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It is very common for Americans to get their first credit card when they are in their late teens. Unfortunately, it is also all too common for teenagers to run up their bills, getting themselves into serious financial trouble when they are still young. The trick to making sure that this doesn’t happen is to combine two very important things. First, you need to have a commitment to responsible use of the card. And second, you need to choose a good credit card that is specifically designed to help students and teenagers build good credit.
Before ever getting a credit card, a teen should really commit to responsible use of the card. This involves more than merely saying that you’ll use the card responsibly. Instead, it means taking actions that will help you to be responsible with your credit. Those actions include learning as much as you can about how credit cards work, making on-time payments on other bills such as your cell phone, budgeting properly for your income, responsibly using a debit card and reviewing your spending on a weekly or monthly basis. This should be done for several months before applying to get a teen credit card.
Once the teen is responsible enough to establish good credit card habits then it’s time to get a good credit card. The best credit cards for teenagers are the ones that specialize in credit for college students. These credit cards are designed to help students build good credit in a fairly low-risk way. Youngsters inevitably make some mistakes when establishing their credit so having a good card that is forgiving and fair is important.
The Discover Student Card is one example of a good credit card for teenagers. It offers a 0% interest rate for the first 6 months on purchases which gives the teen time to get used to using the card before the interest charges kick in. There is no annual fee on the credit card which is important when choosing a teen card. What is really great about the Discover Student Card, though, is that it’s one of the only student rewards credit cards available. Teens can actually earn 1% – 5% cash back on their purchases on this card which can be a big asset for students who use the card regularly. Also of great importance is the fact that Discover has a “student center” that provides ongoing assistance and information to teens who really want to learn to use their credit card responsibly.
Of course, the Discover Student Card is not the only option for teens. Another good credit card for college students is the Bank of America Student Visa Platinum Plus card. This one requires that the account holder be enrolled in college at least part-time and focuses on helping college students build great credit. It offers a low ongoing APR of approximately 14% even for students with little or no credit history; this is one of the leading ongoing rates in the industry for students. There is no annual fee on this card, it comes with free identity theft protection and it has additional cardholder perks like auto rental and travel insurance and purchase protection. The main drawback to the Bank of America Student Visa Platinum Plus card compared to the Discover card is that it doesn’t come with a rewards program.
Discover isn’t the only choice for teens seeking a rewards program. Another choice is the Chase #1 Student Mastercard. This rewards program is specifically designed for students. You can earn points for learning about better use of your credit card, paying your bill on time and establishing other good credit habits on this card. The points can be used to make purchases, donated to charity or shared with friends on Facebook. There is no annual fee on this card.
The best credit cards for teens are generally the ones that are designed for students. What if you aren’t a college student right now and need to build up your credit history? A secured credit such as the Capital One Secured MasterCard for Young Adults may be a good choice. The way that this works is that you send in a security deposit and then you can use the card up to the amount of your deposit. (In other words, you send $500 and get a $500 credit limit.) The purpose of this is to establish good credit so that you can qualify for a better unsecured card in the near future. This card does have an annual fee but it’s only $24 and you should only need the card for a year or two before you can get an unsecured card.
How do you know which credit card is the right one for you? If you already use one of the banks that offers a student credit card then you may want to choose that card to keep things simple. If not, then you will want to look first at the requirements to qualify for a good student rewards card since it’s always nice to get rewards back for your spending. The secured card should be a last choice for students who don’t qualify for other teen cards.