Should I Add My Child To My Credit Card?

SHORT ANSWER: Once your child is responsible enough to understand your household rules and limits for a credit card, you should add them as an authorized user to help them build a credit history and learn financial responsibility.

Adding your child to your credit card can provide many great benefits, including teaching money management skills and providing a kickstart to their credit history. Most credit card issuers allow children to be authorized users long before they qualify for their own card. But there are some nuances to this tactic you’ll want to be aware of. Read on to learn more.

Can I Add My Child to My Credit Card?

Adding someone to your credit card means making them an authorized user. An authorized user is not a primary cardholder and cannot make changes to the account. Authorized users are also not considered when reviewing credit limits and other financial information for the card. But they share the responsibility of paying the charges on the account, meaning any late payments or poor financial decisions you make with the card will transfer to your child just like the good payments can be an asset to their credit history.

After adding a child as an authorized user, they can make purchases using your line of credit. You can provide your child with a card with their name on it that is linked to your account. The card will be valid in stores and online. Every charge they complete will show up on your credit card statement alongside the charges that you, the parent, place on the account.

You’ll be responsible for paying all charges on the account, including yours and your child’s. Some credit card companies allow you to set limits on your child’s card to avoid ending up with bills you cannot afford or children making mistakes and buying higher-ticket items than they realized. The drawback to setting spending limits on a child’s authorized card is that they might not have enough credit in case of a large emergency, such as a roadside auto repair or a hotel bill to get off the roads during a nasty storm. Setting limits comes down to how you plan for the child to use the card and in what contexts.

What Age Can a Child Be Put on a Credit Card?

Many credit card companies do not have a minimum age requirement for a person to be added as an authorized user on a credit card. That means you can add your child to your credit card when the timing feels right or when you’re ready to start teaching them good financial habits.

You can add an authorized user to your online account or mobile app and request a card for the user as part of the process. If your card has fees, you might incur those fees per authorized user. Review those fees before adding your child to make sure it will be worth it.

Here’s a look at the age requirements for some of the most popular credit card issuers to guide you in when you can add your child to your account.

Age Requirements for Authorized Users

Benefits of Adding Your Child as an Authorized User

If you always pay your credit card on time, you’ll help your child build their credit by adding them as an authorized user. This popular Reddit thread explains how this helps a child’s credit: “The length of your credit history is a major factor to your credit score, so by starting that credit history when the child is still in your home, you could be adding a full decade or more to their credit history.”

But your child will experience a host of other benefits. Here’s a look at some of the reasons to consider adding kids to your credit card.

• Financial responsibility: Before your child is on their own, you can start teaching them how to use a credit card responsibly. Set limits on the account and review it regularly so you can have conversations with your child about what they are spending and keep them accountable. Talk about how you pay the card on time and what that does to help give you spending power and good credit.
• More credit card reward points: Instead of handing your child cash every time they need money, you can invite them to charge their expenses. A nice side perk of doing so is that you’ll earn credit card cashback on those funds to help you save toward your goals.
• Emergency funds: As children get older and start driving or going places with friends, they can find themselves in challenging situations where they need money fast. Perhaps it's a car breakdown they need to cover an hour from home. Or a merchant needs a credit card on file over the phone to complete a transaction. They’ll have access to those funds when they need them if they are an authorized user on your account.

Drawbacks of Adding Your Child as an Authorized User

According to this popular Reddit thread, there can be drawbacks to your child’s credit if you don’t pay off your card regularly: “Responsible borrowers who do this will share their good history with their children, but irresponsible borrowers could actually hurt their child's credit score by attaching their name to a delinquent account.”

Here are some drawbacks to consider before you add your child to your credit card.

• You’re responsible for all charges: You can’t dispute a charge just because your child made it irresponsibly or you didn’t tell the child they could use the card for that purchase. It won’t matter what household rules you have. If your child used the card to make the purchase, you’re now responsible for paying for that charge.
• Your credit utilization could increase: You want to keep your credit utilization below 30%. Adding another user who charges their expenses to the card could mean you go above that threshold. As long as you’re monitoring this amount and paying off the card regularly to ensure you have adequate credit available or request an increase to the limit, you should be fine.
• When your credit goes down because of the card, so does theirs: One missed payment or a time when you’re down on your luck will mean your child’s credit also goes down. If you lose your job or face other financial hardships, remove your child before you face late payments or increases in credit utilization to prevent long-term negative effects on their credit.

When Should You Add Your Child as an Authorized User?

There is no perfect age to add your child as an authorized credit card user. You should evaluate their level of responsibility and ability to manage the finances of this decision. Some questions you should ask yourself before adding your child to your credit card include:

• Are you ready for your child to have the right to charge items to your card?
• Can you trust your child to follow the rules you set for what they can charge to the card?
• At what age does your child want to apply for their own card?

In most cases, high school age is a good time to start offering this responsibility to children. This will help prepare them for applying for their own card in college and provide good lessons to them about financial responsibility while they are still at home and you have the opportunity to teach the lessons. It’s also the timeframe when most children need an emergency fund in case of unexpected experiences when they are on their own.

How to Teach Your Child About Credit

One of the most important skills you can teach your child is about money management and how their decisions affect their credit. Spend some time talking about these credit-related topics:

• Credit scores: The concept of a credit score and how it impacts your buying abilities can be complex for children. To put it in context, compare it to their grades and they impact their ability to apply to college or trade school. The same is true of their credit score giving them more opportunities to get better loans or credit cards with more favorable terms.
• Show them a credit card statement: Small charges add up. When you swipe a credit card and enjoy the purchasing power, it might feel small at the moment. But show a child how monthly expenses add up and how it can impact them long-term. Talk about what would happen if you didn’t pay off the statement in full and what interest would do to small charges, making little things much more expensive. Explain the various terms related to credit cards, including the minimum payment, due date and balance.
• Discipline them to check their credit report: Monitoring your credit report can help you spot fraud and protect your creditworthiness. Explain how this works and show them how you review your accounts regularly and start disciplining them to do the same.
• Talk about how credit is not free money: When young adults qualify for credit, they can go crazy with spending without thinking about the long-term consequences. Talk about how credit can help empower you to purchase what you need but you need a plan to pay it off. Explain good uses for credit and when you need to have the funds to pay off items now.
• Review what responsible credit use looks like: Provide children with a realistic view of what using credit responsibly looks like. Help them build a budget as they start their career and showcase how various expenses add up. Consider using a budgeting app such as the Acorns Early program to help them understand their finances early. Talk about how you should only take on loans you can pay off, how to keep balances low and how to avoid unnecessary debt. 

Help Children Build Credit and Financial Responsibility

Once a child is old enough to understand credit and their responsibility in using it correctly, add them to your credit card to help teach them financial responsibility and start building their credit history. While making them an authorized user on your credit card might feel concerning at first, know that it can be a valuable step in their upbringing and preparing them to become financially independent by qualifying for their first credit card, apartment and car purchase.