Opening Credits, the Q & A section of Creditcards.com, recently interviewed me about the law in Alabama as applied to minors who obtain credit cards in their own names.
Ms. Erica Sandberg writes a periodic advice column on the popular credit advice website CreditCards.com. One of her readers had a question about the enforceability of a credit card contract entered into by a minor. In Alabama, minority is a defense to a breach of contract lawsuit. To enforce a contract, the creditor must show that there was an offer, an acceptance of that offer, consideration exchanged, capacity, and legality. The age of the person entering the contract can create an issue regarding the person’s capacity to enter into a contract. The general rule in Alabama is that contracts entered into by minors are voidable. See Ex Parte Odem, 537 So.2d 919 (Ala. 1988). This means that they aren’t automatically invalid, but the minor cannot be compelled to perform their obligations under the contract if they do not choose to do so.
This includes contracts for the extension of credit, such as a credit card. In other words, if a lender is dumb enough to lend money to someone who isn’t old enough to enter a contract, the law doesn’t have much sympathy for them. That’s why so many student loans are co-signed by parents or spouses.
Keep in mind, however, that lying on a credit application about your age or income can be considered fraud, and that could create a separate route for a creditor to take legal action against you. Though to be honest, in hundreds of debt collection cases I’ve dealt with, I have never seen a credit card company or debt collector sue for fraud on a credit application.
The original Creditcards.com article can be found here: