Applying for a credit card is similar to taking a loan, and can be a test of how financially responsible you are. Credit card issuers are bound by Australian laws to verify how much you can feasibly repay, and not give you a credit card limit exceeding that amount.
In Australia, you legally need to be 18 years old to apply for financial products like a credit card or a personal loan. But age isn’t the only qualifying criterion when applying for a credit card.
Can I get a credit card at 18?
A typical credit card application will require proof of identification, including age, and you’ll also need to prove that you’re an Australian citizen or permanent resident. Further, you’ll need to submit proof that you’re employed and earn an income more than the minimum level specified by the credit card issuer.
Credit card issuers will also look at your credit history to check if you’ve had any issues repaying debt in the past. Before 18, you may not yet have a full-time job, and may not have developed a credit history either. For these reasons, 18 years is the minimum age for credit card applications.
One alternative to applying for your own credit card is requesting an additional card linked to your parent’s credit card account. Although this won’t help you build your credit history, it can give you the experience of using a credit card responsibly.
Your parents will be able to monitor your spending and can advise you on your spending patterns. You may also want to consider a debit card with your bank account a prepaid card or even buy now, pay later services, like Afterpay.
How to get a credit card at 18?
Owning a credit card may be a convenient option if you’re looking to gain access to a line of credit. While you can get a paying job even if you are younger than 18, you cannot legally apply for a credit card until that age. Besides being over 18 years of age, here’s what you may need to qualify for a credit card:
- Employment: Most credit card companies cater to those working full time, which means part-time employment as a student may not help you qualify.
- Earnings: You have to earn at least $30,000 to $40,000 from your full-time employment, and this must be verifiable through, for instance, your payslips. However, if you earn less than this minimum income, you may want to consider applying for a basic credit card which offers no benefits and requires no annual fee payment. Also, you may be able to choose a card with a lower credit limit which potentially could be easier to repay.
- Credit Score: You’ll probably need an above-average credit score to qualify for a credit card, although younger people usually don’t have much credit history to merit such a rating. You can take steps to boost your credit score by, for instance, applying for a phone plan or a utility connection in your name. Remember that you’ll need to pay your bills for either the phone or the utility on time and in full for as long as possible to ensure your credit score is impacted positively.
If you do qualify for a credit card, you should plan on repaying the full amount due per the credit card statement as this too can help you improve your credit score. In general, you should remember to focus on keeping your credit card expenses low and repaying the full balance.
If you’re a student, you may have many other expenses which can restrict your borrowing power, and affect how much you can afford to repay. Credit card debt may pile up in such situations, which can also challenge your ability to manage your finances.