Do you want to know if “you should add your child to your credit card”? Well, this was one of my questions too, until I did some research and found out what this really entails. So if you are interested, then you should be reading.
It will be best to get to know the information when it is read in a step-by-step process. In this way, you simply get to know each and every part of the information.
Should You Add Your Child to Your Credit Card?
On this topic, it would be best if I started from the bottom before I went to the top, so I will first break things down for you to then be able to grab or assimilate the information very easily or even very fast. So you should keep on reading.
What Is an Authorized User?
An authorised user is simply someone who has the charging privileges on a credit card account. Some credit cards also provide authorised users with many of the same benefits the primary cardholder receives. Although the credit card’s history may even report to the authorized user’s own, separate credit profile, an authorized user is simply not legally responsible for the debt—the primary cardholder is.
Joint Account vs. Authorized User: What’s the Difference?
A joint account is simply an account where two or more people are simply legally responsible for a debt. Mortgages, auto loans, or credit cards can all be held jointly.
In most cases, a joint account holder cannot be removed from the debt unless it’s refinanced or approval is given by the creditor, who will likely want to then see if the new primary account holder can handle payments on his or her own. By comparison, an authorized user can be removed from a credit card at any time relatively easily.
The Pros and Cons of Adding an Authorized User
There are many reasons why you might even consider adding your children as authorised users on your credit card. Keep in mind that there are simply potential consequences for both you and your children once they are simply added.
6 Reasons to Add Your Kids as Authorized Users
Teach financial responsibility.
A credit card is simply a useful tool to help teach your children financial responsibility. Authorized users are then allowed to simply make changes to the primary cardholder’s credit card. This can even teach young people to pay off charges each month without incurring interest if managed properly with oversight from a parent or guardian.
Give your child independence.
Giving your child his or her own credit card will then allow spending independence. Instead of you asking for money every time they want to spend money, they can simply use the credit card to make the purchase. The obvious disadvantage here is that you lose control of their spending, too.
Encourage conversations about money.
Handing your kid a credit card is not the end of your money lesson—it’s the beginning. Parents should then even have regular conversations with kids about credit card habits. You can print out the statement each month and also be able to walk through the transactions. Don’t just talk—also listen to what they have to say and then encourage them to ask questions.
They build their credit history.
As an authorised user, your credit card will simply help build your kids’ credit history. The credit card usage and even payment history will simply be added to their credit profile. This will then help them when it comes time to apply for their own credit card or other types of credit.
They earn rewards for their spending.
If you then have a rewards credit card, every time your child makes a purchase, you will simply earn rewards. Although these purchases may even be small, the rewards add up over time. Some credit cards even offer benefits at certain spending levels, which simply means that their purchases also get you closer to meeting those hurdles. For example, Chase’s The World of Hyatt Credit Card actually gives a second reward night each year when you spend at least $15,000.
Authorized users receive benefits.
Some of the credit cards with cardholder benefits extend some of those benefits to authorised users. These benefits can simply include airport lounge access, rental car protection, and free checked bags. The Citi®/AAdvantage® Executive World Elite Mastercard®* simply provides all authorised users with complimentary Admirals Club lounge access when flying on American Airlines. The Chase Sapphire Reserve® also gives authorised users access to roadside assistance, which can then even give you peace of mind when you hand your teenager the car keys.
6 Reasons Not to Add Your Kids as Authorized Users
You’re on the hook for their spending.
As the primary cardholder, you are then simply responsible for all of the purchases any authorised users make. It is also critical to emphasise to children the responsibilities that come with credit card spending power before handing them the credit card.
They may have access to your entire credit limit.
For most credit cards, the authorised users can then spend up to the main card’s maximum credit limit (or potentially higher). Business credit cards and also American Express credit cards might even allow you to set individual credit limits for authorised users.
It can be hard to tell who is spending what.
It might be even harder to differentiate your kids’ spending from yours since most banks simply give authorised users the same credit card number as the primary cardholder. American Express credit cards and business credit cards offer unique card numbers to the authorised users and also break out their charges when the bill comes.
Their spending could affect your credit score.
Credit utilisation will then make up 30% of a credit score. If your children now spend a lot on your credit card, your utilisation can increase and also reduce your credit score. This could simply have personal consequences when applying for a loan or refinancing a home.
Some credit cards charge fees for authorised users.
Not all authorised user credit cards can simply be added without additional cost. Premium credit cards might even charge a fee for authorised users. For example, the Chase Sapphire Reserve® charges $75 per year for each additional user.
Your credit activity could hurt them.
Adding children as the authorised users could simply hurt them if the primary cardholder’s finances sour. A late payment, charge-off, or bankruptcy could even place a negative mark on any authorised user’s credit.
How to Add Your Child as an Authorized User
Adding an authorised user is simple and usually a straightforward process. You can simply contact your bank or card issuer by simply calling them at the phone number written on the back of your credit card to begin. Some issuers will then allow cardholders to add authorised users through an online dashboard.
How Do I Add My Child As An Authorized User?
Adding your child as an authorised user is actually the same as adding anyone else. Every bank requires different information when you are adding an authorised user to credit cards. Be ready with the following information about your child in case your bank asks:
- Full name
- email address.
- date of birth.
- Social security number.
- phone number.
- relationship to the primary cardholder.
- mailing address
How to Remove Your Child as an Authorized User
As your children grow up and then start to build their own credit, you might want to remove them as authorised users. But you may also not want to rush it.
Because your credit card might even have a larger line of credit and a longer credit history, consider keeping your kids as authorised users for a couple of years after simply opening their first accounts. This will then allow your account to give their scores a boost while their accounts build up their own history and expand their credit limits.
When you are ready to remove your child as an authorised user, call your bank at the number on the back of your credit card. Some banks will then allow you to simply remove authorised users online or by submitting a secure message through online banking.
Because you and your child’s credit card number might have been the same, consider asking the bank for a new card number. This will also prevent your child from making future charges.
The Cost of Adding Your Child as an Authorized User
Some credit card issuers can even charge for every additional user—especially on those card accounts with annual fees. Some credit cards simply allow authorised users at no additional cost.
Call the number on the back of the card or simply contact the issuer online to find out what the cost will be to add your child as an authorised user.
Consider Setting Some Ground Rules for Your Child.
Setting some ground rules with the children before you let them simply use authorised user credit cards is always a good idea. Make sure you are both on the same page about what your kids can and cannot use the credit card for.
Here are some topics to discuss:
- How much can your children spend each month?
- What items are they allowed to purchase?
- Which stores are they permitted to shop at?
- Is permission necessary before making a purchase?
- How will they pay for their purchases?
- Will they make payments to you or pay the bank directly?
- How long will they remain authorised users?
Also, be very sure to then be able to talk about what happens if they do not follow the rules. Will you take their credit cards away or restrict their purchases somehow?
Your child does not even necessarily need to simply use the authorised user credit card or even have possession of it to build their credit history. You can then add their names to a card and also hold onto the physical authorized user cards to prevent any mishaps.
Keeping cards away from your child does not help them build good credit habits or provide access to funds in an emergency—it only creates credit profiles for them. To simply help them build good habits while limiting your exposure, ask your credit card issuer about the setting for lower credit limits on the authorised users’ cards.
Not all banks can offer this feature, but some card issuers—like American Express—do. With American Express, each of the authorised users has a separate credit card number from the primary cardholder. This will then make it easy to determine which purchases were made with which card.
Bank Rules about Children as Authorized Users
The ability for you to then add a child as an authorised user depends on age and also the bank’s rules.
Children who are then 18 or even older can then be added as authorised users without issue. Some banks may not even allow children under a certain age to simply be added as authorised users. Below are the minimum age requirements for some of the most popular banks.
Minimum Age Requirements
13 years old
Bank of America
No minimum age requirement.
13 years old
No minimum age requirement.
No minimum age requirement.
No minimum age requirement.
15 years old.
16 years old.
No minimum age requirement.
Does Being Removed As An Authorized User Hurt Your Credit?
Not always. If the primary cardholder’s credit history is simply giving the authorized user’s credit a boost, then you should try waiting before removing him or her from the account. Once the authorized user has his or her own established credit history, it will then most likely be safe to be removed without experiencing a ding to the authorized user’s credit score.
Can An Authorized User Take Over A Credit Card?
An authorized user cannot even typically take over the primary cardholder’s credit card. Authorized users are just allowed to make charges and also sometimes remove themselves from an account, but they do not have ownership rights of the primary account.
Will Adding My Child As An Authorized User Help His Or Her Credit?
Yes, adding children as authorised users can simply be of help to their credit scores. It is also up to the primary cardholder to maintain a healthy credit score so the authorised users can then reap the benefits. It is also very important to teach the children responsible spending habits so they do not negatively affect the primary cardholder’s credit score.
What is the minimum age to be an authorised user on a credit card?
Some card issuers can then have minimum age requirements as low as 13 years old, while others have no minimum at all. Call the number on the back of the card to then inquire about a minimum age requirement for authorized users.