by Lyle Daly | Updated July 21, 2021 - First published on Oct. 21, 2019
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The age when you get your first credit card is more important than you'd think.
Most of us get a credit card at some point, but the age when it happens varies for everyone. Maybe you got a card as an authorized user on a parent's account when you were a teenager. Maybe you got one as a college student or right after you graduated. Or perhaps you held off until well past the age of 25.
Even though this subject may seem inconsequential, it can have a significant impact on your finances for years to come. After researching when consumers got their first credit cards, we found that it correlates to salaries, credit card debt, and much more.
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There's an easy answer to when you should get your first credit card from an income perspective, and it's at age 19. People who got their first card at this age had a current median annual income of $52,500.
The turning point is the age of 22. Among those who got a credit card before they hit 22, the median income was always at least $45,000. After that, there's a steep drop that bottoms out at $36,000, the median income for those who got their cards at age 25 or older.
Here's how those numbers average out for each age range:
|Under 18||18 to 20||21 to 24||25 or older|
Data source: Survey of 1,001 credit card users and author's calculations.
To see which age ranges do the best job of managing their credit, we'll look at two factors: credit utilization and total credit card debt.
For credit utilization, which is the amount of total credit you have available compared to the amount you owe, we have clear evidence that it's better to wait before getting a card. It is recommended that you keep your credit utilization below 30% to maximize your credit score.
Those who got their first credit cards when they were under 18 had an average credit utilization rate of 33%. That dropped to 24% utilization for the 18-to-20 group, 22% for the 21-to-24 group, and 20% for those who were at least 25 when they got their first card.
Results were mixed for credit card debt. The groups who got credit cards at younger ages were more likely to have incurred credit card debt, but they didn't necessarily have the highest debt balances. Here's the percentage of each age group that had incurred credit card debt and their current average balances:
|Age when receiving first credit card||Percentage who have incurred credit card debt||Current average credit card debt|
|18 to 20||65.8%||$6,050|
|21 to 24||62.8%||$6,461|
|25 or older||60.3%||$4,234|
Data source: Survey of 1,001 credit card users.
Although the 25-and-up group obviously have the best results, there's a caveat -- that group hasn't had nearly as much time to incur credit card debt. Among the other three groups, credit card debt rises the later that consumers get their first credit cards, potentially indicating that those who learn about credit at a young age have somewhat more success in limiting debt.
One of the more surprising results from our research was a total lack of correlation between the age people get their first credit cards and their credit scores.
No age group won or lost this category, but if you want better credit, there are plenty of ways to raise your credit score at any age.
There's a stark difference in financial knowledge between those who get their first credit card at an early or late age. Among people who got their first cards before they were 18, an impressive 82.9% passed an abbreviated version of the financial literacy quiz from George Washington University. The average pass rate was 76.4%.
For those who got their first cards at age 25 or older, the pass rate for this quiz was just 66.7%. In the 18-to-20 and 21-to-24 age groups, the pass rates were 76.8% and 78.0%, respectively.
Plenty of Americans deal with financial stress (63.7%, to be exact). But getting an early start with credit cards seems to help, as only 60% of those who got a credit card before turning 18 were stressed about money. Among those who waited until 25 or older, 64.5% reported financial stress.
The 18-to-20 and 21-to-24 groups were right around the average in this regard, with financial stress rates of 63.8% and 63.6%.
I'm going to cheat by combining two age ranges, but the best time to get your first credit card is at age 20 or younger.
The under-18 group was the most impressive on a category-by-category basis. They had the highest financial literacy, the lowest financial stress, and did the second-best in terms of credit card debt.
But the 18-to-20 group also did reasonably well in each of those categories, and its median salary was much higher than that of any other group. That's good enough that they earn a tie.
None of this means you're doomed financially if you get a credit card later in life, and we don't always have full control over when we get our first credit card. But if you're a young adult wondering whether the time is right to apply for a card, this info could give you the motivation you need to go for it.
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