Credit cards for an 18-year-old

[Nords]

I canceled a credit card today!

Over five years ago when our daughter turned 13 we got her a credit card. I don't remember how we stumbled upon Citi but at the time it may have been the only company that would let a teen have a card with her name on it. She set up the account for online payment through her checking account and started learning experientially. She'd already had a checking account for four years by this point so she did OK.

I think her credit limit started at $1500. I occasionally helped her reconcile the account during the first two years, but she mostly had to teach herself to enter her charges in Quicken as she made them and to not make a paper trash pile in a desk drawer. Online payment was a must. A couple times I had to call Citi to raise the credit limit (it got all the way up to $3800) for airplane tix. I haven't had to do a thing for several years. I've never even logged into the website.

Now she's at college, and her campus is Chase territory, but for some reason the bank has a terrible reputation with the students. When she turned 18 she started applying for other credit cards (NFCU, PenFed, Fidelity, USAA) but they turned her down. (Despite having a healthy CD balance at PenFed and a Roth IRA at Fidelity.) Her assets and a $250/month NROTC stipend weren't considered enough income to qualify, despite her long-term relationships with some of the institutions.

We went back to Citi to ask them to transfer the card over to her name. Despite her application (stating income & assets) and my assertions that she was the one with the five-year payment history, Citi turned us down. Twice.

Last Christmas she got an offer from Amex Blue. She applied and was accepted. Over the last six months she's religiously paid off that balance every month to get a start on "her first credit score". That responsibility has made her even more zealously frugal with her money, and it inspired her to really confront her budget & expense numbers. She's made real progress on this in just six months.

Last week she re-applied for USAA and was accepted online. (Did the Amex Blue give her a track record? Did USAA recognize the family name of the blogger that they've invited to their conference?) The card arrived yesterday and she immediately activated it. Now with two credit cards in her hands in her own name, we could cancel the Citi card.

You know what happened next. Her call was transferred to the Citi retention team and we got the full-court press. They even pointed out that we were "owed" $14.62 in rebates but would lose them if we didn't keep spending on the card until we reached their $50 rebate threshold. I politely yet firmly explained that they'd had a chance to keep us twice before and that they'd turned us down both times. They apologized profusely and pointed out that we were owed $14.62...

We finally broke through that DO loop and they "reluctantly" and "regretfully" agreed to cancel the card. Luckily their address on file is her college dorm, so I won't have to read any of their Jackson Five "We want you back!!" letters...

She proudly sliced up her Citi card into the trash. I then presented her with the other three cards that Citi's sent me over the last five-plus years, still unactivated and glued to their cover letters. She had a lot of fun cutting them up to.

Her NROTC stipend goes up to $300 next month, but she's already committed to sending the extra $50/month to her savings account and "living like a freshman". (She read about it on a financial-independence blog somewhere.) She's even decided to get a $12/tour job as a campus guide and use those earnings to pay for her ZipCar addiction.

One step closer to getting her off the payroll!

 

[kaneohe]

Nords,

Your DD is lucky to have you as her trainer. Perhaps it might be a useful
exercise to have her poke Citi with her tale to remind them that today's
beginner is tomorrow's spender. It will teach her to choose her words carefully and with restraint and perhaps, if sent to a high enough position, will trickle down to the right person bearing large mea culpa gifts.....like 50K points.

Sure sounds like the cc companies have done a 180 from what they used to do.

 

[LOL!]

Seems a petty reason to cancel a card. Was the Citi card on HER credit report? Would canceling it affect HER credit score?

I think one needs more than 2 cards. Just this month, our Chase card was compromised the day before a big vacation. They called on Friday night and said, we are sending you new cards that will get there on Tuesday. We were not going to be there on Tuesday.

So with the Chase card out of action, my spouse decided to use the Citi card, but guess what? We hadn't used it in a while and had been expired for several months. Didn't they send us new cards? Yes, but she put them somewhere without activating them, so the cards are really "lost". She had to call them up and get new cards issued. They would send them right away, but we weren't going to be there.

With two cards down that left a third card as backup: CapitalOne that worked. And somewhere around here is a USAA card as well, but it has never been used, so maybe it has expired as well?

 

[GregLee]

Sure sounds like the cc companies have done a 180 from what they used to do.

I'm not sure I see a change. I had a hard time getting my first credit card back in 1969 (plus or minus), because (I was told) I didn't have a credit history (never having borrowed any money). But then, after a time using that first card, I got inundated with offers of new credit cards, which I usually didn't want. I got the impression that the principle was: if I wanted a credit card, I was not the sort of person the CC company would care to deal with. But if I didn't want one, then they would love to have my business.

 

[LightningDawg]

I have been a long time carrier of a Citicard mastercard. My daughter has had this card to use (as an authorized user on my account). I thought it would help "build her credit" but I must have been misinformed. Regular payments only affected my credit.

She just graduated from college. I thought she should get a credit card of her own. She received a student Discover card application a few months ago, filled it out, but was turned down due to no credit history and no income.

I read an article that Citicard was one of the best CC for college students, so we went to their website and applied for one in her name. She got approved right away, no problem. I don't understand why the OP had problems with them, but we sure didn't.

 

[ERD50]

I recently tried to get DD set up with a credit card with our credit union. She was having problems getting accepted, then they mentioned that if I co-signed it would be no problem, so I did.

I guess I should put a reminder in to see if I can get off that once she has a credit and full-time salary history, maybe in a year or two.


-ERD50

 

[East Texas]

I made the young 'un an authorized user on my oldest USAA credit card when she was in high school. She had been working since she was 16 and this was one way I could keep check on her ability to manage credit. By the time she graduated from college she had an excellent FICO score (not sure why LighteningDawg's daughter didn't get credit as an authorized user....) Once she got her own USAA credit card I removed her from mine.

 

[LightningDawg]

I made the young 'un an authorized user on my oldest USAA credit card when she was in high school. She had been working since she was 16 and this was one way I could keep check on her ability to manage credit. By the time she graduated from college she had an excellent FICO score (not sure why LighteningDawg's daughter didn't get credit as an authorized user....) Once she got her own USAA credit card I removed her from mine.

I don't understand it either. She was told she didn't have a credit history and coupled with no income, she was denied. But thanks to Citicard, she got a credit card in her name (and I did NOT have to co-sign).

 

[Nords]

Seems a petty reason to cancel a card. Was the Citi card on HER credit report? Would canceling it affect HER credit score?
With two cards down that left a third card as backup: CapitalOne that worked. And somewhere around here is a USAA card as well, but it has never been used, so maybe it has expired as well?

I canceled the card because it was my fourth. We tried twice to get Citi to make it "her" card, but they weren't interested until it was too late.

I don't need a fourth card. I barely use my second one (only at places which don't take Amex) and wouldn't use the third unless the first two were out of commission.

That Citi card had a limit that was much much lower than my other three cards and the worst of the rebates. It'll be interesting to see if canceling it affects my credit score over the next few years.

Both her new Amex Blue and her new USAA cards have better rebates than the old Citi card. In a year or two (or definitely after she's commissioned and has "real" income) she'll probably be able to upgrade to even better rebates.

I might have canceled that card anyway, just for the sheer pleasure of getting a kid off the payroll...

 

[FreeAtLast]

My son who is 18 has a Debit/Credit card from our local credit union. It is a youth account which is a joint account with me. He keeps a balance in the account and that is his spending limit.

He has an AMEX card on my account for emergencies and household purchases.

Credit card will probably come in a few years.

 

[deserat]

Thread hijack - when are you speaking at the USAA conference - where is it? That's cool - I guess you're famous now -)

 

[Brett_Cameron]

I just got my 15 year old son a prepaid debit card from USAA. Let the training begin!

 

[Nords]

Thread hijack - when are you speaking at the USAA conference - where is it? That's cool - I guess you're famous now -)

http://www.early-retirement.org/forums/f28/usaas-invited-me-to-san-antonio-57007.html#post1091177

8-9 Sep. I think much of the second day will be taken up with a 9/11 remembrance.

They invited me to attend, but I'm not sure any of us (17 so far) are expected to speak. We're going to see & hear a lot of cool stuff and then blog about it.

This appears to be the second annual conference, and only a few are repeat attendees. I'm not sure if that's because USAA is spreading the net to a wider audience, or due to blogger attrition, or due to last year's bar bill.

 

[arebelspy]

I canceled the card because it was my fourth. We tried twice to get Citi to make it "her" card, but they weren't interested until it was too late.

Why not transfer it at that point, if they were willing? It having a longer credit history would have benefited your DD. And while they had turned you down twice so canceling was the correct move, once they were willing to transfer, that likely would have been the same amount of work as canceling and more beneficial. Just a spite thing at that point, or what?

I do see you said the newer cards have better benefits, but she could use those cards, leave the citi idling, and just helping her credit score because of the amount of time the line was open...

 

[nwsteve]

I recently tried to get DD set up with a credit card with our credit union. She was having problems getting accepted, then they mentioned that if I co-signed it would be no problem, so I did.

I guess I should put a reminder in to see if I can get off that once she has a credit and full-time salary history, maybe in a year or two.

-ERD50

ERD--I used a similar strategy for my DD to get her a card at 16/17, and specifically noted on the application, that my guarantee would be null and void on the date of DD's 21st birthday. This was with Capital One.
Like others, the credit card actually showed up on my credit report. When I sent by snail mail a request to have myself removed and enclosed a copy of the notation on the original app, I got a response that they could not remove me from the card. I called to find out why my notation was not being honored. The "Customer No-service rep" basically told me that if I wanted off, DD would have to get a new card and cancel the current card and only she could cancel. --so we cancelled ;-)
Nwsteve

 

[ERD50]

ERD--I used a similar strategy for my DD to get her a card at 16/17, and specifically noted on the application, that my guarantee would be null and void on the date of DD's 21st birthday. This was with Capital One.
Like others, the credit card actually showed up on my credit report. When I sent by snail mail a request to have myself removed and enclosed a copy of the notation on the original app, I got a response that they could not remove me from the card. I called to find out why my notation was not being honored. The "Customer No-service rep" basically told me that if I wanted off, DD would have to get a new card and cancel the current card and only she could cancel. --so we cancelled ;-)
Nwsteve

Thanks for that experience. I guess it may be the only way they can do it - changing 'ownership' could require a new card, that might even be the law, not just their policy.

At any rate, this is through our Credit Union, and they have been very co-operative in the past, so I imagine it will go about as smoothly as is possible within their legal constraints.

-ERD50

 

[Nords]

Why not transfer it at that point, if they were willing? It having a longer credit history would have benefited your DD. And while they had turned you down twice so canceling was the correct move, once they were willing to transfer, that likely would have been the same amount of work as canceling and more beneficial. Just a spite thing at that point, or what?
I do see you said the newer cards have better benefits, but she could use those cards, leave the citi idling, and just helping her credit score because of the amount of time the line was open...

Citi had their chance-- twice.

At that point I felt that I was just being promised anything, whether or not they'd actually do it. We still would've had to go through the entire transfer application process, approval, and so forth. I can almost hear it now: "Great, we're happy to keep you as a customer! Please hold while we transfer your call..."

Remember years ago when Discover card used to be a great deal, and then they started shaving away at it? Spouse and I put ours in our desk drawers for a couple years of "idling" and moved on to better credit card deals. On the third year we got a letter from Discover canceling our accounts.

 

[arebelspy]

Citi had their chance-- twice.

At that point I felt that I was just being promised anything, whether or not they'd actually do it. We still would've had to go through the entire transfer application process, approval, and so forth. I can almost hear it now: "Great, we're happy to keep you as a customer! Please hold while we transfer your call..."

Remember years ago when Discover card used to be a great deal, and then they started shaving away at it? Spouse and I put ours in our desk drawers for a couple years of "idling" and moved on to better credit card deals. On the third year we got a letter from Discover canceling our accounts.

Fair enough; if you don't feel it was a legitimate offer from them, it makes sense to just cancel then.