Credit cards are generally considered financial tools for adults, but there are situations where it makes sense for a child to have their own credit card. And when you say “I have my own credit card,” it means that someone under the age of 18 can’t open their own credit card account, which means they will be “added to their credit card.” So, instead of opening a new credit card by name, if you have a credit card, you will need to add it to your account as an authorized user.
That being said, if you’re wondering whether your child should get a credit card in the first place, the short answer is that it depends. There are many potential advantages and disadvantages to consider. Some of them depend on your unique situation and the level of maturation of your child, but you need to consider the pros and cons of each one, as well as how you will apply to you before diving in.
Benefits of giving your child a credit card
You don’t need to get a credit card without supervision, especially if you’re learning how to use it first. However, giving a credit card to a child can provide a lot of potential benefits worth considering, if done properly.
You can start building your child’s credits
Not all credit issuers report authorized user activity to the credit department, but you can also use your child. Certified Users With your credit card, it may help them to make something valuable Credit History They are needed later in life. Having a credit history under their belt can help young adults work towards their qualifications First credit cardand student loans, and even mortgages over time.
Your child can learn positive financial habits
Having a credit card for children will help children, especially teenagers, to know that their actions will have consequences. If they charge a purchase on their card, they will need to pay back what they owe over time. And if they spend more than planned, they will ultimately learn to understand that the bill will always be due.
Plus, if you have Credit cards that allow you to set limits You have better control over the credits available to your children each month about how much an authorized user can pay – you can lower that limit if necessary.
Your child is credited to the emergency
Children with credit cards also have valuable tools to use in emergencies. For example, a credit card for children under 18 can be very useful if teenagers may run out of other ways, or if they don’t have children in the summer, need a safe way to buy, and if they need a gas.
The disadvantage of giving your child a credit card
There are many reasons why parents might consider adding their children to their credit card accounts, but there are as many “gotchas” as you should be careful. Here are some things to keep in mind.
You need to monitor their spending
While a child’s credit card may seem like a good idea, it could create more work for you. Depending on the conditions you set to use your card, you may need to track the transactions in your account statement to understand how much they owe you and where they came from. If you have a teenager who works part-time, will they pay you back from their pay? Will it be deducted from their allowance each month? Or maybe you’re okay with paying their fees up to certain limits and just want to make sure they don’t overuse them.
No matter what rules you set, you need to prepare to discuss your spending habits. If the card is allowed, you can also set spending limits and turn on transaction alerts.
Opens the door to potential spending issues
Using credit cards on minors under the age of 18 means that children and teens need to deal with issues that arise when they have their own credit cards. What happens when your child spends too much time with friends or requests a non-refundable online purchase on their card? If your child is an over-person or otherwise you don’t want to pay for fraudulent purchases, you can deal with all sorts of expensive issues.
I’m responsible for repayment
Ultimately, you are the person responsible for repaying all purchases charged to an approved user credit card. This means you are on the hook, both on the good and bad, for your child’s choices.
That’s why it’s important not only to tell your child about the responsibilities that come with your card, but to make sure you’re sure your child is mature enough to handle that responsibilities. Still, mistakes can happen.
How to tell your child about financial responsibility
If it’s going to help Your child learns the trust and exit,The following steps will help you get started.
1. Please explain what a credit card is
Older children may already understand this fundamentally, Credit Card Definition The meaning of adding to your account compared to something like a debit card. By explaining how authorized users work, you can ensure that your child understands that they can see and monitor their spending.
2. Find out the basics of how credit cards work
One of the most important factors for children to understand credit cards (and hopefully it sticks to lifetimes) is: It’s easy to charge a credit card purchase, but ultimately you’ll need to pay back every penny you charge.
3. Show me your credit card statement
I use my credit card responsibly While it may be difficult for children and teens to understand at first, credit card statements can be a valuable tool when it comes to providing a real-world example of this information. For example, if a child charges a $60 game on an authorized user credit card, the paper bill showing the fees, deadlines and deadlines can be very eye-opening. If they choose to pay the minimum for their fees, you can even use your statement to show how interest has arisen in their balances from one month to the next.
4. Work with them on budgeting and repayment plans
Hopefully, kids and teens can learn over time that credit cards and budgets are closely related. If you can throw away your money to pay off and stick to your plan, it’s fine to charge your purchase with your credit card. However, without charging, tracking, or putting money aside for bills, using a credit card can quickly make life more expensive and complicated.
Minimum age requirements for credit cards
Some credit card issuers set a Minimum age for authorized user credit cardsothers aren’t. We worked together on the details of each card issuer so that we could share these details.
|
Credit card issuer |
Minimum age for certified users |
|
American Express |
13 years old |
|
Bank of America |
There is no minimum age requirement |
|
Barclays |
13 years old |
|
Capital 1 |
There is no minimum age requirement |
|
Tracking |
There is no minimum age requirement |
|
City |
There is no minimum age requirement |
|
Discover |
15 years old |
|
US Bank |
13 years old |
|
Wells Fargo |
There is no minimum age requirement |
How to get a credit card in your child’s name
The process is fairly straightforward if you decide to add your child as a certified user to help them build credits or help them learn about active money habits. This is what you need to do.
1. Understand which credit card accounts to share
Take stock of your credit card and know which one you have Cards you want to share This is because adding authorized users to a specific card may have advantages. If you add your child to a Reward Credit Card or Travel credit cardsFor example, you can earn points or miles for each dollar you charge your card. On the other hand, it may be wise to choose a card with the lowest interest rate.
2. Check if you can add certified users online
Some credit card issuers allow authorized users to add online to their credit card accounts, but some prefer to call the issuer’s customer service number to start the process. For example, Chase allows cardholders Add authorized users online to any credit account.
3. Be prepared to provide your children with personal information
Depending on the card issuer, you should plan to share information such as your child’s Social Security number and date of birth when requesting a certified user card.
4. Wait for your child to receive their new credit card via email
Once you add a child as a certified user, you simply have to wait for your credit card to be mailed. Their cards have their own names and you can activate them and start using them immediately.
Alternatives to help your child build credits
If you want to help your kids learn positive credit habits, you don’t want to get their own credit card, to them Debit Card It’s one option. Debit cards tied to their own bank accounts don’t build credits, but they help them learn to budget the money they have and develop the habit of tracking their spending.
Once your child is at least 18, you can help them get their own Starter Credit Card. This will likely need to be a student or secure credit card for individuals who have no limited credit or credit history, but credit cards are the best place to start. This is our choice Best student credit card and The best secure credit card.
Finally, even if you plan to pay it back soon, you could also consider co-signing a car loan or another small loan with your child. The loan and its repayments will be reported to three credit bureaus. Help your child start building a history of responsible credit use.
Conclusion
Teaching your kids the importance of credit is an important part of getting it Financial literacy. And definitely when you have 100 other things to teach your little ones, it’s overwhelming, but taking your time Add children as certified users (If the time is correct) will help make the transition to a starter card much easier.
