As the consumer credit card website Card Hub notes, getting a credit card for your child is part of a continuum of personal money management. You could potentially open a credit card for your child, barring age minimums, at any time. The question is if you, and the child, are ready for that important step. If you are, several avenues and credit card choices are available for minors and of-age children alike.
You should have a discussion about finances with your children well before you give them a card. While there are no hard and fast rules to determine your child's readiness, your talks should address the potential dangers of credit card use. It should also cover spending limits and who ultimately foots the charges.
Becoming an authorized user may be the only way a child 18 and under can get a credit card because he cannot get a cosigner at that age. Authorization means that you add your child's name to your credit card account. Children between 18 and 21 in school may qualify for credit cards set up just for students. Otherwise, cosigning lets you open a card for a child with you as the primary account holder. The child would only get cards for which you qualify.
Benefits of Credit
At this "training" level, your child-as-authorized-user is building credit because the account appears on his credit report. If your credit is good, it will help your child's credit. If it's not, it will hurt. With student cards, the child has to demonstrate that she can pay her bills -- through a part-time job, for example. Some student credit cards offer no annual fees and some type of cash-back reward structure, but they will let him build credit before hitting the job market.
Hazards for Child and Parent
While being authorized helps your child practice using credit, the bills still go to you. Unless you place spending limits and establish clear rules and consequences for abusing credit card privileges, your child's overspending can wreak havoc on your own credit. Cosigning for an of-age child can be a stressful proposition in that both you and your child are responsible for repayment. Any payment lapses on your child's part will become your burden.
- Today: So Your Kid Wants a Credit Card. What Do You Do Now?
- CBS News: Pitfalls of Getting Your Child a Credit Card
- Consumer Finance: I Want to Help My Daughter Start Her Credit History. What Should I Do?
- Consumer Financial Protection Bureau. "§ 1026.51 Ability to Pay." Accessed March 3, 2020.
- Experian. "Will Being an Authorized User Help My Credit?" Accessed March 3, 2020.
- Experian. "Authorized User vs. Cosigner." Accessed March 3, 2020.
- FICO. "Fair Isaac Innovation Will Restore Authorized User Accounts to Calculation of FICO 08 Scores." Accessed March 3, 2020.
- VantageScore. "Did You Know? How Students Can Build Credit." Accessed March 3, 2020.
Timothea Xi has been writing business and finance articles since 2013. She has worked as an alternative investment adviser in Miami, specializing in managed futures. Xi has also worked as a stockbroker in New York City.