Credit cards can be a great tool for building credit and improving your financial standing. But can and should a teenager get a credit card? Below, we discuss credit cards for teens and other alternatives, such as prepaid debit cards.
What age can you get a credit card in the UK?
You must be 18 years old to apply for a credit card. If your teen is under 18, they won't be able to get a credit card. You can add a teenager to your own credit card as an authorised user, but you may be charged extra fees for each extra cardholder. Plus, some banks still have age restrictions on added cardholders. With GoHenry, children as young as six can have a prepaid debit card.
Related: How old do you have to be to get a credit card?
What are the alternatives to credit cards for teenagers?
Prepaid debit cards can be a good alternative to credit cards for teenagers. Your teenager can only spend the money that’s loaded onto the card and this can help them stay within their budget and avoid getting into debt, meaning they’re a great way to learn about spending within their means. They are also a good alternative to credit cards as there’s no chance of interest rates or late fees. With the average annual interest rate on credit cards at 22.2%, this is a definite bonus.
Advantages to teens having a credit card
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It will teach them to be responsible with money: According to GoHenry’s 2022 Youth Economy Report, over 71% of UK teens believe that earning their own money is important. So, giving a teen their own credit card to manage can be an empowering experience that helps teach them the value of money and how to budget as a teen.
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They don’t have to ask for cash: This can be really handy if they want to buy something online or in a store. They can just use their card and not have to worry about having the correct amount of cash on them.
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You can have visibility of what your teen is spending money on: If you are the primary cardholder, you can see what your teen is spending money on and help them to understand why it might be better to save up for something rather than buying it on credit.
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They can use it in emergencies: There are also added advantages to a teen with a credit card, especially in an emergency when neither cash nor parents are available.
Reasons your teen shouldn’t get a credit card
For any parent supporting a teenager with their own credit card, the road can be as daunting as when teaching them to ride a bike on their own. Here are some of the disadvantages parents may have to deal with along the line:
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They may be irresponsible with their spending: While of course, every individual is different, the enthusiasm of having a credit card combined with being independent can be a heady combination. The lure of an impulse buy can often seem far more important than sticking to the rules you have set about using the card.
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Many credit cards don’t have instant spending notifications: This means you may not see what teens are spending until you get your monthly statement. This can lead to unexpected surprises, particularly if your teen is using their credit card to shop online.
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Lack of parental controls: The lack of controls means that parents may then be faced with the prospect of a hefty and very unwelcome monthly bill. Credit cards for teens, without clear financial education and a back-stop, can be a minefield that affects the whole family.
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Easy for teens to rack up debt: One of the main dangers of credit cards is that it can be easy to forget you are borrowing money when you use it. This can quickly lead to debt.
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You’re responsible for your teen's credit card debt: As the primary cardholder, you’re ultimately responsible for any debt your teen racks up. This means that if they can’t or don’t pay their bill, it will affect your credit score and could lead to you having to pay what they owe.
Consider a GoHenry prepaid debit card
GoHenry is a prepaid debit card for teens that comes with a number of features beneficial for parents and teenagers, like being able to set spending limits, track spending and get instant notifications when money is spent. The card also has a built-in safety feature, allowing parents to freeze the card if it is lost, stolen, or misused. Unlike credit cards, your teen can’t spend what they don’t have so they won’t get into debt.
However, a prepaid card will only be useful in emergencies if there is money in the account and it won’t teach your teen about borrowing. That said if your teen is tempted to spend more money than they have and aren’t very good at paying back the bank of mum and dad, then a prepaid card is a good way to teach them money management before they get a credit card.
Related articles:
Difference between a debit card and credit card
How to help build your child’s credit
