In years past, college students could pick up new credit cards like bags of potato chips. Since Feb. 22, 2010, however, getting a credit card under the age of 21 hasn't been as easy. The Credit Card Accountability, Responsibility and Disclosure Act of 2009 prevents credit card issuers from issuing cards to underage consumers unless the applicant has a co-signer or can show "an independent means of repaying any obligation."
For young adults without jobs or assets, co-signing or becoming an authorized user on a parent or guardian's account is the only way to obtain a credit card in their own name. Co-signing differs from sharing an account with an authorized user in that both parties are jointly liable for repayment, while an authorized user isn't legally responsible for the debt.
Not all issuers allow co-signing
Despite the fact that co-signing is one of the only ways for young consumers to obtain a credit card, not every card issuer allows consumers to apply with a guarantor. Bankrate.com surveyed some of the largest card issuers and found that some simply don't permit co-signing.
This may be because some institutions might be reluctant to deal with "the logistics" of servicing joint accounts, says Dennis Moroney, research director of bank cards at CEB TowerGroup in Needham, Massachusetts. With authorized users, he says, "there's no question about who owns the debt."
Which credit card issuers allow co-signing?
|American Express||No||Cardholders can add a card with a custom spending limit to their account for a teen or young adult who is 15 years or older, says spokeswoman Elizabeth Crosta.|
|Bank of America||Yes||After qualifying, a parent or guardian could add an adult under 21 years of age to the account. "And a co-signer can be added to any credit card account," says spokeswoman Betty Riess.|
|Capital One||No||Co-signer accounts are not offered. "We're offering accounts to consumers under 21 based on means to independently pay," says spokeswoman Pam Girardo.|
|Chase||No||"Once the account is booked, a customer can request to add an authorized user," says spokesman Rob Tacey. "The request can be made by contacting Chase via phone, letter or email."|
|Citi||No||Citi offers student credit cards where "no co-signer is required" -- meaning you need to have the ability to pay. "Citi does not offer a co-signer credit card for college students," says spokeswoman Emily Collins.|
|Discover||Yes||"Once we review the application, we will determine if they need a co-signer and then send them a notice," says spokesman Matt Towson.|
|Wells Fargo||Yes||"Per the CARD Act, applicants under 21 must submit written applications that include their information, as well as information and a signature from their co-applicants," says spokeswoman Natalie Brown.|
Check with the card issuer
Most people younger than 21 years old can qualify for a credit card without a co-signer, says Nessa Feddis, senior vice president and deputy chief counsel for Consumer Protection and Payments at the American Bankers Association.
"Many people under 21 have part-time jobs or assets. They work during the summer, earn money, and so, would therefore be eligible for a card," she says.
When co-signing is the likelier route, call ahead to the bank or credit union before applying to find out what the process involves. It may be a matter of submitting an application and letting the issuer decide whether a co-signer is necessary.
"If they do not qualify for the Visa with their income, then we can offer them a Visa with a co-signer," says Suzie Hagardt, lending systems administrator at Rivermark Community Credit Union, in reference to applicants younger than 21. "We would use the income from the co-signer to qualify them."