How Old Do You Have To Be To Get a Credit Card in Canada?
Credit cards can be a great way to build credit history and accumulate rewards points or cashback. But how old do you have to be to get a credit card in Canada? And just because some types of cards are available to teens, should they have one?
With power comes responsibility. Before you rush out to get your teen a credit card, find out what types of cards are available to them and what every teen should know before getting their first one.
Can You Get a Credit Card If You Are Under 18?
Technically no, according to current legislation, you cannot get your own unsecured card until you reach the age of majority in your province.
But that doesn’t mean your teen is out of options. There are many ways teenagers can get access to credit cards before they reach the age of majority.
How Old Do You Have To Be To Get a Credit Card in Canada?
To get an unsecured credit card in Canada, you have to be the age of majority in your province/territory. Here is a breakdown by province and territory:
Must Be 18 Years Old
- Prince Edward Island
Must Be 19 Years Old
- British Columbia
- New Brunswick
- Newfoundland & Labrador
- Northwest Territories
- Nova Scotia
Credit Card Options for Teenagers under 18
Just because a teen can’t get their own unsecured credit card under 18 doesn’t mean they don’t have options. Here are 4 ways your teen can obtain a card as a minor.
1. Authorized User on an Existing Account
Some credit card companies will allow authorized users as young as 13 years old. An authorized user has access to the credit card account but is not the primary cardholder. Authorized users will have a separate card that is attached to the primary credit cardholder’s account.
Before agreeing to add someone to your account as an authorized user, remember that their credit usage will impact your credit history and score. You will be responsible for anything that is charged to your account by an authorized user.
Authorized users can be an excellent option for parents wanting to help their children learn about credit.
When I was in high school, my parents made me an authorized user on their account to have access to credit in case of an emergency when traveling on school trips. Thankfully I never had to use the card, but it was good to know that it was there.
2. Prepaid Credit Card
Prepaid credit cards are similar to gift cards in that if you buy a prepaid credit card for $100, you have $100 to spend. Look for them the next time you see a credit card display at your favourite big-box retailer.
With prepaid cards, you are not borrowing money from a credit card issuer. There is no registration required for these types of cards, so they cannot help you build your credit.
Prepaid cards do not incur interest charges like regular credit cards, and it is impossible to overspend your limit. But they also come with a fee structure, including fees for non-use. Make sure to read the fine print before purchasing this or any other credit product.
3. Secured Credit Card
Some credit card providers offer a secured credit card. This is a credit card backed by your money. You provide the cash collateral for the card so that there is no risk to the credit card issuer.
The benefit of secured cards compared to a prepaid credit card is that secured cards will help build your credit. Credit card companies will report your payment history to credit bureaus. As such, a secured credit card can be an excellent way for a teen to start building their credit history.
4. Visa Debit or Mastercard Debit
A Visa debit or Mastercard debit card isn’t actually a credit card; rather, it’s a debit card affiliated with a credit card issuer, like Visa or Mastercard. This means that they are accepted anywhere Visa or Mastercard is accepted.
Lenders will not report your Visa/Mastercard debit card activity to the credit bureaus. So these cards will not help you build a credit history. However, they are an alternative for teens learning how to manage their money and responsibly use credit cards. They may also offer some of the purchase protections offered by Visa and Mastercard.
What Type of Credit Card Is Best for My Teenager?
What type of credit card is best for your teenager will depend on their age. Some products are more appropriate for tweens and some for teens.
If you are looking for a credit card for a tween (aged 11-13), you may want to consider a Visa/Mastercard debit card or a prepaid credit card.
And if you’re looking for a credit card for your minor teen (aged 14-17), you may consider a secured card or setting up your teenager as an authorized user on your credit card.
How to Get a Credit Card for a Teenager
Whether you are getting a credit card for a teenager who has reached the majority or for a minor, it can be an easy 3 step process.
- Decide what type of card would be best
- Unsecured credit card?
- No-fee credit card?
- Authorized user?
- Look into options for that type of card.
- Shop around and compare cards based on fees, rates, benefits, and rewards points
- Apply for the credit card
Before Getting Your Teenager a Credit Card
Credit cards are a powerful tool. But they should always come with education to set your teen up for future success in managing their finances. Before rushing to get your teenager a credit card, here are some credit vocabulary and lessons for responsible use that you can go over with your teen.
- Credit bureau – an agency that keeps track of your credit report and score. Canada has 2 credit bureaus – Equifax and Transunion.
- Credit score – a number based on all of the components of your credit report. Different lenders and credit bureaus will have different ways of calculating credit scores.
- Credit report – a credit and lending history that also includes your demographic information.
- Credit limit – the dollar amount that you can borrow without penalty.
- Minimum payment – the lowest monthly payment required by the lender to keep your account in good standing.
- Interest rate – rate accrued for any outstanding balance on your credit card, even after making the minimum payment.
Lessons for Responsible Use of Credit Cards
- Know your credit limit and stay within it. It is a good idea for teens to start with a lower credit limit until they learn how to manage this new responsibility. Educate your teen on only charging what they absolutely have to on their credit card.
- Credit cards are not a source of income. If you cannot afford the item, you cannot afford to put it on a credit card. Do not live off your credit card – eventually, that money needs to be paid back with interest. And credit cards have some of the highest interest rates.
- Pay off your credit card in full every month. Only charging things that you can afford will help to ensure that you pay off your balance in full every month. Doing so will avoid interest charges.
- The minimum payment is to the benefit of the credit card issuer, not you. The credit card company is not doing you a favour by only insisting on the minimum payment. Only paying the minimum every month can result in interest charges higher than the original item’s cost.
- Avoid late payments. Set a reminder in your phone to always pay off your credit card on time. Late payments will incur an interest charge for the whole month.
- Monitor your credit card account for fraud. Fraud happens. And although credit card issuers have great algorithms to detect it, charges can slip through the cracks. Regularly monitor your statement and account for all charges, and report any suspected fraud immediately.
- Know your rights. As a credit card user, you have rights, and everyone borrowing money should know their rights and responsibilities when doing so.
Credit Card Tips for Teens
Here are 5 tips to help your teenager use their credit card responsibly.
- Maintain a low balance.
- Always pay off your balance in full every month.
- Regularly review your transactions for fraud.
- Consider no-fee options.
- Use your credit card to help build your credit, not to buy things you can’t afford.
Helping Your Teenager Build Their Credit History
A teenager’s first credit card can help them to build their credit history. Here are some ways you can help your teenager with their credit history.
- Explain how credit bureaus work. If you don’t know, this can be a good thing to learn together.
- Continue to stress the importance of responsible use. Irresponsible use of credit as a teenager (incurring credit card debt) can have long-lasting effects on one’s credit history and score.
- Not all teens will be responsible credit card users. Secured cards can be an excellent option for teens or spenders of any age who want to build their credit history.
Depending on your child, you may not want them to access a credit card before becoming an adult. But credit is not the only way that a teenager can build their credit history. Having a cellphone bill in their name and paying the bill in full every month can also help build your teen’s credit.