Getting a credit card in your name can help you build a good credit history, which can come in handy when you’re ready to buy a car or a home. But if you’re new to using credit cards, do you need a credit card co-signer?
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 for applicants under the age of 21. Specifically, the law requires anyone under the age of 21 to show proof of sufficient income or a co-signer — someone who agrees to share responsibility for the crime.
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 may limit your options.
Why you may not be eligible for your own credit card
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 under the age of 21, you will need one of the following documents:
- Co-signer willing to share responsibility for the card
- Proof of Self-Employment Income
The rules are designed to protect young consumers from abusive credit card practices that could leave them in debt. You can also help young people learn good credit habits. For example, if your parents co-sign your card and monitor account activity, you’re less likely to build up a large balance.
Having a co-signer is also beneficial to the credit card company because if you can’t pay, someone else could be held responsible for the debt. Credit card companies may take collection actions against co-signers, including debt enforcement. However, since most major card issuers no longer allow co-signers, it becomes more difficult to get a credit card with a co-signer.
That said, if you’re under 21, your ability to get a credit card in your name depends on whether you have income. However, the CARD Act does not specify a specific required income level. If you don’t have independent income (which may be the case if you attend school full time or have a job but don’t make a lot of money), you are less likely to be approved.
Which credit cards allow co-signing?
Most major card issuers no longer allow co-signers of any kind. As of January 2022, the list of issuers that do not allow co-signing includes:
- Bank of America
- American Express
- Capital One
- Citi
- Chase
- Discover
- USAA
- Wells Fargo
- U.S. Bank.
Bank of America offers an alternative to traditional co-signer arrangements. If you apply for a Bank of America credit card and are approved, you can ask them to add the co-applicant to your account. However, this is not quite the same as having a co-signer up front. If you are under the age of 21, you will still need proof of income to be approved.
You may 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 may be a good place to start when looking for a card that allows co-signers. Or you can check with your parents’ bank to see if they would be willing to co-sign a credit card in your name.
Alternative: Become an Authorized User
If you can’t get a credit card in your name because you’re under 21 and haven’t passed the income test, there’s another option. You can be an authorized user of someone else’s credit card account.
Authorized users are those who are added to the account by the host cardholder. As an authorized user, you have your own credit card with your name on it, which is associated with the account. You can use the card to make purchases, but you are not responsible for any debts incurred. You will not be able to do the following:
- Request a credit limit increase
- Add another authorized user
- Redeem rewards unless authorized by the primary cardholder
Becoming an Authorized User can be a roundabout way of building credit, as most major card issuers report Authorized User status to the three major credit bureaus. As long as the primary cardholder develops good credit habits (payment on time, low balance, etc.), your credit score will benefit. The effect is not exactly the same as the cards in your name. But you can still use someone else’s good credit to build your own credit history.
There are pros and cons to being an authorized user, the main benefit being the ability to build credit. On the other hand, if the card issuer doesn’t report the authorized user status to the credit bureaus, you risk not getting any credit-building benefits. If the primary cardholder makes a late payment, the credit card has high credit usage — or worse, funds default — your credit score could be negatively impacted.
Overall, if you want to get a credit card under the age of 21, becoming an authorized user is worth considering. If you plan to have someone add you to their credit card account, be sure to choose someone with a history of responsible credit management. It might be a good idea to agree some ground rules beforehand about how the card will be used and what you might pay for the balance.
21 year old credit card
The good news is that once you turn 21, these CARD Act rules no longer apply. From this point on, you can apply for a student credit card or other card in your name without a co-signer. However, the app may still ask for your annual income. Remember that your approval may depend on your credit rating. If you don’t have a long credit history, your best bet may be a starter credit card or a secured card.
Entry credit cards typically have lower credit limits and may or may not have an annual fee. A secured card requires a cash deposit to open, which is also often used as your line of credit. Both can be good stepping stones for building credit so you can end up getting approval for a card that offers more features and benefits.
Final result
Getting your first credit card under 21 can be daunting if you don’t have independent income or the card you’re interested in doesn’t allow co-signing. You can wait until you’re 21 to apply for a credit card, but if you choose the authorized user route, you can start building 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 your balance low.
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