Most Americans Get Their First Credit Card Too Soon. Here's Why

by Maurie Backman | Updated July 21, 2021 - First published on April 19, 2020

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A young woman sitting at a sunny dining room table in front of her laptop and holding a credit card.

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You shouldn't get a credit card until you're financially prepared for one.

There's a certain degree of freedom that comes with having a credit card. That little piece of plastic could be your ticket to dinners at your favorite restaurant, admission to concerts, or the vacation you've been itching to take for months.

But while credit cards may be convenient, they can also be extremely dangerous. The reason? They don't need to be paid off right away, which makes it very easy to run up a balance. As long as you make your minimum payment each month, your credit card issuer will be more than happy to continue extending credit to you -- and collecting interest in the process. 

Carrying a credit card balance can be extremely harmful to your finances. Not only can it cost you money in interest charges, but it can also hurt your credit score when your balance gets too high. Once your credit score drops, it can become difficult, if not impossible, to borrow money affordably when you need to. 

That's why a credit card isn't something you should apply for on a whim. Rather, you should make sure you're financially ready to have one. That means being able to pay off your credit card bills month after month, and having a key understanding of how credit cards work. Yet research from The Ascent reveals that most people get their first credit card between the ages of 18 and 20 -- at a time when they're likely in college or just plain not established financially. 

If you're thinking of applying for a credit card at an age when you're not even old enough to buy beer, it could pay to hold off -- and wait until you're in a more secure place in your life. 

Don't rush to get a credit card

Many people think that having a credit card will make their lives easier, financially speaking. But if you abuse your credit card, it can make your life a lot harder. For example, if you rack up a balance you can't pay off, the result will be interest charges that accrue against you and cost you money. That's not easy!

Furthermore, imagine having to part with a huge chunk of your monthly income to make your minimum credit card payment. That's not financial freedom -- it's the opposite. 

Incidentally, if you only make your minimum payment, the result will not only be extra interest, but a balance that takes years to pay off and risks climbing high enough to hurt your credit score. Along these lines, having a whopping balance hanging over your head could be a major source of anxiety and stress, thereby making a credit card not worth the trouble.

Now to be clear, being young when you get your first credit card doesn't automatically imply that you're going to abuse it. But if you get that credit card while you're still in the midst of pursuing a degree, and you don't have a steady income at the time, it may be difficult to pay off each month's balance when it comes due. 

Even if you're not in school when you get your first credit card and you do have a full-time job, if you're young and new to adulthood, you may not yet have a handle on how much you can afford to charge each month. And if you go overboard, the repercussions could be dire. 

The right time to get a credit card

There's no single age that's the "right" age for your first credit card. Rather, aim to have the following before applying for one:

  • A steady income
  • A budget you follow
  • An understanding of how credit cards work

With regard to the latter, you should understand the terms associated with your credit card, from your minimum payment to your card's APR. You should also know that the more established you are financially, the greater your chances of getting a credit card with favorable terms (like a lower interest rate) and better rewards. For that reason alone, it could pay to wait until you have a good job and an even better credit score. 

If you are going to apply for a credit card in your late teens or around age 20, make sure you have money in savings beforehand so that if you wind up with a hefty bill, you'll have a means of paying it off. The last thing you want to do is kick-start a cycle of debt at a very young age, and struggle for years because of it.

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