Credit Card for 18 year olds - The Finance Forums: Financial planning, debt help, loans, mortgages, retirement and 401k, investment, and general finance discussion forums

C-squared · #1 (**permalink**) 05-12-2008, 06:10 PM

I'm wondering if anyone knows of a good credit card to give an 18 year old who has no credit history.

My brother just turned 18 and would like to start building credit. He was going to look into a loan for a motorcycle but decided that would be a frivolous purchase and he doesn't want to worry about a monthly payment right now, so he just wants a credit card he can purchase a few things on a pay off.

All places have cards for college students, but he's not going to college. He'll be graduating high school in a few weeks and working for my dad and myself (my father owns a pool servicing company and I own a pool supply store). Unless you can prove you're a registered college student - and not just of that age - you can't get approved for any of those cards.

We had him check through his bank (he's had a checking account at First Merit for a few years) but they rejected him based on "no credit history." He has a steady income and makes a decent amount per year - more than any other kid his age - but we keep hitting walls with him without my dad signing for it (he'd like to do it on his own if at all possible).

GarySpicuzza · #2 (**permalink**) 05-14-2008, 10:44 AM

Have him open a secured credit card.

Simply deposit say $500 dollars with the bank as collateral for the card's $500 credit line. As time goes on they will usually increase the credit limit once he's shown he's responsible.

See THIS link.

summer · #3 (**permalink**) 05-15-2008, 05:07 PM

Why does he want a credit history? What are his goals? How about putting money in a mutual fund or high yield savings?

Establishing a relationship with a good bank that lends to its patrons is usually a good idea. You don't need credit for a home loan and saving up for a decent used vehicle is better than losing all that equity driving off the lot with a loan.

C-squared · #4 (**permalink**) 05-16-2008, 02:07 AM

He has 10,000 in a mutual fund.

He would like to have credit history so he can purchase cars and a house.

AllThingsPersonalFinance · #5 (**permalink**) 05-18-2008, 05:58 AM

Quote:

Originally Posted by C-squared

I'm wondering if anyone knows of a good credit card to give an 18 year old who has no credit history.

My brother just turned 18 and would like to start building credit. He was going to look into a loan for a motorcycle but decided that would be a frivolous purchase and he doesn't want to worry about a monthly payment right now, so he just wants a credit card he can purchase a few things on a pay off.

All places have cards for college students, but he's not going to college. He'll be graduating high school in a few weeks and working for my dad and myself (my father owns a pool servicing company and I own a pool supply store). Unless you can prove you're a registered college student - and not just of that age - you can't get approved for any of those cards.

We had him check through his bank (he's had a checking account at First Merit for a few years) but they rejected him based on "no credit history." He has a steady income and makes a decent amount per year - more than any other kid his age - but we keep hitting walls with him without my dad signing for it (he'd like to do it on his own if at all possible).

Your brother is 18. A credit card is not a good idea for him.

However, if he wants to use plastic to buy something that he already has the money for, tell him to get a secured card. These can be found at bankrate.com. He will deposit an amount with a card issuer in the amount of the credit limit that he wishes to have. After 6 months or so, the card company can convert his secured card to a regular credit card.

But again, I don't recommend this for someone so young. I would encourage him to begin the habit of paying cash rather than buying with credit.

For another quick but bad idea for him, as his older sister, why don't you make him an authorized user on your oldest credit card? That will jumpstart his history into fifth gear.

C-squared · #6 (**permalink**) 05-22-2008, 05:23 PM

We think we're going to go with a secured card.

His purchases are monitored by my father - he simply just wants to start building credit, not go out of control with it.

I never even thought about the secured card - great idea!