Credit cards are ubiquitous in our financial system, so there’s a high chance your child will get one sooner or later. Introducing them to lending mechanisms early on is an excellent decision as it helps them build proper money management skills they’ll carry into adulthood.
If your child is ready for their first financial product, you might be considering a Capital One credit card for kids. This guide will outline everything you should know about this financial product so that you can decide if it’s the right option for your child. You’ll also learn how to prepare your child for their first credit card and how else to support their long-term financial stability.
Who Can Take Out a Capital One Child Credit Card?
Before exploring the details of Capital One kids’ credit cards, you must know if your child even qualifies for one. Like other lenders, Capital One doesn’t issue credit cards to minors since doing so isn’t legal.
Even if your child is of legal age (typically 18 or over), there’s a high chance they might not get a credit card because of the limitations imposed by the CARD Act of 2009.
According to the Act, anyone under 21 must demonstrate an independent ability to make payments before they’re considered as a borrower. Otherwise, they must have a co-signer over this age who can assume responsibility for the card.
Banks abide by the CARD Act’s guidelines, so they’ll only issue a credit card to your child if they meet the above conditions.
Capital One Kids’ Credit Card—Available Options
Capital One offers two credit card types your child might be eligible for:
- Secured credit cards
- Student credit cards
Capital One Platinum Secured Credit Card
Secured credit cards are typically intended for those without a solid credit history or people trying to rebuild their credit score. Young adults typically fall under the former category, so your child may qualify for this option.
As the name implies, secured credit cards are protected by security deposits that lenders use to counter the risk of non-payment. The collateral is refundable and typically the same as the credit limit, but Capital One lets users open a $200 credit card with a minimum deposit of $49.
Users can increase the credit limit to $1,000 after six months through timely payments and larger deposits. Capital One lets the cardholder get their deposit back if they use the card responsibly and may even extend an offer for an unsecured card to trustworthy borrowers.
Capital One Credit Cards for College Students
Capital One aims to support college students’ independence through three credit cards:
While the cards have similar features, there are some differences in the Annual Percentage Rate (APR) and rewards:
|Journey||29.99% variable||1% cash back on all purchases (1.25% with timely payments in the given month)|
|Quicksilver||19.74%–29.74% variable||1.5% cash back on all purchases|
10% cash back on Uber/Uber Eats
|SavorOne||19.74%–29.74% variable||1% cash back on all purchases|
3% cash back on specific categories (dining, entertainment, etc.)
8% on Capital One Entertainment purchases
10% cash back on Uber/Uber Eats
*Interest rates and rewards as of May 10, 2023
All cards require a ‘fair’ credit score, which Capital One defines through two criteria:
- There’s a record of loan defaults in the past five years
- The applicant has a limited credit history—they’ve owned a credit card for three years (or have been an authorized user of one)
If your child meets either condition, they can apply for a card provided they meet the aforementioned CARD Act requirements as well. You’d still want to make sure your child understands the gravity of credit cards before taking one out.
How To Prepare Your Child for a Credit Card
Qualifying for a card doesn’t mean your child is ready for one. Borrowing money is a great responsibility with long-term consequences, so you need to make sure your child can meet their obligations toward lenders.
To make this happen, take the following steps before encouraging your child to apply for any credit product:
- Teach your child how to use the card sensibly
- Help them build credit
Instill Financial Responsibility Into Your Child
Source: SHVETS production
Many children have checking accounts and debit cards before getting a chance to apply for a credit card. While the basic difference between a debit and credit card is obvious enough, you must ensure your child draws a clear line between the two and doesn’t spend the bank’s money as they would their own.
Emphasize that while the credit limit is technically the amount they’re allowed to spend, they should only use credit funds when necessary. Rewards and perks might make credit card use quite compelling, but your child should resist the temptations and always pay with their own funds before using borrowed money.
Let your child know that using credit for shopping sprees and other reckless spending habits is out of the question. Set strict rules as to when they can use the money and for what. Allowed purchases can include:
- Small college expenses (books, supplies, etc.)
- Necessary clothes or items that currently can’t be funded otherwise
- Useful tech and equipment
Timely payments are also a crucial consideration, as they’re necessary for a strong credit profile that will allow them to take out loans in the future. Make sure your child prioritizes them over other expenses, as any late or missed payments can cause long-term damage to their credit score.
Help Your Child Establish and Build a Strong Credit Profile
As mentioned above, Capital One’s student credit cards are reserved for those with at least Fair credit. Your child will likely face similar limitations when applying for loans throughout life since lenders always prioritize those with a proven track record of responsible credit use.
Because of the CARD Act’s restrictions, starting a credit profile can be a significant challenge for young adults. Without your help, there’s a high chance your child would have to spend their first couple of college years without a credit card or similar financial products. This might put them at a disadvantage compared to their more independent peers.
To ensure this doesn’t happen, many parents add children to their credit cards early in life. While this method can help them start a credit history sooner than they could on their own, it suffers from a few major drawbacks:
- You must give your child unrestricted access to your credit card—this isn’t a good idea unless they’ve proven themselves responsible
- Your child will inherit your credit score, and the two will stay connected—poor spending habits or credit behavior can damage both credit profiles
- When you remove your child from the card, all credit history associated with it gets deleted from their profile, so they must start from scratch
Luckily, there’s a way to help your child establish and build credit without these caveats. If you want to give them a leg up and support their independence, check out FreeKick.
FreeKick—Parent-Sponsored Credit Building for Minors and Young Adults
FreeKick is created by Austin Capital Bank—a Federal Deposit Insurance Corporation-insured (FDIC-insured) bank. FreeKick combines an FDIC-insured deposit account with additional services to help you build and monitor your child’s credit profile.
You can make your child’s adulthood easier in three quick steps:
- Create an Account—Go to FreeKick.bank and choose your plan
- Set It and Forget It—When you open the account, FreeKick will automatically build your child’s credit history for the next 12 months
- Keep Growing—After the 12-month term, you can renew the account for another 12 months or cancel it and receive your deposit back
With FreeKick, you don’t have to worry about yet another monthly subscription. FreeKick offers a FREE plan with a one-time deposit, as well as two tiers with a small annual fee and lower deposits:
If your child is of legal age (18 in most states), FreeKick will immediately report their credit history to the three major consumer credit bureaus to help them establish a credit profile. For minors, reporting is activated upon reaching the age of majority because credit bureaus only accept reporting for adults.
FreeKick doesn’t impose any commitments—you can close the account at any time for free. Note that if you do it while your child is still a minor, no credit reporting can be done on their behalf.
Enjoy Peace of Mind With FreeKick’s Credit Profile Monitoring
Each year, one in 50 U.S. children falls victim to identity fraud. Besides impersonation, children are at risk of synthetic identity fraud—a sophisticated crime where the perpetrator combines a child’s Social Security number (SSN) with fake information to forge a new identity.
The following example from the Federal Reserve’s whitepaper shows what synthetic identity fraud looks like:
Freezing your child’s credit report is often advertised as a good safety measure against this type of fraud, but it can stunt the child’s ability to build a credit profile because their report will be inaccessible to new lenders until you remove the freeze.
To protect your child’s information while improving their creditworthiness, FreeKick offers advanced credit profile monitoring.
Set your child up for stable adulthood and reduce the risk of identity fraud—sign up for FreeKick.
*Capital One is a registered trademark of Capital One Financial Corporation.
Featured image source: Antoni Shkraba