might be a good idea to agree some ground rules in advance about how you’ll use the card and what you might pay for the balance.

Credit cards for your 21st birthday

The good news is that these CARD Act regulations no longer apply once you turn 21. At that time, you will be able to apply for student credit cards or other cards in your name without the need for a co-signer. However, the app will probably still ask you for your annual income. Keep in mind that your approval may depend on your credit score. If you don’t have a long credit history yet, your best option might be starter credit cards or secured cards.

Beginner credit cards tend to have lower credit limits and may or may not charge annual fees. A secured card requires a cash deposit to open, which usually acts as a credit limit. Either could be a good stepping stone to building credit so you can eventually get approved for cards that offer more features and benefits.

The bottom line

Getting your first credit card under 21 can be daunting if you don’t have independent income or if the card you’re interested in doesn’t allow co-signers. You can wait until you’re 21 to apply for a credit card, but going the authorized user route could get you credit sooner. The most important thing to remember when getting a credit card at any age is to use it responsibly, which means paying on time and keeping balances low.