16 year old new driver - credit card?

[Just Kate]

16 year old ds will be taking his driver’s license test in a few weeks. He has a car that we helped him buy and a part-time job. Now I’m trying to figure out if we should put him on one of our credit cards for emergencies and to help him build credit? Also, I guess I need to decide if we will make him purchase his own gas. I’m pretty sure we will pay for the additional car insurance (which I know will be $$$ for a teen boy!). 
 

How did you handle your new driver? Did you make them pay for their own gas? Put them on a family credit card? Any tips or suggestions  (things that worked well or you wished you’d done differently)?

[katilac]

The only part I can answer is the credit card - yes, I would add him as an authorized user, 16 is a good age for that. They get a little practice with lots of oversight before leaving home. 

[Pen]

I pay the insurance because I want to be sure it is properly done and not a bare minimum. It includes road side assistance. 

My son has an account with a debit card. He is paying for his own gas for his trips. He will also pay for maintenance and repairs. 

I do not plan to have him on a credit card with me.  He will probably get a secured credit card at some point to work on getting a good credit rating.

 

[Pen]

Adding, my ds is 18 now so I don’t access his account, but below age 18, I could put money into his checking account and he could then use his debit card as needed.  Had an “emergency” beyond roadside assistance arisen, putting money in to cover him would have been an option without needing a credit card.  As long as he was driving my vehicle, triple A was also a possible option for some types of emergencies. As it happens, there have not been any emergencies involving son driving vehicle. 

(Knock on wood. )

 

[2squared]

Our teens are authorized users on our credit cards. They use the credit cards for everything, and it’s been heavenly. They run errands for me all the time, and the convenience of not tracking and transferring money has been awesome. For example, if they are out an about, I can have them stop by the store for milk without a second thought  

We pay for everything - gas, insurance, repairs, vehicle. The vehicle is as much for my convenience as it is for their convenience. When they start driving. I save a lot of time and gas money not saving to drive them around anymore, and they also drive their siblings around. I am pleased to foot the bill in exchange for the added convenience, and I am very glad my five kids are two years apart. I should always have a teen driver until my youngest graduates. 

[J-rap]

We gave our kids credit cards on our account when they were old enough to drive, only to be used for gas or car issues.  We still paid the bill, but they were responsible for making sure the car was filled with gas, getting oil changes when needed, and cleaning the car.  Our kids didn't have their own individual cars though...  They shared one car with other siblings who were also old enough to drive.  (We got a Discover card that we used only for car stuff/gas.  They were good about allowing teens on our account, and offered a rebate.)

[Corraleno]

I added my kids as authorized users on one of my cards as soon as they got their licenses, and also added them to my AAA membership. Both have had to call AAA in an emergency, once for a dead battery and once for a tire blow out, and they were able to use the credit card to pay for a replacement battery and new tires.

I pay all costs for DS's car, including gas, and just consider it part of his college expenses. DD has a part time job so she pays for her own gas, but I pay everything else. Currently, both of their cars are titled and insured in my name, with them as authorized drivers. If DD were working full time and not in school, then I would likely transfer the title to her name and expect her to take over the costs of insurance and maintenance. 

[marbel]

We also added our kids as authorized signers on a credit card. They have debit cards as well, but I don't encourage them to make purchases with the debit cards. I have recently suggested they each apply for a credit card of their own, but they haven't done so.  

One of our kids pay for his share of the insurance because he has always had a job that will cover it and more.  The other one only only when necessary (she hates driving), so we pay that insurance.  We pay for most gas. Well, one hardly uses any anyway, LOL.  We'll keep doing this while they are in college. 

[Pawz4me]

We made each of our boys authorized users on one of our credit cards when they got their drivers license, provided them with a vehicle, and covered all  the costs associated with the vehicle until they graduated from college and started a full time job. But they never abused that--no going out driving around just to be driving around or anything like that. 

[MEmama]

We intended to, but DS barely drives anywhere on his own. Like, maybe 5 minutes very, very occasionally. We live in a small town and he’s not one to go out just for the sake of it. And of course right now, he’s staying home anyway. 
 

We did get him a prepaid gas card, but again, he never drives without us so he hasn’t needed it. We'll get him all set up before he goes off to university next year. I don’t expect he will need his own car for several years, if at all depending where he ends up.

[TracyP]

We added dd as an authorized user on our credit card when she got her license. However, she does pay for her own gas. She only uses the card if she is in a bind unless she is doing something for me like picking up a few groceries. 

We pay the car insurance. When she bought her car our original deal was that we would pay for gas. She rejected that idea. I think it is because she is a DE student at the local college and most of her friends are older. She seemed to want to join them in the "omg, all my money goes to filling up my car" conversations. She has a job and in hindsight it has been good for her to pay for her own gas. I think that is something we will have the other kids do as well. 

[Momto6inIN]

We pay for insurance til they graduate. We also pay for gas, since many/most of their trips make my life easier 🙂

I got into a bit of trouble with credit cards as a young adult, so we don't give them credit cards. Obviously, when they become adults they can do what they want, but we counsel against it up til then. They've all been working with their own checking accounts since 14, so they just use their debit card. They for gas with that and give me receipts and I pay them back.

[teachermom2834]

We put ours on as authorized users on our account. I realize some kids might be untrustworthy but we haven’t had a problem. Of my 3, one of them is the personality to push limits, and will occasionally slide a small purchase on there that I haven’t authorized but I keep an eye on it and catch it pretty quick.

I do want them to have it in case of emergency and I do want to help them build credit. Also for purchases like something they need for school or I tell them I want to treat them to something they can use it. Or if they are running an errand to pick something up for me. 

We do pay for their gas too which goes on the family credit card. They have debit cards but I don’t like anyone using those to pay at the pump because we have had issues with getting our numbers stolen there. If there is fraud on the cc it is easier to deal with than the debit.

We also pay insurance. I also don’t want to worry about them not having paid it or whatever. It is easier than having separate policies or having to collect from them. They do handle many of their own expenses but we help with most the car stuff. We don’t have an official cut off date for that but my 2020 college grad just got his own insurance. That might be something we help the younger ones with longer if they need it, depending on circumstances.

[Melissa B]

We do not put our children on our credit cards. However, checking accounts for minors here have to be linked to a parent account. So in an emergency dd16 could use her debit card and if she overdrew her own account it would withdraw money from my checking account without penalty to either of us.

The lease for dd16's car is in my name but she makes the payments. It will be paid off in under a year. She also pays for all gas and maintenance. We are paying for the first year of insurance as we did for her sisters. 

[Ottakee]

For insurance, one of my friends and her da paid for their kids car insurance UNTIL they got a ticket for poor driving (not like a warning for headlight, etc).  That was motivation for safe driving.

For gas, if your son is one that will be driving all over for pleasure, I would suggest that he at least chip in some.

Then again, I saved for and bought my own car at 16, paid my own insurance and repairs, gas, etc.  I grew up in a rural, poorer farming community and that is just how all of the kids did it.   We had all been working at paid jobs since we were 11 or 12.

[2squared]

9 hours ago, 2squared said:

Our teens are authorized users on our credit cards. They use the credit cards for everything, and it’s been heavenly. They run errands for me all the time, and the convenience of not tracking and transferring money has been awesome. For example, if they are out an about, I can have them stop by the store for milk without a second thought  

We pay for everything - gas, insurance, repairs, vehicle. The vehicle is as much for my convenience as it is for their convenience. When they start driving. I save a lot of time and gas money not saving to drive them around anymore, and they also drive their siblings around. I am pleased to foot the bill in exchange for the added convenience, and I am very glad my five kids are two years apart. I should always have a teen driver until my youngest graduates. 

I should add that my teens have their own debit cards which they use to pay their expenses. They use my credit card to pay for my expenses. 

[EKS]

I'd be surprised if authorized users build their own credit.

That said, we never got cards for our kids when they started driving.  We did put them on our AAA account though.

[Garga]

What about a student credit card?  My son just graduated high school and could get a card of his own. He’s very conservative about his money, so it would be completely shocking if he abused the card.  

We’re thinking of getting him a student card. Is there a reason everyone posting on this thread added their students to their own cards vs getting them a student card?   

 

 

Edited July 3, 2020 by Garga

[teachermom2834]

18 minutes ago, Garga said:

What about a student credit card?  My son just graduated high school and could get a card of his own. He’s very conservative about his money, so it would be completely shocking if he abused the card.  

We’re thinking of getting him a student card. Is there a reason everyone posting on this thread added their students to their own cards vs getting them a student card?   

 

 

I am not sure. When we did it, it was just the easiest thing 🙂 Also, I could be wrong but I believe it helps their credit more to be on our card with our very large credit limit being well managed. I could be wrong though.

I will say, however, that as good as my kids have been I have not been in a hurry to hand over bill paying that would have an effect on their credit while they were young. If I had, I would have been fussing at them and reminding them to pay on time, etc. Now, I am not saying that is stellar parenting, and certainly learning responsibility is key. However, with my teen boys I have been a safety net on finances while they are learning. But I do think a student card is a good idea. If one of mine wanted to do that I would probably still have them on mine for bigger emergencies (big car repair for college kid out of town) that possibly wouldn't be covered with the low limit on a student card. 

Edited July 3, 2020 by teachermom2834

[Garga]

3 minutes ago, teachermom2834 said:

I am not sure. When we did it, it was just the easiest thing 🙂 Also, I could be wrong but I believe it helps their credit more to be on our card with our very large credit limit being well managed. I could be wrong though.

I will say, however, that as good as my kids have been I have not been in a hurry to hand over bill paying that would have an effect on their credit while they were young. If I had, I would have been fussing at them and reminding them to pay on time, etc. Now, I am not saying that is stellar parenting, and certainly learning responsibility is key. However, with my teen boys I have been a safety net on finances while they are learning. But I do think a student card is a good idea. If one of mine wanted to do that I would probably still have them on mine for bigger emergencies (big car repair for college kid out of town) than possibly wouldn't be covered with the low limit on a student card. 

Hm...good points, but I forgot to mention that my son is starting at a CC, so he’ll be living at home with us for the next two years. But these are good points for thinking ahead for when he goes to a 4 year.  

He has executive function issues from his ADHD, so I wasn’t picturing him paying his own bill at all.  I was picturing us sitting side-by-side each month to pay it for right now.  He still needs that kind of scaffolding, and we meet together every day for half an hour to plan his day/take care of important issues (like, today we need to order books for his classes.)  And since he lives at home, if there’s a big emergency, we could be right there on hand so he wouldn’t need a big credit limit.

But when he’s ready for the 4 year, we’ll have to reassess. I’ll have to see if he’s going to be ready to pay his bill properly and if he’ll need a bigger limit.  Thanks for pointing out those things. 

 

 

[marbel]

Just did a quick google search on authorized signers and credit building.  It seems the answer is that yes, it can help a person get started. I didn't look very deeply into it; I would guess that a secured card and/or a student card would be better overall, but being an authorized signer on a card that is well-managed can be a benefit.  It will not help to be an authorized signer on a card that is not well-managed. 

I added my kids as signers when they started shopping alone, driving, buying gas, etc because it was an advantage to me. At that time, they just had savings accounts with ATM cards, so they could get cash for their own spending.  Now they have checking accounts and are more independent, but it's still easy enough for them to use my card. Inertia.

Edited July 3, 2020 by marbel

[teachermom2834]

3 minutes ago, Garga said:

Hm...good points, but I forgot to mention that my son is starting at a CC, so he’ll be living at home with us for the next two years. But these are good points for thinking ahead for when he goes to a 4 year.  

He has executive function issues from his ADHD, so I wasn’t picturing him paying his own bill at all.  I was picturing us sitting side-by-side each month to pay it for right now.  He still needs that kind of scaffolding, and we meet together every day for half an hour to plan his day/take care of important issues (like, today we need to order books for his classes.)  And since he lives at home, if there’s a big emergency, we could be right there on hand so he wouldn’t need a big credit limit.

But when he’s ready for the 4 year, we’ll have to reassess. I’ll have to see if he’s going to be ready to pay his bill properly and if he’ll need a bigger limit.  Thanks for pointing out those things. 

 

 

My boys have all gone away to a four year at 18 yo. One of them over 500 miles away so it does give me piece of mind that if he gets into some kind of jam that costs money he can get himself out of it even if he can't reach us. Like he gets his car towed and impounded or he ends up in the ER and they are demanding payment or he has a tech crisis that he needs to solve on a deadline. Haha. And more- I have a wild imagination which is not helpful when young adults move away.

 

[hippiemamato3]

My DS has a credit card (authorized user on two of mine) and we pay for his gas, etc. right now. We also pay for insurance and bought his car. He is planning to get a job soon, and at that point I am hoping the credit card will be mainly used for emergencies, but for now he uses it for whatever he needs when he is out. 

[EKS]

2 hours ago, marbel said:

Just did a quick google search on authorized signers and credit building.  It seems the answer is that yes, it can help a person get started. 

I just did the same thing and go the same result.

I think that this is totally ridiculous.  Me paying the bills that my kid incurs on my account should not help his credit score.

[2squared]

2 hours ago, Garga said:

What about a student credit card?  My son just graduated high school and could get a card of his own. He’s very conservative about his money, so it would be completely shocking if he abused the card.  

We’re thinking of getting him a student card. Is there a reason everyone posting on this thread added their students to their own cards vs getting them a student card?   

 

 

Kids have to be 18yo to get their own credit card, and then when they are 18yo, the credit limit is very low. My kids start driving at 16yo, so that’s when we add them as authorized users. My younger teens/preteens take my credit card when they are out and about without me. 

I think my 18yo has $150 credit limit on her card.

i have no desire to transfer money or have them split their credit card bill between things I pay for and things they pay for. It’s much easier for them to just use my credit card. 

[marbel]

48 minutes ago, EKS said:

I just did the same thing and go the same result.

I think that this is totally ridiculous.  Me paying the bills that my kid incurs on my account should not help his credit score.

It doesn't seem to make sense. But maybe credit card companies know that young people who have access to a well-managed credit card as authorized buyers do better once they have their own credit cards.  I'm just speculating on that. 

When I got my first card, I went a little nuts. I am sure that is not unusual. But, I got into some trouble. I've learned a lot since those days. My kids have had it drilled into them that they are to mind their purchasing so that they can pay the bill in full each time it's presented to them.  Of course one does not need to have access to a parent credit card to learn that.

[Bootsie]

3 hours ago, marbel said:

Just did a quick google search on authorized signers and credit building.  It seems the answer is that yes, it can help a person get started. I didn't look very deeply into it; I would guess that a secured card and/or a student card would be better overall, but being an authorized signer on a card that is well-managed can be a benefit.  It will not help to be an authorized signer on a card that is not well-managed. 

I added my kids as signers when they started shopping alone, driving, buying gas, etc because it was an advantage to me. At that time, they just had savings accounts with ATM cards, so they could get cash for their own spending.  Now they have checking accounts and are more independent, but it's still easy enough for them to use my card. Inertia.

Yes, it can help a young person build credit, but it will not necessarily do so.  Some companies report authorized users to the bureaus others do not.  Then, it is up to the bureaus to decide how to use that information.  If this is important to you, you need to check the reporting of the specific card you are considering.

[EKS]

13 minutes ago, marbel said:

It doesn't seem to make sense. But maybe credit card companies know that young people who have access to a well-managed credit card as authorized buyers do better once they have their own credit cards.  I'm just speculating on that.

Probably because they have mommy and daddy to bail them out.

[Pawz4me]

5 hours ago, EKS said:

I'd be surprised if authorized users build their own credit.

That said, we never got cards for our kids when they started driving.  We did put them on our AAA account though.

They absolutely do, although it does depend at least somewhat on how the particular credit card company reports to the credit reporting agencies.

[teachermom2834]

My ds who is an authorized user on our major credit card account texted me the one day saying his credit score went down. (He monitors it regularly). It was because Dh and I had hoarded some cash when Covid hit and we were worried about his job and had not paid off our credit card bill in full that month. Because that month we were carrying a large balance it brought my son's credit score down. So yes, being an authorized user on an account can both help and hurt regarding credit. We paid the bill off and his credit score went back up. This ds rarely even uses the card for anything. 

Edited July 3, 2020 by teachermom2834

[Pen]

5 hours ago, EKS said:

I'd be surprised if authorized users build their own credit.

That said, we never got cards for our kids when they started driving.  We did put them on our AAA account though.

 

I think at least for some cards it does help to build credit. 

My own feeling is that it is better for young person to slowly and carefully build their own credit. That they are less likely to get into a difficulty of overspending if they start with a small secured card. 

And I can’t think of a situation where I would have wanted a 16 or 17 yo to spend a significant amount (over debit card ability  ) without consulting me.   I didn’t allow overdraft protection for debit card either. I considered the inability to accidentally overspend to be a positive thing. 

Edited July 3, 2020 by Pen

[Pen]

4 hours ago, Garga said:

What about a student credit card?  My son just graduated high school and could get a card of his own. He’s very conservative about his money, so it would be completely shocking if he abused the card.  

We’re thinking of getting him a student card. Is there a reason everyone posting on this thread added their students to their own cards vs getting them a student card?   

 

 

 

Personally, I think a good student card is a good idea.  Look at its exact details with him. And look it up online to check for any known problems, especially if it’s not from your usual bank. 

And I would recommend having it on auto payment in full from a bank account. So it doesn’t get late payment problems and so they are keeping track that there is the money in account to cover purchases. 

 

[2squared]

4 minutes ago, Pen said:

 

I think at least for some cards it does help to build credit. 

My own feeling is that it is better for young person to slowly and carefully build their own credit. That they are less likely to get into a difficulty of overspending if they start with a small secured card. 

And I can’t think of a situation where I would have wanted a 16 or 17 yo to spend a significant amount (over debit card ability  ) without consulting me.   I didn’t allow overdraft protection for debit card either. I considered the inability to accidentally overspend to be a positive thing. 

A credit card is a means of payment, nothing more. Some people may prefer to reimburse their teen for expenses, and that works for them. The same money is spent regardless of payment method.

My teens are authorized users on my credit cards purely for my convenience. I have no care if it helps build their credit or not. They will do that on their own. If they do get a boost from being on my card, I guess that’s an unintended positive outcome.

My teens definitely consult with me when they spend large sums of my money, but just as often I am telling them to spend. The means of payment (their debit/credit vs my debit/credit) is, once again, purely for my convenience. 

If my teen overspent in his/her credit card, I wouldn’t bail them out (hypothetical at this point because they haven’t overspent yet). That would deprive them of a valuable life lesson. Having them as authorized users on my credit card is not related to their spending limits at all  they are responsible for monitoring their spending of their personal money.

My teens do not have overdraft protection either, for the same reason you state. I want them to have the natural boundary of only spending what is in their checking account.

[Pen]

1 minute ago, 2squared said:

A credit card is a means of payment, nothing more. Some people may prefer to reimburse their teen for expenses, and that works for them. The same money is spent regardless of payment method.

 

Given the huge numbers of people in credit card debt, I don’t agree with you.

That May be true for your family, but for many a person or family a credit card can lead into spending money beyond ones means. 

A debit card without overdraft is limited to what is in the account.   From ~ age 14 to the present that is what my son has managed with.

If he were frequently running errands or shopping for the household that might have led to a different decision. 

 

1 minute ago, 2squared said:

If my teen overspent in his/her credit card, I wouldn’t bail them out (hypothetical at this point because they haven’t overspent yet). That would deprive them of a valuable life lesson. Having them as authorized users on my credit card is not related to their spending limits at all  they are responsible for monitoring their spending of their personal money.

 

If your teen overspent on **your** card as an authorized user ?   Would you leave the amount unpaid and building up interest on the amount till the teen paid it?  Or by definition is it impossible to do that because you just cover whatever they spend? 

 

[Random]

We have a different situation, so I'll add it to share a different perspective.

We have 2 over 16 and 2 under.  Our kids have to purchase their own vehicles, insurance, registration, maintenance, and fuel.  They are added on to our insurance policy, but pay their portion of the premium.  The two who have done it so far have earned money through various jobs.  The next one soon-to-turn 16 knows he'll have to buy his own vehicle and then pay for its operation.  They run errands for me from time to time, but it's rare. 

Our kids aren't on our credit cards, though sometimes they'll take my card to the store to shop for me.  Since no one checks signatures or anything anymore it's not an issue for them to use my card.  Getting a credit card of their own will probably happen in the near future just to build a credit history.  I wish so much wasn't tied to our credit ratings. 

By the time our drivers started driving, they had a student checking account with a debit card that they manage.  As the guardian, I'm a signer on their checking accounts, but the bank wouldn't draw from my account to cover any overdrafts on the student checking. 

One tip: I called our insurance agent and asked for ALL the potential discounts available.  When I did this, I found out my sons were able to take a specific online driver's ed course that reduced the premiums.  A different driver's ed course wasn't accepted for a discount.  I paid the $79 for the driver's ed, but my sons get the benefit for the cheaper insurance premium.  Also, they get good student discounts.  I provide a transcript to the insurance agent and that's been sufficient.  We have a low mileage discount for one of our vehicles, too.   One company offered a discount for Eagle Scouts.  It really paid off to keep asking questions to get as many discounts as possible.  I do the work of finding the discounts to help my sons, but they pay the premiums.

[theelfqueen]

Each of my kids (15, 19 and 25) got an authorized user card on our account around age 14 - because they travelled out of state without us for various reasons.

They have all been severely warned of dire consequence for using our card without our permission except for an emergency. Only one has ever done so (claimed he meant to use his debit card instead and grabbed the wrong card).

All (including 15 year old) have been told to use it in authorized circumstances (run to the store/corner store and get some milk ... I'll buy you some gas, just use my card, etc...) it was convenient for me that they had it, and gave me peace of mind when they were in circumstances where an emergency could arise. 

[Forget-Me-Not]

We added our son onto one of our CCs as an authorized user when he turned 16 and got his DL. It’s great. He’s super responsible with it and it’s nice that I can ask him to run errands for me. We currently pay for his gas and insurance. The pandemic has put a cramp in his job search efforts. 

[2squared]

41 minutes ago, Pen said:

 

Given the huge numbers of people in credit card debt, I don’t agree with you.

That May be true for your family, but for many a person or family a credit card can lead into spending money beyond ones means. 

A debit card without overdraft is limited to what is in the account.   From ~ age 14 to the present that is what my son has managed with.

If he were frequently running errands or shopping for the household that might have led to a different decision. 

 

 

If your teen overspent on **your** card as an authorized user ?   Would you leave the amount unpaid and building up interest on the amount till the teen paid it?  Or by definition is it impossible to do that because you just cover whatever they spend? 

 

If my teen used my credit card on authorized items, then they will be banned from the card and they would reimburse me. This hasn’t happened yet, but that is what I tell the will happen. We have never carried a balance on a credit card, and we definitely wouldn’t in this case either. My teens use my credit card to buy things I pay for. They use their own credit/debit cards for their personal expenses. They frequently run errands and buy items for the household. 
 

I should say my pre-18yo teens use my credit card for their personal online purchases and then they transfer cash to me. We don’t use debit cards for online purchases, as a matter of financial security. 

[Bootsie]

As far as having a teen pay for gasoline, my answer depends on what type of driving they are doing.  If I had been driving the teen to sports practice before and now the teen can do that on his own, it wouldn't make sense to me that the gas money now became his responsibility. I wouldn't charge that child gas money to drive them myself.  And, if the teen is driving a family car that is driven daily be me also, it would be difficult to sort out how much gas he was using and what he needed to pay for.  If he is using the car to run around and socialize with friends and using a significant amount of gasoline, that would be a different situation to consider.  I would want a child who was driving my car to be an authorized user on my credit card and be able to fill up the tank when he was using the car and it was low.  

I had a child who didn't get a drivers license at 16, but we still had the child as an authorized user on our credit card.  The child was traveling for school events and did some international travel.  We wanted our children to have access to a credit card if there was some type of emergency.  Some things like booking hotels are more easily done with a credit card than a debit card.  We never have had a problem with a child overspending on our credit card.  You can set up your account to get an alert if a charge over a certain amount is made.  You can immediately suspend the card, if needed.  

[Pen]

3 minutes ago, happysmileylady said:

In regards to teens building credit as they move into young adulthood.  

Dh and I have not had credit cards in over a decade.   And we raised DD24 to not use credit cards.  So she never has, and still doesn't have a credit card.

However, she certainly managed to get an apartment, without a co-signer, and is now in her second apartment, with no co-signer.  She also managed to get a car loan all on her own, she is the only name on the loan.  (She's also already about half way to paying it off even though she's had it less than a year......she only got the loan because her car died before she had more than a few thousand saved to buy the replacement.)

My personal experience and my experience with having a young adult DD is that "building credit" is like way overrated.  I understand the concept and why people want to build good credit......but we really haven't found it as necessary to our lives (or her's) and it's sometimes made out to be.  

 

(also, our own personal credit is pretty much crap because of the short sale on the house we owned due to job loss and a whole additional series of unfortunate events.....and it really hasn't created as much of a problem as people are generally concerned about.)

 

That’s helpful to know.  What did your daughter use to establish credit or whatever was needed to be able to rent an apartment?

[Corraleno]

4 hours ago, EKS said:

I just did the same thing and go the same result.

I think that this is totally ridiculous.  Me paying the bills that my kid incurs on my account should not help his credit score.

That policy isn't just for kids, though. I think, at least in the past, it was common for credit cards to be in the husband's name if the wife didn't work, and then the wife would be an authorized user, even if she was the one who was mostly using the card and paying the bills. If the couple later divorced, it would be unfair if those years as an authorized user didn't count at all towards building her own credit.

[EKS]

11 minutes ago, Corraleno said:

That policy isn't just for kids, though. I think, at least in the past, it was common for credit cards to be in the husband's name if the wife didn't work, and then the wife would be an authorized user, even if she was the one who was mostly using the card and paying the bills. If the couple later divorced, it would be unfair if those years as an authorized user didn't count at all towards building her own credit.

This is why I've always used a credit card where I am the primary account holder.

[Pen]

Thinking about this more, it isn’t true that nothing happened thus far with son driving—there was an expensive brake repair on my car that I paid for.  It happened because son drove with emergency brake engaged and didn’t mention that there was a grinding noise. 😲 So it needed rotors replaced, not just brake pads.  😏  way Better than a crash though. 😊🙏

He is now in his own for repairs and maintenance on his car.  And he is 18 which is different than OP’s son.  On my advice he set aside a fund for car expenses (looking up expected expenses for his vehicle), so as long as doesn’t deplete that, he has it already earmarked.  

 

I definitely think what driving is being done by teen, and how much it helps parent would make a difference as to who buys gas etc.   And if travel were needed with motel rooms, planes etc, that could be excellent reason to be on a credit card.

 

 

Edited July 3, 2020 by Pen

[Just Kate]

30 minutes ago, Corraleno said:

That policy isn't just for kids, though. I think, at least in the past, it was common for credit cards to be in the husband's name if the wife didn't work, and then the wife would be an authorized user, even if she was the one who was mostly using the card and paying the bills. If the couple later divorced, it would be unfair if those years as an authorized user didn't count at all towards building her own credit.

This is our situation! Not sure why, but my dh has the credit cards in his name and I am the authorized user. I didn’t even realize we’d done this until about a year ago. I started monitoring our credit pretty closely as we are hoping to buy a house this summer (we are currently renting). We had had credit card debt in the past and as we paid it off, my credit score went up just like dh’s, even though I am only the authorized user. 
 

By the way, I plan to get a card in my name, but I want to wait until after our house purchase to do so (I don’t want anything affecting our credit score at this point). 

[Scarlett]

8 hours ago, EKS said:

I'd be surprised if authorized users build their own credit.

That said, we never got cards for our kids when they started driving.  We did put them on our AAA account though.

I am an authorized user on 3 of my bosses cards. One of them shows up on my credit report the other two do not.  So I don’t really know for sure how it works.  
 

I helped ds20 get a secured credit card when he was 18.  A year later when I tried to help dss19 do the same thing it was no longer an option at either of the banks we use.  So I consigned for him to get a credit card.  I have talked long and loud about not letting debt rule you but rather as a very limited tool for your benefit.  My DIL told me ds20 must  have heard me because he says No Credit card debt to her constantly.  Ds20 and have credit scores of 750 which I think is fabulous. They qualified for a mortgage.  

[hippiemamato3]

9 hours ago, EKS said:

I'd be surprised if authorized users build their own credit.

That said, we never got cards for our kids when they started driving.  We did put them on our AAA account though.

It does! It's actually recommended to get your child off on a good credit start to adult life. 

[hippiemamato3]

4 hours ago, EKS said:

Probably because they have mommy and daddy to bail them out.

 

Nothing wrong with that. 

[Pen]

1 hour ago, Just Kate said:

This is our situation! Not sure why, but my dh has the credit cards in his name and I am the authorized user. I didn’t even realize we’d done this until about a year ago. I started monitoring our credit pretty closely as we are hoping to buy a house this summer (we are currently renting). We had had credit card debt in the past and as we paid it off, my credit score went up just like dh’s, even though I am only the authorized user. 
 

By the way, I plan to get a card in my name, but I want to wait until after our house purchase to do so (I don’t want anything affecting our credit score at this point). 

 

I think this would probably be another good reason to get an account with a debit card for your son at this time if he doesn’t already have that. 

It’s probably much more important to be keeping your own credit situation excellent right now than to be working on your son’s.  After you get house and have that well in hand you could reconsider your son going on your credit card as authorized user if the debit card system isn’t working well for you all. 

[teachermom2834]

I often wish we would have been able to do more for our kids in terms of paying for college and helping them get going but funds are just limited. Helping them build credit in this way is just one thing we can do for them to help them out. We co-signed for a car for my oldest ds. He has made all the payments. He could have gotten the car on his own but the interest rate would have been at least double. He’s a responsible kid and helping him with credit is saving him money and helping him get started. He is going to be starting his first real job and will be making good money and he is already talking about buying a condo. We’d love to help him do that financially but we just can’t. But we have been able to help him out a little with this credit building thing.

I don’t think it has to be an either or thing. Mine are authorized users on our card. They also have debit cards and checking accounts so they are learning to manage their own daily expenses and not overdraw. I think a student or secured card could be useful in addition to the debit card and the family card. 
 

It is also strange that there is some pushback here that parents that put their children on the family card are spoiling  their kids or something. Or not teaching responsibility. To the contrary, having access to a card with a $30,000 credit line and not using it (or misplacing it!) is actually alot of responsibility. 
 

There are lots of ways to teach kids about money and get them launched. This is one possibility and it has worked well for us. But it isn’t the only way for sure and there are good suggestions in this thread. 

Edited July 4, 2020 by teachermom2834

[katilac]

 

2 hours ago, happysmileylady said:

 My personal experience and my experience with having a young adult DD is that "building credit" is like way overrated.   

Building credit is not overrated; your dd would not have been able to get apartments and good loans without credit. 

2 hours ago, happysmileylady said:

IIRC (it's been 4 yrs since she qualified for that first apartment) she utilized her history of paying her cell phone bill and her car insurance.   

Then that is how she built her credit! Payment history is the single most important factor in your credit score.