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Just Kate

16 year old new driver - credit card?

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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. 

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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 by teachermom2834
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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. 

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5 hours ago, EKS said:

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

Or they have mommy and daddy to teach them about building, using, and maintaining good credit. 

 

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3 minutes ago, katilac said:

 

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

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

Cell phone bills and insurance payments do not register on credit reports and are not considered in the development of FICO score.  Most people are referring to FICO when they refer to "building credit." 

 

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1 minute ago, happysmileylady said:

Cell phone bills and insurance payments do not register on credit reports and are not considered in the development of FICO score.  Most people are referring to FICO when they refer to "building credit." 

 

But she used them to get her apartment and loan, correct? I should not have been so succinct: Payment history is the single biggest factor in building credit; thus, having a solid payment history is taken seriously by those who might extend you credit. 

If she hadn't paid her own bills, she would not have had a history to show. 

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1 hour ago, Pen said:

 

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. 

Ds has had a checking account with a debit card since he turned 15. I agree that we will wait until after our home purchase before we add him as an authorized user on our credit card (if we decide to go that route). I’m enjoying this conversation though! It is interesting to hear what choices other families make. 

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1 hour ago, teachermom2834 said:

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. 

We wish we could do more too.  With dss19 we paid his phone, insurance and tolls for a year past graduation.  He just started paying 212 monthly for his phone,  car insurance and health insurance.  We still pay his tolls.  Helping him with build his credit is one thing I know how to do that doesn’t hurt us.....in this area buying a house is a good investment and cheaper than rent.  So he hopes to do that soonish.  

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For those who might not know this (a lot of people don't) - if you use debit cards, be sure to know the spending limits on the card, and consider having the bank lower them, or keep a low balance in the account with the card. Or, use a bank that offers a card you can "turn off" when you aren't using it. 

I work for a bank, and often get calls from people who wake up one morning and find their checking account has been wiped out overnight through fraudulent use of the debit card. The fraud department catches a lot, but it can't catch everything. And it takes time to get the money back. It's really hard to listen to someone crying on the phone because the money in that account was all they had, and having to tell them they have to wait 10 days to get it back. Even harder to actually be that person.

 

Edited by marbel
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My DS had a debit card to his own bank account long before he could drive. We have his allowance set as a automatic transfer each month. When he started driving at 16, he was driving a substantial distance to school. We did add him to a gas station credit card to use just for gas. 

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4 hours ago, teachermom2834 said:

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. 

I agree. My kids have debit cards, checking accounts, employment, and years of managing their personal money before they are added to our credit cards at 16yo. We add them because they are financially responsible and trustworthy. If they weren’t financially responsible or trustworthy, we wouldn’t have gone this route.

We pay for insurance, gas, vehicles, cell phones, etc while they are in high school. Them driving saves gas versus us driving them around, and it’s a lot more convenient to have them drive. My oldest is heading to college in the fall, and I plan on passing her clothing and gas bills to her then. I’ll probably give her gas money when she visits to encourage her coming home. 

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On 7/2/2020 at 7:41 PM, Just Kate said:

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)?

We do add our new drivers as authorized users. Makes it much easier to purchase gas. They stay on there through college.

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What do you find hard about gas purchase with debit card?

8 hours ago, GoodGrief1 said:

We do add our new drivers as authorized users. Makes it much easier to purchase gas. They stay on there through college.

I’ve only done it once, but purchase went through same as for credit card, no need for pin. 

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Just now, Pen said:

What do you find hard about gas purchase with debit card?

I’ve only done it once, but purchase went through same as for credit card, no need for pin. 

For us it is that the only times dh and I ever got our numbers stolen it was at gas stations. So we made a rule about not using debit cards for pay at the pump. Also, if I am going to pay for gas for three kids It is easier for me just to pay my cc bill than to transfer money into their accounts everytime someone buys gas. 

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4 minutes ago, teachermom2834 said:

For us it is that the only times dh and I ever got our numbers stolen it was at gas stations. So we made a rule about not using debit cards for pay at the pump. Also, if I am going to pay for gas for three kids It is easier for me just to pay my cc bill than to transfer money into their accounts everytime someone buys gas. 

When we first moved down to FL, our credit cards (we don’t use debit for anything except taking cash out) had to be cancelled and replaced 3 times in 2 months after using at gas stations.  CC rep said it’s a big problem down here.  We’ve switched to cash for gas, every time.

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14 hours ago, katilac said:

But she used them to get her apartment and loan, correct? I should not have been so succinct: Payment history is the single biggest factor in building credit; thus, having a solid payment history is taken seriously by those who might extend you credit. 

If she hadn't paid her own bills, she would not have had a history to show. 

Yeah, she just printed out the history online and showed them that, since she didn't have a credit report.  I wish more places could look at those sorts of things more than the stupid credit report and FICO.  I know that our credit score is going to be an issue when we try to get a mortgage next year, even though at that point, we will have a full 7 yr history of paying rent on time,  every single time.  

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6 minutes ago, teachermom2834 said:

For us it is that the only times dh and I ever got our numbers stolen it was at gas stations. So we made a rule about not using debit cards for pay at the pump. Also, if I am going to pay for gas for three kids It is easier for me just to pay my cc bill than to transfer money into their accounts everytime someone buys gas. 

OP here. You hit the nail in the head! If I’m going to pay for ds’s gas, I think I would prefer for him to just use a credit card. I know that ds will be doing some driving for me (like taking his sister to dance class - yay!!), so I’m sure we will pay for some of his gas. Because transferring money is a bit of a pain, I think we will add him to our credit card just to make gas easier (for me!). 
 

For several years, dh and I only used our debit card, as we had some credit card debt to pay off (so thankful that is over!). During those years, we had our debit card numbers stolen a few times, which was such a pain since we only had one joint checking account (thankfully the debit card was not connected to our savings account!). Having a credit card number stolen is much easier to deal with. 

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6 minutes ago, ikslo said:

When we first moved down to FL, our credit cards (we don’t use debit for anything except taking cash out) had to be cancelled and replaced 3 times in 2 months after using at gas stations.  CC rep said it’s a big problem down here.  We’ve switched to cash for gas, every time.

I actually use a gift card for gas.  Once a month, I put my gas money on a Costco card and get all my gas at Costco since it's right around the corner from my house.  I keep an "emergency" $20 in cash just in case I *have* to get gas somewhere else, but I figure that with the gift card, even if they could somehow skim that number....all they have is my gas money, and the only place they could use it is at Costco lol.  

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1 hour ago, Just Kate said:

OP here. You hit the nail in the head! If I’m going to pay for ds’s gas, I think I would prefer for him to just use a credit card. I know that ds will be doing some driving for me (like taking his sister to dance class - yay!!), so I’m sure we will pay for some of his gas. Because transferring money is a bit of a pain, I think we will add him to our credit card just to make gas easier (for me!). 
 

For several years, dh and I only used our debit card, as we had some credit card debt to pay off (so thankful that is over!). During those years, we had our debit card numbers stolen a few times, which was such a pain since we only had one joint checking account (thankfully the debit card was not connected to our savings account!). Having a credit card number stolen is much easier to deal with. 

When we added our oldest as an authorized user, I had considered opening a new account that only she would then use. If you want to track the kids’ spending, you could go that route. I decided I preferred to have fewer cards, accounts, and payments to manage, so they were added to our existing cards  

I consider most of my high school kids’ driving to be my responsibility. Before they were able to drive themselves, I drove them to work, school, activities, friends, etc. They are doing the same driving (although fewer miles since I’m not driving round trip x2 anymore) plus errands and sibling chauffeuring, so I am covering all their gas. Our gas bill has gone down. 🙂

I think once dd leaves for college, she will pay her own gas, but I will give her cash when she comes home to encourage her to make the trip. I want to build good habits early, lol. 
 

I didn’t find our teen boy to be as expensive as I expected. He’s about $90/month, and that’s with full coverage on a 2010 sedan. My 18yo dd is $90/month on a 2013 Chevy Equinox, so they are nearly the same cost. I just dropped full coverage on ds’s vehicle yesterday, so I expect his amount to decrease a little. We have our two teen drivers as primary drivers on our two oldest vehicles. 

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1 minute ago, 2squared said:

When we added our oldest as an authorized user, I had considered opening a new account that only she would then use. If you want to track the kids’ spending, you could go that route. I decided I preferred to have fewer cards, accounts, and payments to manage, so they were added to our existing cards  

I consider most of my high school kids’ driving to be my responsibility. Before they were able to drive themselves, I drove them to work, school, activities, friends, etc. They are doing the same driving (although fewer miles since I’m not driving round trip x2 anymore) plus errands and sibling chauffeuring, so I am covering all their gas. Our gas bill has gone down. 🙂

I think once dd leaves for college, she will pay her own gas, but I will give her cash when she comes home to encourage her to make the trip. I want to build good habits early, lol. 
 

I didn’t find our teen boy to be as expensive as I expected. He’s about $90/month, and that’s with full coverage on a 2010 sedan. My 18yo dd is $90/month on a 2013 Chevy Equinox, so they are nearly the same cost. I just dropped full coverage on ds’s vehicle yesterday, so I expect his amount to decrease a little. We have our two teen drivers as primary drivers on our two oldest vehicles. 

That is great that your teens’ insurance is so inexpensive! I have heard such scary numbers...so we are planning for a large increase. I will be so happy it is less!

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12 minutes ago, 2squared said:

When we added our oldest as an authorized user, I had considered opening a new account that only she would then use. If you want to track the kids’ spending, you could go that route. I decided I preferred to have fewer cards, accounts, and payments to manage, so they were added to our existing cards  

 

Our "family card" as we call it has different numbers for all five users. This is great because if one of the numbers gets stolen it is only that one person's card that is unusable briefly. It also breaks it out on the statement so I can quickly see what each kid used it for. Each kid will only use it  3-4 times per month while dh and I have a couple pages of transactions. If the kids' transactions were mixed in with mine it would be much harder to look over their spending. 

I also would worry more about my kids carrying the cards if they didn't have different numbers. Teenagers lose wallets, etc. more often than I do. The fraud detection on it is pretty good. If my kids usually only use the cards for gas and other small purchases, I would get a text if they tried to buy a lawnmower at Home Depot or something. So I highly recommend having the kids on a different card number.

 

Edited by teachermom2834
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5 hours ago, teachermom2834 said:

Our "family card" as we call it has different numbers for all five users. This is great because if one of the numbers gets stolen it is only that one person's card that is unusable briefly. It also breaks it out on the statement so I can quickly see what each kid used it for. Each kid will only use it  3-4 times per month while dh and I have a couple pages of transactions. If the kids' transactions were mixed in with mine it would be much harder to look over their spending. 

 

Our doesn't do that, which is too bad, though one of my kids hardly spends anything, and the other... well, it's easy to tell which are theirs.😁

I get an alert every time a transaction over $0 is attempted. If I see something I'm not expecting, I text to our family group asking if someone did it. My spender didn't like that, so lets me know ahead of time to expect a charge to appear.  😄  ETA: I should add that both my kids pay their bill on time, in full, when presented to them. I am sometimes lax on presenting it... but they don't charge more than they can pay for. If one ever had to for some reason, we would make arrangements. 

Edited by marbel

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On 7/4/2020 at 9:22 AM, happysmileylady said:

Yeah, she just printed out the history online and showed them that, since she didn't have a credit report.  I wish more places could look at those sorts of things more than the stupid credit report and FICO.  I know that our credit score is going to be an issue when we try to get a mortgage next year, even though at that point, we will have a full 7 yr history of paying rent on time,  every single time.  

You probably know this, but start looking for a lender before you start looking for a house. If you happen to be a first-time buyer, it's well worth seeking out a lender with a special program and expertise. My parents went through a first-time buyer program (they didn't own our house growing up), and their point person was unbelievably helpful. 

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