Planning a teen’s first credit card

teen's first credit card

Holy cow.  My son will turn 18 in November!  I can’t believe it.  But, rather than denying it… I’m starting to plan… for his first credit card applications.  Credit card companies in the US require kids (adults!) to be 18 before considering them for their own credit cards.

He’s a responsible kid.  I believe he’s ready.  In the recent post “Building (and viewing) teenage credit” I described how to build a child’s credit record before they’re 18 and how to view it when they are close to 18.  Now it’s time for the next step: planning my teen’s first credit card.

I have a bit of experience with this already.  When my niece turned 18 a few years ago, she asked about signing up for a credit card.  I recommended the Discover It for Students Card.  It appears to be exactly the same as the regular Discover It card with no annual fee, rotating 5% categories, and first year cashback match.  It also throws in a few extra bucks for getting good grades: “$20 cash back each school year your GPA is 3.0 or higher for up to the next 5 years.”  And, for the first year, that $20 should double to $40.

In my niece’s case, her application for the Discover It Student card was denied.  But, that was OK.  They offered her a secured Discover It card which had no annual fee and the same rewards as the regular Discover It card.  The difference between this secured card and the “real” credit card is that my niece had to deposit money with Discover.  That deposit became her credit line.  That way, Discover took on no risk.  If she ever failed to pay her bill on time, they would presumably take the money from her account.  My niece deposited $200 and used the card regularly for a while (7 or 8 months, maybe?).  Then Discover proactively moved her up to a real Discover It card and refunded her deposit.  She now has a positive credit record and can most likely get approved for more “real” credit cards going forward.

While I was already feeling good about the Discover route for my son’s first card, I decided to do a bit more research. I asked parents and students in our Frequent Miler Insider’s Facebook group for input.  Here’s roughly what I learned:

  1. It’s possible (but certainly not guaranteed) to get approved for a real credit card even with no income
  2. Discover and Amex seem to be fairly lenient

Then, in response to my post “Building (and viewing) teenage credit,” I learned a new idea from a reader named Beth:

When my daughter had a summer job before college we took her to our local Chase and opened a standard new checking account and she happily received the signup bonus after her first paycheck hit. At sign up we asked if she was pre-approved for any credit cards. She was not. But the banker advised us to check back.  And after she had the checking account for about a month we checked with the bank and she was pre-approved for a Freedom. She got that card and we charged $500 on it for her so she could get another signup cash bonus. She was hooked. Free money!

She left for college and used the Freedom for things we intended to pay for anyhow (books mainly) at college and we paid the bill which arrived in paper form to our address. This also allowed us to make sure she was being responsible with the card because of course she allowed us to open the bill in order to pay it.

After about six months she applied for a Southwest card and got 60,000 miles. She started telling her friends and got a couple of referral bonuses on Southwest cards. A year later, after a trip on United, she got a United explorer card offer for 70,000 miles and received that. Those cards have gone into a drawer at home after the minimum spend was achieved.

I’m amazed at how much credit is extended to kids with a few thousand stated income in summer jobs. In fact in her Junior year she was pre-approved for a CSP [Chase Sapphire Preferred] with a credit line of $20,000!!! (cough, we reduced that credit line while she was applying) It’s been great to have another mileage stash in addition to my own and we’ve used them to get her back and forth to college several times. At this point she has a lovely credit score after 3 years of managing her credit responsibly. I’ve also timed her applications so that she will be under 5/24 when she graduates and can start from scratch if she wants to take up this obsession.

To summarize: Beth’s daughter started by opening a Chase checking account (a regular one, not a high school account) in order to earn a new account bonus.  Once Beth’s daughter had her own banking relationship with Chase, she was eligible to receive pre-approved offers.  A month or so after opening the account, they checked with their local Chase banker and learned that she was pre-approved for the Chase Freedom card and so she signed up for it.  And, after using that card responsibly, she was able to get approved for other great offers later.

Note: Credit card accounts aren’t the only way to earn signup bonuses! Checking and savings accounts also frequently offer cash bonuses.  At the time of this writing, Chase is offering $300 for opening a checking account and completing a direct deposit (click here for details).  See also Doctor of Credit’s “List Of Methods Banks Count As Direct Deposits.”

My Plan

When my son turns 18, I’ll recommend that he do the following (with my help, as needed):

  1. Sign up for a Discover It for Students Card; and
  2. Sign up for a new Chase checking account in order to get a checking account bonus, and to establish his banking relationship with Chase.  And a month or two later he should check in with his banker to see if he has been pre-approved for any Chase cards.  Either Freedom or Freedom Unlimited would be great first Chase cards.

What about 5/24?

When people first start applying for credit cards for the rewards, I usually recommend that they start with Chase.  Most Chase cards are subject to their 5/24 Rule in which Chase will automatically deny the application if they see that you have opened 5 or more cards with any bank in the past 24 months.  By starting with Chase, it’s possible to get the best Chase bonuses before hitting the “5/24 Wall”.

If my son starts with the Discover card, he’ll add one to his 5/24 count right out of the gate.  I think that will be OK.  My bet is that he’s not going to be aggressive with credit card signups.  He can take it slow at first and sign up for new cards over time as he needs to.  Past this first Discover card, though, I will recommend that he focus on Chase cards.

If my son surprises me and wants to sign up for cards aggressively, I’ll have a slightly different recommendation.  I’ll advise him to start a business.  He can buy and sell things.  He can do a bit of computer consulting.  Whatever.  There’s really no investment needed to start a sole proprietorship.  And once he has decided to start this business, he can apply for business credit cards.  Often, business cards have the best signup bonuses.  And most business cards do not count towards 5/24.

What do you think?

We have almost two months left before my son’s eligible to apply for his own credit cards, so there’s time to make adjustments to this plan.  If you have additional suggestions, I’d love to hear them.  Please comment below!

About Greg The Frequent Miler

Greg is the owner, founder, and primary author of the Frequent Miler. He earns millions of points and miles each year, mostly without flying, and dedicates this blog to teaching others how to do the same.

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  1. Yeah. I’ve been surprised how willingly banks will give college students credit cards. I don’t know if having companion cards helps. Mine have all had them, especially with AMEX for the obvious reasons. My experience is that Citi is pretty easy with 18 year olds. Barclay’s is OK, too. Chase is a little pickier; build a (short) credit history with the other banks first.

    If your college kids are going to do any travelling by themselves, they may need these cards for other reasons. Like my son is going to fly by himself, and the AA Basic Economy fare is (crazily) $300 cheaper roundtrip. With his own AA Citi AAdvantage card, he can bring a ton of luggage with him for free, as opposed to just a small personal item.

  2. Good Morning Greg. Last week, I helped my 21 year old apply for his first credit card. He applied for the chase freedom. I was surprised he was denied. He has a full time job, and has been making a truck payment for about a year now. Would you recommend calling the reconsideration line?

  3. Ah, college and credit cards. I’m almost nostalgic for the days when a young person could sign up for a credit card and get a ‘free’ t-shirt as a signup bonus. The vultures (ie credit card signup ppl) made out like bandits at my alma mater. I had quite a stash of free shirts after freshmen year. Good thing my mom taught me well about credit or it could have derailed my new financial record for years to come.

    Luckily, all the cards had very bad rewards and credit limits; making it a very easy choice to close the accounts shortly after what little, if any benefits were reaped.

    • Haha yup, got my first, a Citi dividend, in 2004 for a free subway sandwich, doh!

      Never used it until a year later when I discovered it had the 5% back categories (weren’t rotating back then). Thought, “wait, you’re gonna give me 5% back for using this to buy gas and groceries?.. Thats free money. How do the credit cards make money?” Still have not paid a dime of interest 13 years later.

  4. I got my first one when I was 18. I got the BoA CashRewards since that was my main bank and it fit my spending (wasn’t into the hobby) at the time. I got the “adult” version of it with a $500 limit. It was my everyday card for the longest time. Later on, Chase declined me for a freedom and a cfu 2 years later for lack of history. From my experience, apply for the adult one and see, you never know. Also I have to agree, Chase is hard for some reason even though most of my friends got a chase card first so who knows.

  5. My son’s first card approval was at 18 years and 2 months, and was the Bank of America Cash Rewards Student card. He earned the 100$ cashback bonus.
    His second card was the Student Discover card. He used dual enrollment classes, from his senior year of high school, to claim the $20 GPA bonus, which will double.
    It has been a few months since the last application, and soon we’ll select his next card. Would love for hime to get the Freedom, but I am not confident.

  6. My Son’s first CC was an AA card from Citi. Chase also gave him a Freedom right from the start. Zero income but a credit history that predates his birth.
    He wanted to do the whole Europe backpacking thing and thought it was time for him to earn his own damn miles

  7. Just a head’s up that I tried to sign my son up for a Discover card but I could not submit it because he is not quite 18. So then I had to reread your articles and noted that you really don’t mention that anywhere…that they have to be 18.

    But then someone above just mentioned that Chase allows at 17, so I’ll give that a try.

    I’d say that an article about teenager credit probably should include this information!

  8. My first card at 18 was a Freedom card. But at that point I had been working a part time job for two years and had been making car payments for one year.

  9. For those considering Chase, I definitely recommend doing one of those checking sign-up bonuses, and converting it to a student account first. Also, it doesn’t hurt if to have them added as an authorized user to help build their credit before they submitting any applications–especially with the banks that thang date credit history. Lastly, for annual income, don’t forget to factor any grants that they receive

  10. Anyone have any experience with the Citi Secured Mastercard? Just saw it on their website. Seems to be similar to the Discover It secured card.

  11. Something I mentioned in the comments to the other post, and confirms a point made by Greg: my brother in law (having being AU on 3 cards for a while, excellent score) was instant denied for Citi Double Cash and Chase Freedom, but got a card from Discover (after he provided some additional information on the phone). Thanks again Greg and other readers for the suggestion!

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