This Card Is the Safest Way for Teens to Build Credit (2024)

Parents aren’t lacking options when it comes to spending cards for their children, but Step’s Visa Card offers something no rival card can: credit building. Establishing a high credit score early will help your teen qualify for loans they may need in the future (for, say, college or a car) and with better repayment terms.

Step can offer this perk because, unlike most teen-focused cards, it is not technically a debit card, but rather a secured credit card. As a secured card, an upfront cash deposit determines your credit limit, meaning your child can only spend funds deposited in their Step account, preventing them from racking up a balance and interest charges as they might with a traditional credit card.

However, teens with Step cards can also access features more commonly associated with debit cards, such as the ability to earn interest on their savings and withdraw money from 30,000 ATMs for free.

What does the card offer?

Step can help your child establish a solid financial record early. The average teen Step user has a credit score of 723 when they turn 18, the company reports. That is a “good” score by credit rating standards and far above the typical score of 679 seen among 18 to 25 year-olds last year, according to credit bureau Experian.

While parents can help teens establish a credit history by making them authorized users on their own credit cards, most cards don’t let you set spending limits for those users potentially leaving you to foot the bill later. Step’s separate account avoids this problem and ensures they cannot overspend.

Guardians will need to “sponsor” the account as under-18-year-olds cannot legally obtain a credit card independently. Sponsors get a Step account too, providing them insight and a bit of control over their child’s account.

They can view all their teen’s card activity, add money to the teen’s account, set up recurring allowance payments and freeze a teen’s card. However, unlike with some other cards, parents cannot limit where a teen spends. Step does however dictate that no more than $250 can be withdrawn from an ATM within a day or $1,000 in 30 days and only a $1,000 can be spent within a day on your card.

Teens can fund their account with direct or cash deposits, track their spending and send money to family and friends. There are no costs to obtain or use the Step account as it doesn’t charge maintenance, subscription or overdraft fees and lacks any minimum balance requirements.

Are the perks worth the fees?

Step’s lack of fees and potential for interest and rewards earnings make it a free way to educate your teen about credit usage without real risk to their—or your—budget.

Teens who set up a direct deposit of at least $500 a month can earn 5% interest on up to $250,000 in savings, as well as cash back on select purchases. That means they would earn $25 a year in interest on $500 in savings, while those who squirreled away $5,000 would net $250. That’s a top payout on par with the best savings account rates.

Direct depositors can also earn rewards when they buy certain services or products with their card. Step offers 3 points per dollar spent with a list of specific merchants that change monthly; 2 points on dining, food delivery and charitable donations; and 1 point on entertainment, gaming (for example, charges on Minecraft or Roblox) and streaming. Each point is worth 0.01 cents, meaning 500 points equals $5. If your teen spent $100 a month within each of those three different point bands, they would make $72 back in a year.

Who benefits most from this card?

Because Step cannot legally report payment information to credit bureaus until your child turns 18 and can then only share two years’ of data, this account works best for older teens. Its lack of common parental controls on spending and the fact that many perks are tied to direct deposits, may also make it a poor choice for younger children.

Parents more interested in teaching their teens general money management and spending skills than in building credit, should consider the Capital One MONEY Teen checking account debit card, our pick for best free debit card for teens. This card also pays out interest—albeit at a much lower rate—and comes with customizable daily ATM and purchase limits to keep teens on track.

How we picked

To pick Buy Side from WSJ’s Best Debit Cards for Kids and Teens, we looked at card options available to those under the age of 18, including prepaid debit cards, checking account-linked debit cards, secured credit cards and brokerage account-linked debit cards. To pick the best ones, fees to open or maintain the account were most heavily weighed, followed by the range of parental controls available and other perks offered, such as interest payments, rewards or educational tools. We also favored cards that were easy to obtain and for parents to monitor with a well-reviewed app experience.

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