Handing your teenager a credit card can build financial muscle, but a single missed payment can tank their score for years. Our review of Federal Reserve and national survey data shows that the most common ages for entering the credit system are 18 to 20, yet nearly three-quarters of teens say they lack confidence managing money. 

Before you decide whether to add your child as an authorized user or wait until they’re 18 or older, here’s how the benefits, pitfalls and lower-risk alternatives stack up—plus how to coach smart habits from day one.

Pros of a Teen Credit Card

Adding your teen as an authorized user on your account can jump-start real-world budgeting practice. Learning to use a credit card safely helps teens manage and protect their money, the Consumer Financial Protection Bureau (CFPB) notes. They’ll see, statement-by-statement, how paying bills on time avoids late fees and interest. Plus, it’s a firsthand lesson about money that school may not teach.

Using a credit card responsibly as a teen also builds an early credit history, making it easier to get loans, rent an apartment and take advantage of better financial options.

Getting this head start under parental guidance is a practical way for teens to prepare for handling money on their own.

Potential Drawbacks

Credit cards can be tricky. Although a credit card can be a useful starting tool, teens may underestimate how overspending today can hurt tomorrow. A 2024 survey by Greenlight—a debit card and money app for kids and teens—found that 74% of teenagers lack confidence in their personal finance knowledge, highlighting a significant gap in financial education among young people.

That new iPhone is just a swipe away, and a shopping spree with friends can rack up charges before your teen thinks twice. It can tank their credit if they miss payments or blow past their limit. And if they’re using your card, their mistakes can hit your credit, too.

Consider Starting With a Savings Account

Before jumping into credit cards, opening a teen-friendly savings account is often a simpler first step. It helps teens get used to setting money aside, planning ahead and watching interest grow. Many banks now offer no-fee youth accounts, letting parents keep an eye on things while their teen learns.

A savings account is low-stakes practice, teaching your teen to save instead of spending everything immediately or tapping everything on a credit card. Whether your child is stashing cash for a wanted gadget or building a small emergency fund, they’ll learn goal setting and the power of compound interest. And teen accounts still let parents check in, so you can stay involved without hovering.

When Do Teens Usually Get Their First Credit Card?

Federal Reserve data show that the most common ages for entering the credit system—often by opening a first card—are 18, 19 and 20. More than 70% of consumers appear in the credit market before age 30. Yet many get plastic earlier—16 to 18—by becoming an authorized user on a parent’s account. It really depends on maturity, financial knowledge and family values. If you want to apply for a credit card in your own name, you must be 18 or older.

The Federal Reserve report shows that starting a credit history early can be helpful, but how you begin makes a difference. Its Consumer Credit Panel shows borrowers who enter the credit market at 18 boast credit scores about 10 to 18 points higher by age 30 than peers who start at 19 or 20, while a smaller pocket of first-timers at 23 also performs well.

There’s no right age, but choosing the right first credit product—and repaying on time—can build a strong profile.

Tips for Parents

• Start with a savings account to build basic money habits.
• Talk openly about credit—interest rates, statements and the importance of paying bills on time.
• Set spending limits or alerts to help teens stay on track.
• Review statements together regularly to encourage transparency.

Bottom Line

There’s no one-size-fits-all answer to whether your teen needs a credit card. It depends on their readiness and your family’s approach to money. Whether you start with a savings account or a credit card, the key is open communication and ongoing education about money management. With the right tools and guidance, your teen can build healthy financial habits that last a lifetime.