Putting a teen on a CC?

[Forget-Me-Not]

The other credit card thread reminded me that I have a question I’ve been meaning to ask here. My oldest will get his drivers license soon and DH and I have been considering adding him as an authorized user to one of our CCs so he can buy gas and have it for emergencies. This kid is very level-headed and responsible. No concerns whatsoever about him using it inappropriately and running up a huge bill or anything. 

So have you done this (or not)?  Anything I should know beforehand?

[Pen]

I set my Ds up with an account that has a debit card...    I felt that was better to begin learning how to use such a card...    

[Suzanne in ABQ]

Both of our now-20-somethings started carrying our credit cards when they started driving.  They used them for gas and for emergencies, or if we asked them to stop and pick something up for us.  The cards were set up to alert us when they were used.  It was never a problem.  They never abused them or used them without permission.  Dd's wallet was stolen, but she let us know as soon as she found out, and we were able to report it stolen before much damage was done.  Make sure he understands the importance of keeping track of it.

[Tree Frog]

We set our dc up with a checking/savings account and a debit card and put a set amount in each month. Their accounts were linked to ours, so if they needed to make an emergency purchase, we could transfer the $$ in. Our goal was to encourage them to manage their money. We put enough in each month to cover a tank of gas, the amount we would have put in for lunches bought at school, and about $20 extra. They were also encouraged to find a job so they would have additional income.

[TravelingChris]

We first gave our kids debit cards.  But then we gave them CC\s that were on our accounts when they were travelling away from us and may have needed to get a hotel in an emergency.  None of them misused the cards.  But ymmv.  My kids aren't average children in a number of ways-  most importantly, not following the crowds and respectful of our money.  Depending on what your child will be doing and how you handle finances in your family,  debit and/or CC can be the way to go.  If only driving around the same town/city as you, I do not really see a need for a CC unless your family is one that puts everything on CC, then pays off each month in order to get points that revert to money or goods.

[frogger]

My son was older when he got his licence and was traveling out of the country.  I figured if he had his own card it would be one less thing to think about as he transitions to being on his own. I didn't want a debit as I think credit cards have more protections. So he a secured card through our credit union. I'm hoping that by the time he moves this fall he can have an unsecured one, not to carry debt but pay for books online, get gas, or other things where cash isn't viable.

[Tap]

My kids had both my card (attached to my account that did not have their name on it) and their own card attached to their own banking accounts. They knew what they could use my card for and what they had to pay for. I liked them having my card for a back up, in case thier bank wasn't able to process a payment. I work in retail and sometimes banks have a computer glitch  and can't process a card. I wanted them to feel like they always had a back up payment if needed. 

Only one time did my daughter get ID'd for using my card. It was at Lush and luckily I was with her.  My kids have never had an issue using my card anywhere else.

Edited March 19, 2019 by Tap

[Chris in VA]

My dd has a debit card and her own account. I like it better than a credit card. My kids have a mom who got into bad, bad debt using a credit card the wrong way. ;-(  So they have a negative example to turn to in case they are ever tempted to abuse credit. 

[MEmama]

**Listening**

I like this idea. We have bought DS a gas card and make sure he has bills tucked in his wallet in case of emergencies. But I've been wondering about a debit or linked credit card. He doesn't travel far yet, but I tend to think learning the responsibility with the safety of us nearby can be beneficial, especially for him. 

[Night Elf]

My oldest dd got a secured credit card from her bank at age 17, I believe, and the limit was only $300. They changed it to a regular credit card after a certain period of time. I liked that because she was building up credit.

My youngest dd got a credit card with DH as a joint owner. In other words the account had both of their names. Her limit is $2,000. She's extremely frugal with money and has never overspent. We got that for her when she was a senior in high school. 

Ds uses his debit card. I told DH to get ds a credit card now that he's back in college and is driving but he just hasn't gotten around to it yet. We keep forgetting. It will be like my youngest dd though having both of their names and attached to our account.

Our bank lets us have multiple accounts attached to our main account. Oldest dd is off out account now but the other two both hold a checking and a savings account, and dd has a credit card, all on our account so we can transfer money between accounts as needed. The kids cannot access our accounts, only their own, but we can see their accounts.

All 3 of our children are frugal with money and always have been. I taught them about money while they were growing up. They always knew DH's salary, the cost of our bills, and how much money we had to spend on fun things. We got them savings accounts when they were born, and checking accounts when they got their first job.

[DawnM]

Oldest is on our credit card.  He rarely uses it, so we are fine with it.  Other 2 kids have debit cards.

[Carrie12345]

I do think my kids will be added when they’re driving on their own. They have their own checking/debit accounts and jobs, but they don’t always have a bunch of spare funds. And dh and I aren’t always instantly reachable for bank transfers.  Having spent years myself without access to emergency funds, I know it’s usually doable, but the worry is a lot of stress. I have the ability to remove that for them. 

[Pawz4me]

Our boys had their own checking accounts and debit cards when they were young teens. When each of them started driving we made them authorized users on one of our credit cards. We had no worries at all about them using the cards inappropriately. By that age we'd already drummed into them how to properly use credit. At that point our goals were (1) them having access to adequate funds during an emergency and (2) building their credit scores so they would have the benefit of starting their adult lives with that already established. I think how an authorized user's activity is reported for credit score building purposes depends on the company issuing the card. We had the boys use their cards as often as possible to hopefully help build their credit score even more (although I don't know for sure if that mattered). For example, if DH or I were with them and we needed gas we'd have whichever kid was with us use their card to pay. Ditto when we were eating out, picking up a few groceries, etc. DS23 had NO credit history other than being an authorized user on our card, and upon graduating from college and getting his own apartment and his own credit card his score was around 750. He had no trouble qualifying for a very good rewards credit card with a generous credit line (although no doubt having a well paying job with a big tech employer also helped with that!).

Edited March 19, 2019 by Pawz4me

[J-rap]

When our kids first got their driver's license, we made them an authorized user of one of our cc's and they had their own card.  This was really for gas  only (and emergencies, but there never was one).  In fact, it was a credit card we had entirely set up for only gas.  We knew we could trust them, and also it saved us the hassle of having to get the gas ourselves.

Eventually we phased out that card but as they graduated from high school and went on to college, etc., we made them authorized users of another card (and they each had their own card).  This is a card that was a travel-type card -- it collected points, no money conversion fees, etc.  (Our kids traveled a lot.)  It was for emergency only, or things for which we gave them permission to use it for.  Also, then I could ask them to run errands for me more easily (and they could just pay with the card) which was handy.  🙂

This was nice for them during their years of building up their own good credit, etc..  But also, it's harder to get by with cash only (when traveling) in this digital world these days (unlike my years of traveling in foreign countries in my 20's, when we used travelers checks and could always stop by any American Express office to get more).

We've liked Capitol One for that because of their points program, but also because they give each card holder (on the same account) a different number.  That way, if one of the cards is lost or is somehow used fraudulently, you only have to cancel that one card -- not everyone else's on the account.  Our kids have never misused it although they HAVE used it for emergency-type situations.    

 

[Tenaj]

As soon as my kids have their driver's license they go on as an authorized user on our credit card.  I don't like debit cards for purchases like gas (too much potential for fraud) so this has been our solution.  We've not run into any issues with it so far.  It's really for my convenience.  We pay their gas but quite often they run errands for me or cart younger  siblings around for me. If I need to have them pick something up at the store, they use my card and , of course, it's there if they have an emergency.

[teachermom2834]

We have our two college kids on our Capital One card. One of the things we pay for them is their gas. So they use the card for that. We did also want them to have it in case of emergency. For example, oldest ds has an HSA card that is finicky and has gotten declined for no reason. So, if he ends up with a medical expense he can’t cover he can use our cc. They both have cars so with that comes the possibility of unplanned major expense. Second son is 9 hours away so if we had an emergency he could buy a plane ticket or whatever.

They do also have debit cards on checking accounts linked to ours so we can transfer them funds if necessary and we do use that feature as well. But they are still dependent on us for that. In a true emergency I don’t even want them to have to be able to reach us.

We also use it as a way to treat them. Tough week? “Order a pizza on our credit card.” 

Our cards all have different numbers so I can look at the bill and it is categorized by who made the purchases which is helpful. Our kids are very responsible. One of them would not have been ready for this in high school but he was by the time he left for college.

I also have a family rule about not using debit cards to pay at the pump. We use debit cards all over the place for all kinds of purchases online and IRL. The only problems we have ever had getting our card number stolen were from gas stations. It can still happen with a cc but much easier to deal with. I also tell my kids to use the cc anytime they are paying someplace potentially sketchy security wise. I can’t think of an example right now but there have been times I have used the cc because I got a gut feeling I wanted to protect my debit card number.

My kids work and pay for most of their own expenses using their debit card so it really is just for gas and emergencies. They have been able to learn to manage their own money while also having the emergency card. 

[gstharr]

Debit cards do not establish credit.  Debit cards won't work for car rentals and some hotel rentals.  You need,  a "pre-paid  credit card" for this.  Many on-line applications available.   You open a savings account with the card issuer  for, i.e.,  $500.00, and that becomes the credit limit for the credit card. 

[marbel]

Our kids are authorized buyers on one of our credit cards. We did that a few years ago.  It's very convenient for all of us; they buy things that I will pay for (gas, groceries, medical and dental appointments that have to be paid at the time of the visit) and things they want that they pay me back for (online purchases of clothes, etc).

Since I get the bills and all the transaction alerts, I see little risk. Generally if one of them is going to buy something unusual they tell me ahead of time.  They pay me when I present them the bill.  

But, our to-do list includes them getting their own cards before they leave for college in the fall, probably a secured card from our credit union.

I don't like buying stuff using a debit card.  It's harder to dispute debit card fraud and takes longer to get the funds back. The few times we've had fraud on a credit card, the bank caught it before we did, the charge disappeared, and we had new cards the next day.  My kids grew up knowing that credit cards aren't fun money and are to be paid off every month; of course they may deviate from that when they are on their own, but plenty of kids who never had a credit card as a teen go crazy when they get one for the first time.  (I was one of them.) 

Edited March 19, 2019 by marbel

[Scarlett]

When both of mine were 16 I took them to the bank and set them up with debit cards for their accounts.  I made sure the overdraft protection was turned off.  So if there is no money the card will be declined.  I also made sure their savings accounts were not linked to their debit card.  I have an account at the same bank and it is very easy to transfer money to them if I need to for whatever reason.  

When ds19 turned 18 I helped him get a secured cc.  $500 limit.  He has been very careful to use it and pay it off.  

[almondbutterandjelly]

My dd has had a credit card attached to our account since she was about 12.  She used to go out to lunch with a group weekly, and it was just easier than making sure we had cash to give her.  She is 18 now.  Never any problems.  (We did, by the way, get her a state ID when she was 12 in case they wanted ID with credit card.  Obviously now she has her driver license.)

[Okra]

All of my kids are authorized signers on my credit card and they also have a debit card for their own expenses.

If you have a trustworthy kid I think this is great! They buy stuff for me with my money. They use their debit card for stuff they want.

This works perfectly for us.

[forty-two]

 

4 hours ago, Night Elf said:

My youngest dd got a credit card with DH as a joint owner. In other words the account had both of their names. Her limit is $2,000. She's extremely frugal with money and has never overspent. We got that for her when she was a senior in high school.

This is what my parents did, when I was a junior in hs.  It was my credit card, but my parents were joint owners.  My limit was lower, though, $500.  It was convenient, especially because my parents could pay it off from their own account - in high school I only used it for things they would pay for.  It became a bit of a problem when I was out on my own and my being late with a payment dinged my parents' credit.  My parents took themselves off my younger sister's accounts (started when she was a child, like mine) when she was on her own, but by the time we realized the problem I was out of state and thus not able to go in in person to take care of it (with my permission, my parents tried to take themselves off my account without me, but they weren't allowed to - it took all the joint owners being present to do it).  It wasn't a huge deal, since I did have a local account and another cc by that point, but it's something to think about.

[cabercro]

I don't have teens, but as a random aside, my husband has an excellent credit score in part because he was an authorized user on his parents card from a young age. If nothing else, I might go ahead and put him on the card and then put it away for safekeeping if you don't feel he's ready for it yet.

[Corraleno]

Both of my kids are authorized users on my Amex card. As others have mentioned, debit cards don't build credit history. On most cards, being an authorized user starts a credit history, and the average age of a person's open accounts is part of their score, so being an authorized user on a parent's card as a teen (even if they rarely ever use the card) is better for their credit than just having a debit card for several years and then getting a CC in their own name once they graduate from college and have a job. 

I purposely added both of my kids to a card that has a very high limit, in case of an emergency where they might need to buy a last-minute plane ticket or pay an ER bill or something. For example, DS is away at college and a couple of weeks ago he said his old laptop was dying and he didn't think it could be repaired, so I told him he could use the Amex to buy a new one. If he only had a debit card with a low balance in his account, I would have to transfer money from my account to his, and wait for that to clear, before he could get a new laptop. So I think even if a student has their own CC with a low to moderate limit, it's not a bad idea to make them an authorized user on a card with a higher limit, both for building credit and to have in case of emergency.

 

[G5052]

1 hour ago, Corraleno said:

I purposely added both of my kids to a card that has a very high limit, in case of an emergency where they might need to buy a last-minute plane ticket or pay an ER bill or something. For example, DS is away at college and a couple of weeks ago he said his old laptop was dying and he didn't think it could be repaired, so I told him he could use the Amex to buy a new one. If he only had a debit card with a low balance in his account, I would have to transfer money from my account to his, and wait for that to clear, before he could get a new laptop. So I think even if a student has their own CC with a low to moderate limit, it's not a bad idea to make them an authorized user on a card with a higher limit, both for building credit and to have in case of emergency.

 

Yes, this is very important. My older one is in the Army National Guard while going to college, so he needs a card where he handle an emergency when he is away with drill or training. His laptop has a warranty through the college which includes a loaner, but they require a $500 deposit to fix the computer which they refund when you bring the loaner back and pick up yours. There are times that his bank account has less than that, believe me.

As they start going further afield, they need to be able to cover larger purchases if necessary. 

[Denise in IN]

We have set out kids up first with debit cards linked to their own bank accounts.  That has worked well - we communicate a lot about their spending and are very aware of what they're spending.  No credit cards yet, but I would not hesitate with my olders if the situation warranted it.  I think good communication and accountability are the key, also knowing your kids' tendencies and working with them on weak areas.  

[zimom]

Our kids have debit cards attached to their own checking accounts but they are all given AMX tied to our account once they start driving.  They use it to purchase gas, groceries and any other errands we ask them to do.  They know errands are part of the privilege of using the vehicles.  We have never had a problem with them abusing the cards.  AMX has always proven to be the most reliable when it comes to fraud so we stick to them.  

[May]

When our girls were in college, they both were authorized users on our cc account.  They never abused the privilege.

[gardenmom5]

dh opened the CC with the teen as the main cardholder, and one of us on it with them.  then it is their credit being built.

we especially had to open CC with higher limits for the girls as plane tickets were one of their possible emergency expenses.

we also did either visa or mastercard as they are accepted more places than amex.  (we were thrilled when Costco went to visa and no longer used amex.)

[Kari C in SC]

We put both of our older kids on ours when they started driving. As a bonus, they inherited our great credit score. I also liked that I could have them pick up groceries, take out, etc. without having to get them cash or whatever. We will put our youngest on it when he turns 16. Obviously, you have to have trustworthy kids for this to work. 

Edited March 24, 2019 by Kari C in SC