Should Your Child be an Authorized User on Your Credit Card?

Many young adults face a dilemma. It is hard to get a credit card because they don’t have any credit built, yet they cannot build credit to qualify because they cannot get a credit card. Luckily, they do not need to deal with that dilemma because there are multiple ways that they can build credit in order to get a credit score. While there are numerous ways, one way in particular is having them become an authorized user on your credit card. An authorized user is a person that the original cardholder has allowed to use the card without obligation to make payments on the card.

Should You Add Your Child as an Authorized User of Your Credit Card?

The answer depends on a lot of factors that dictate whether or not it will be beneficial. This could be a great opportunity to teach your child about how credit works, how to build a good score, and how to use a credit card responsibly. Even though it is still the original cardholder’s responsibility to handle payments, your child can be more involved in the process so that when they do get their own credit card, they should not face any surprises.

How Can You Tell if Your Child is Ready?

You want to see for yourself how trustworthy they are, as well as how responsible they are. You can look at how they behave at home as an indicator of how they will manage their finances. It is important that your child follows any and all rules that you set in place for the credit card. You also want to have a long conversation about what this means for both you and your child.

When you have that conversation with your child, it is a great time to set expectations and guidelines. You want to explain to them what you expect from them and vice versa. You also should set guidelines of how much they can spend, what they can buy, permission understanding, how long will they be an authorized user, and how repayment will work. These key points will make for clear communication so that if everything goes according to plan, there should be no issues. You also want to be clear about any penalties if these guidelines are broken. These guidelines can be anything from charging them interest, to removing them as an authorized card user all together, and more. This is a good teaching lesson to show your children that creditors are very strict and serious when it comes to credit cards.

When Should Your Child Stop Being an Authorized User?

You can remove your child as an authorized credit user whenever you would like. Ideally, they will be removed once they qualify for a credit card on their own and have a consistent source of income. However, you can remove them before that if there are any issues with them handling your credit responsibly. Removing authorized users is incredibly easy and can be done with a phone call to your credit card issuer.