Published in: Research | May 22, 2019
Study: When Does the Average American Get Their First Credit Card?
By: The Ascent Staff
The path toward adulthood often begins with your first credit card, as building credit can open doors to many other financial milestones. In starting down this path, two things are paramount: First, choosing the right credit card for your financial needs and goals, and second, having responsible financial behavior once you’ve made your selection.
As it turns out, fiscal responsibility can become more or less likely depending on the age at which you first start using a credit card. Wanting to know more, we surveyed 1,001 credit card users to determine how earlier or later use of credit cards impacted their current financial standing.
The first credit card a person owns may not exactly constitute as true ownership. Parents and guardians may decide to extend a credit line from their accounts, establishing children as authorized users. When including authorized users, the average age Americans received their first credit card was 20. The majority -- 54.3% -- obtained their first credit card between the ages of 18 and 20, while just over 4% were younger than 18. Another 30% got their first credit card between the ages of 21 and 24.
Ultimately, this graph reveals a modern trend to begin lines of credit as college-aged adults. If you are currently in college or if you or your children plan to enroll, consult well-researched guides to determine the best student credit cards. Some cards offer benefits for good grades, while others focus on building solid credit histories.
The youngest acceptable age a person should receive a credit card is 19 years old, according to the credit card users we polled. Before this age, respondents considered a person too young for the responsibility and risk associated with personal credit cards. However, they also were concerned about waiting too long before starting a line of credit: 25 was considered the oldest acceptable age to get your first credit card.
Although younger people may make more inexperienced purchase decisions, developing a credit history sooner rather than later can be beneficial. If you begin building credit at 19 years old, you can give yourself about three to four years to establish a healthy credit score before graduating from college or living on your own. If you lack credit by the time you’re ready to move from home, you may experience difficulty when leasing without a cosigner.
There are other benefits and drawbacks to building credit at various stages of young adulthood. Continue reading to see how early credit card use plays into Americans’ financial futures.
Credit card demographics
Many factors, from gender to education, affect the age at which Americans obtain their first credit card. We found that on average, women became authorized credit card users at the age of 20, one year earlier than men.
Around 45 years ago, women were required to answer questions about their marriage and plan for children in order to qualify for a credit card!
Education and location also determined the average ages for people’s first lines of credit. The most common time, and possibly the riskiest, was during college: 47.5% of respondents received their credit card during this time. College textbooks are notoriously expensive, yet required. Parents would be wise to ensure they and their children are at least earning rewards or cash back on these purchases.
Commuter towns, or exurban areas, led to the earliest average age (18) for first-time credit card users. These communities often have little commercial or industrial activity beyond a small amount of locally oriented businesses, so having to frequently commute to work could lead to the need to borrow money for a car or other costs. Urban and rural residents got their first credit card at age 21, on average.
Credit cards and success
Evidently, earlier credit card use correlates with at least one important aspect of financial success: salary. The longer people waited to get a credit card, the smaller their median annual income was, with only minor fluctuations in this trend. Those who got their first credit card at age 19 or earlier earned between $45,000 and $52,500 a year, compared to those who waited until age 24 or later who earned $40,000 or less annually.
Having financial credit from an early age may lead to a more fiscally oriented mindset, or it may encourage career-based ambition. Perhaps an earlier accruement of credit may also lead to lucrative business opportunities later in life, since many business loans (or loans of any kind, really) may require certain credit scores to proceed.
Before establishing true financial independence, children may be authorized users of credit cards linked to their parents’ accounts. Of respondents who acquired their first credit card as an authorized user, 36% were granted access before they turned 18. You’ll need a great deal of trust in your child to extend your credit, or you can work with your bank to establish limits for their specific use.
Interestingly, 63% of respondents believed children were better off learning how to use a credit card at a younger age, asserting that 15 was a good age to begin their education. That way, children can have some degree of financial education before they begin spending from their parent’s accounts.
Ultimately, the benefits of owning a credit card may pale compared to a person’s growing credit card debt. Your outlook on the matter may depend on how much debt you have accumulated. In fact, more than 1 in 10 respondents would advise a person never to open a credit card.
Across the U.S., roughly half of people believed they had good financial health. We defined financial health as the state of one’s financial situation, which may include: the amount in savings, the amount set away for retirement, annual salary, managing debt, and more.
On average, financial health was shared most often by those who began using a credit card from the ages 18 to 20. Fifty-two percent of this age group reported solid financial health, compared to 44.7% of those who waited until age 25 or later.
Reading between the (credit) lines
In spite of the American propensity to overspend, 76.4% of our respondents said they were financially literate. More specifically, this means three-quarters of people can pass an abbreviated version of the financial literacy quiz from George Washington University, which was administered to every participant in this survey. If a person started using a credit card before age 18, they were more likely to pass this financial literacy quiz than other credit card users. Scores from this financial literacy test dropped as participants waited later in life to build credit. As with many things in childhood education, the earlier, the better.
Checking in on credit
Google reveals a relatively common American search inquiry: “Will checking my credit score lower my credit score?” The answer is no, although this myth most likely exists because having a lender or credit card issuer frequently check your score may actually impact your score. Your score can certainly be checked whenever needed. In fact, 60.8% of credit card users frequently checked their credit score. With this in mind, let’s take a look at the demographics behind those who keep close tabs on their credit score.
Those who received their first credit card before age 18 were the most likely to check their credit score frequently (65.7%). Again, we see a noticeable correlation between early credit card use and fiscally responsible behaviors. Only 53.2% of those who waited until age 25 or later to start their first line of credit kept close eyes on their credit score, compared to 64.3% who started between the ages of 18 and 20.
Credit score comparison
A credit score of 800 and higher is generally considered excellent, while dropping below 700 may cause concern. Fortunately, the average credit score oscillated between 690 and 718, which is relatively good. The average credit score was 700.
Ultimately, there was not a strong trend toward a better credit score with earlier credit card use. With everything from late payments to a lack of credit diversity, it’s difficult to say which factor is at play for various age groups. Credit scores may thrive or suffer for various reasons, regardless of different life stages.
Using your credit
The percentage of available credit that gets used is referred to as a person’s credit card utilization rate. A good credit utilization rate is typically considered to be less than 30%. The only group to exceed this percentage was younger credit card users. Those who had credit card authorization earlier than age 18 also used the biggest portion of their available credit, averaging a 33% credit card utilization rate.
Because debt tends to accumulate over time, those who started at a younger age may experience the snowball effect. In fact, older first-time credit card users saw a percentage drop in their credit card utilization rate.
Credit card stress
The majority of Americans are stressed about their finances. Sixty-four percent of credit card users said they felt stressed when it came to their current financial standing. According to Debt.org, credit card debt can be damaging beyond the financial burden and can actually impact your ability to relax.
Financial stress levels can potentially be mitigated by learning how to use a credit card earlier in life. Those who started younger than 18 were the least likely to experience financial stress. People who waited until age 25 or later were nearly 5 percentage points more likely to experience financial stress than their younger counterparts. Another way to mitigate financial stress outside of credit history is to grow a healthy savings account.
The majority (64.1%) of credit card users reported credit card debt. The percentage of people who had some debt did not differ drastically between early and late credit card users. The amount of debt, however, changed depending on the age at which people started using their first credit card.
Although it’s expected that late bloomers would incur more debt due to a lack of financial education, those who waited until age 25 or later had less debt than everyone else. This is most likely because it includes those who haven’t had their credit card for very long.
Steps toward financial adulthood
The earliest financial milestones we examined were opening savings and checking accounts, which occurred at 17 and 18 years old, respectively. Progressing along the path toward financial adulthood, respondents purchased their first car at age 21, on average. They got busier at age 25, where they established a 401(k) plan, established their career track, and began investing in the stock market. At age 28, they purchased their first home, and then at 29, they established a household income of $60,000 or greater. The earlier respondents used a credit card, the earlier they achieved every one of these financial milestones in life.
Taking the financial leap
This study makes a strong case for building credit history earlier in life. Establishing good financial health and passing financial literacy tests more easily are only some of the possible benefits of learning the nuances behind credit card use at a younger age. A major caveat is that having a credit card early in life leaves a young person with more time to accumulate debt. Responsible financial behavior is paramount -- and this behavior can improve if learned at an earlier age.
At earlier and more impressionable ages, it becomes even more important to find financial advice from true and reputable experts. The Ascent has helped over 6.3 million individuals (and counting) secure financial independence. If you’re looking to build credit knowledgeably and successfully, The Ascent is the right place to start.
Methodology and limitations
For this analysis, we administered online surveys to 1,001 people who self-identified as credit card users. Respondents were required to currently own at least one credit card to access the questionnaire. Of the 1,001 participants surveyed, 50.5% identified as male, 49.2% identified as female, and 0.3% identified as neither male nor female. The survey’s sample consisted of 566 millennials, 126 baby boomers, 285 Gen Xers, and 24 were either a part of Generation Z or the silent generation. Data accuracy was ensured via an attention-check question; participants who failed to answer this question correctly were immediately disqualified.
We defined financial health as the state of one’s personal financial situation. This definition may include but isn’t limited to: the amount in savings, the amount set away for retirement, annual salary, managing debt, etc. To determine financial health, we used a 6-point Likert scale with 6 meaning “very good.”
Financial literacy was determined using an abbreviated, three-question version of a financial literacy quiz from George Washington University. This test was administered to every person in the survey to measure their financial savviness. Composite scores were then calculated by averaging the percentage of correct answers for each age group.
In some cases, questions and responses were modified for clarity and/or brevity; an emphasis was placed on accurately showcasing the original intent of the participants. To maintain statistical accuracy, outliers have been removed where necessary, specifically in cases where ages were averaged and salaries were calculated. Percentages may not equal 100 due to rounding. The main limitation of this study is that the claims rely on self-reported data. There are several potential issues with self-reporting, which may include but aren’t limited to: selective memory, exaggeration, attribution, and bias errors. Another limitation is that respondents may have experienced difficulty in recalling the age they received their first credit card.
Fair use statement
Young adults may be eager to search online for credit card advice, but it’s important that the sources are reputable and well-researched. Share this in-depth study for noncommercial purposes with anyone who may benefit, but link back to this page so that its contributors can receive proper credit for their work.