Do I have to get a credit card in my child’s name?

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Credit cards are generally viewed as financial tools for adults, but there are times when it might be a good idea for a child to have their own credit card. Note, however, that children cannot open their own credit card. Account. Anyone under the age of 18 can only be added as a Authorized user on an adult’s credit card account, which doesn’t offer exactly the same privileges – or responsibility.

“Can I get a credit card in my child’s name? Is a great question to ponder, and the answer is a definite “yes”. However, there are a lot of potential pros and cons to consider. Some of them depend on your unique situation and your child’s personality, but you should consider each of the pros and cons and how they might apply to you.

Benefits of giving your child a credit card

You might be wondering why you should get a kid’s credit card in the first place, but there are many potential benefits to consider:

Build credit

While not all credit issuers report authorized user activity to the credit bureaus, there’s a good chance adding your child as an authorized user on your credit card can help them create a valuable credit history that they will need later in life. Having a good credit history can help young adults qualify for their first credit card as well as student loans or even a mortgage over time.

Learn positive financial habits

Having your own credit card can help children understand that their actions have consequences. If they charge a purchase to their card, they’ll have to pay back what they owe over time. And if they spend more than they planned, they will learn to understand that ultimately the bill always comes due.

Emergency credit

Kids with credit cards also have a valuable tool they can use in an emergency. A credit card for a child under 18 can be extremely useful if, for example, your child is away from home and needs supplies or if your teenager needs to fill up with gas when they might otherwise. run out.

Cons of giving your child a credit card

There are many reasons parents might consider adding a child to their credit card, but there are just as many “pitfalls” to watch out for. Here are a few to keep in mind:

Monitoring is required

A kid’s credit card might sound like a good idea, but it could also create more work for you. Depending on the terms you set for their card use, you may need to track their transactions on your account statement to determine how much they owe you from their allowance, or perhaps just to discuss their spending habits.

Potential for problems

You will also have to deal with any issues that arise when your child or teen has their own credit card, such as a child accumulating a huge balance on something frivolous. If your child ends up spending too much money or is unwilling to make payments for unauthorized purchases, you could end up with all kinds of costly problems.

You are responsible for reimbursement

Remember, you are ultimately responsible for reimbursing all purchases charged to authorized users’ credit cards, whether or not you have approved them. This means that you are responsible for your child’s choices, whether they are good or bad.

How To Talk To Your Kids About Financial Responsibility

When it comes to helping your kids learn the ins and outs of credit, one of the most important factors to understand (and one that will hopefully last a lifetime) is this: it is easy to charge for purchases on a credit card, but you will ultimately have to pay every penny you pay back, along with interest and fees.

This can be difficult for children and teens to understand at first, but your credit card statement can be a valuable tool when it comes to providing a concrete example of this information. If your child charges their authorized user’s credit card for a $ 40 game, for example, if they have a paper bill that shows them the amount, the amount owed and the due date can be incredibly revealing. If they only choose to make a minimum payment for their fees, you can even use your statement to show them how much interest has accrued on the balance they carried forward from month to month.

Hopefully kids and teens can learn over time that credit cards and budgets go hand in hand. It’s okay to debit purchases from a credit card if you are able to put money aside for repayment and stick to a plan. But if you charge “stuff” and don’t follow up or put money aside for your bill, using a credit card can make your life more expensive and more complicated.

Minimum age required for a credit card

Some credit card issuers set a minimum age for authorized users’ credit cards, while others do not. We looked at the details of each card issuer so that we could share those details.

Credit card issuer Minimum age for authorized users
American Express 13 to 15 years old
Bank of America n / A
Barclays 13 years
A capital letter n / A
chase away n / A
Citi n / A
Discover 15 years old
American Bank 16 years old
Wells fargo n / A

How to get a credit card in your child’s name

If you decide to get a children’s credit card to help your child build credit or learn positive financial habits, the process of adding an authorized user is fairly straightforward. Here is what you need to do:

Step 1: Determine which credit card account you want to share

Take stock of the credit cards you have and determine which one you want to share. There may be benefits to adding an authorized user to a certain card – if you are adding your child to a credit card rewards or a travel credit card, for example, you could earn points or miles for every dollar they load on their card. On the other hand, choosing the card with the lowest interest rate may be prudent.

Step 2: Check if you can add authorized users online

Some credit card issuers like Chase allow you to add authorized users to your credit card accounts online, but you may also need to call your issuer’s customer service number to initiate the process.

Step 3: Prepare to Provide Personal Information to Your Child

Depending on the card issuer, you should plan to share information such as your child’s social security number and date of birth when you apply for an authorized user card.

Step 4: Wait to receive your child’s new credit card in the mail

Once you’ve added your child as an authorized user, all you need to do is wait for their child’s credit card to arrive in the mail. Their card will have their own name on it, and you can activate it and start using it right away.

Alternatives to help your child build credit

If you want to help your child learn positive credit habits and don’t want to give them their own credit card, giving them access to a debit card is an alternative. A debit card linked to their own bank account won’t create credit, but it can help them learn how to budget the money they have and get them into the habit of tracking their spending.

Once your child is at least 18, you can also help them get their own starter credit card. This will probably have to be a student credit card or secure credit card intended for people with no credit or with a limited credit history, but any credit card is a good place to start.

Finally, you can also consider co-signing on a automatic loan or another small loan with your child, even if you plan to pay it off right away. The loan and its repayment will be reported to the three credit bureaus, which may help your child begin to build a history of responsible credit use.

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