If it’s time for your child to start learning financial responsibility, there are many ways to help them. Having the money talk is a solid first step, but if you want to go beyond it, you might ask a common question—“Can I add my child to my credit card?”
There are several considerations to make before authorizing a child to use your credit card. This guide will outline them to let you make an informed decision and help your child build a strong foundation for their financial future.
Can You Add a Child to Your Credit Card?
Many banks let parents add children as authorized users of their credit cards, so you should be able to do it without complications. In most cases, the child will get their own credit card linked to the parent’s account, allowing them to make purchases independently.
As the account owner, you might be able to set a spending limit to avoid your child going overboard, though this depends on the bank. If it’s offered, setting the credit limit when you first authorize your child is a good idea, and you can expand or remove it once they’ve demonstrated healthy spending habits.
Note that adding a child as an authorized user isn’t the same as having a joint account. The main difference lies in debt responsibility—joint account owners share it, while authorized users have no obligations toward the debt. You retain full liability for any issues caused by the authorized user of your card, so proper financial education is key.
What Is the Minimum Age for Authorized Users?
The main restriction you might face when adding a child to your credit card is their age. Every bank has a specific threshold, so you should contact your lender for details. If you need a general reference, the following table breaks down the age limits of some major banks:
|Bank of America||None|
*Information current as of April 2023 and subject to change.
Many parents add kids to their credit cards to help them build credit, which we’ll discuss later in this guide. For now, it’s important to note that credit reporting also comes with age restrictions. American Express is a good example—while the minimum age for adding a child is 13, the bank won’t report their credit activity to the bureau until they turn 18.
Source: Van Tay Media
The Benefits of Adding a Child to Your Credit Card
There are several ways you and your child can benefit from the authorized use of your card:
- Building healthy spending habits early on
- Accessing emergency funds
- Enjoying card bonuses and perks
- Building credit
Teaching Your Children Proper Credit and Spending Habits
Every parent wants their child to be independent and care for themselves properly without excessive parental oversight. Adding a child to your credit card can be a solid step as it’ll introduce them to responsible management of credit for many purchases and life events, such as:
- Going to college
- Buying a vehicle
- Moving out and renting/buying an apartment
The earlier your child learns the ins and outs of using credit responsibly, the better they’ll manage it later in life. A credit card can help them develop a proper relationship with borrowed funds and money in general.
There’s a high chance you’ll have to play a significant role in the process, at least in the beginning. It’s best to teach by example and demonstrate responsible credit card use that your child can emulate to develop their own habits.
Having Access to Funds in Need
There are many situations in which your child may need urgent access to funds. They may be away from home, so you can’t give them cash or transfer the funds as quickly as needed. In such cases, the ability to use your credit card can simplify everything and ensure your child can get the funds wherever they are.
If you only authorize your kid to use the card in case of emergency, make sure to clarify the allowed situations and purchases. You should also keep in mind that most banks charge ATM and foreign transaction fees for credit cards, which is worth remembering if your child travels abroad. Fees are typically around 3% of the purchase, but you should check in with your bank for specific information.
Source: Eduardo Soares
Maximizing Card Perks
Many card issuers offer rewards as a part of their efforts to boost customer loyalty. You can enjoy various perks, including:
- Airline miles
- Points you can use to redeem specific rewards
To reap these benefits, you typically have to meet conditions like spending specific amounts. When you add a child to your credit card, all their purchases count toward those perks, so you can reach milestones faster.
Helping Your Child Build Credit
A strong credit profile can benefit your child in many ways, from taking out more favorable loans to securing their desired apartment. Building credit early in life is an excellent way to establish a strong credit profile and enjoy its advantages.
Minors don’t have access to financial products that would let them build a credit history, which is why many parents decide to give them a head start in building credit by adding them as authorized users on their cards.
If your bank offers credit reporting for authorized users, this approach may be beneficial. It still suffers from many drawbacks you should keep in mind if credit building is your main motivator for adding a child to your card.
Drawbacks of the authorized user approach to building credit for your children include:
- Your child is not building their own credit, they are piggybacking on yours
- Your child can legally use your credit card at their discretion
- Your child can harm your credit by overspending
- Your card issuer must allow and report credit on authorized users, specifically minor authorized users
- When you eventually remove your child as an authorized user, all your credit history for the credit card will be removed from their credit profile
- Many lenders ignore authorized user tradelines and credit history when making credit decisions
- You must have good credit. If you pay late or miss a payment, your child’s credit profile will be negatively impacted
Fortunately, there’s a more effective and convenient way to help your child build credit without the above issues, which you’ll learn about later in this guide.
How To Add Your Child to Your Credit Card
Adding your kid as an authorized user is quite straightforward—all you have to do is reach out to the bank and request authorization. You’ll need to provide some information on your child, including:
- Full name
- Relationship to the account holder
- Social Security number (SSN)
- Mailing address
- Phone number
The required documentation might vary between banks, but the above is the general information most financial institutions ask for.
While the process is simple enough, everything preceding it might take more effort and time. Before you add a child to your credit card, make sure to teach them about:
- The proper way to use a credit card
- Fees, interest, and other relevant factors
- The importance of protecting their card and personal information
Educate Your Child on Using Borrowed Money
While you understand the gravity of using a bank’s funds, your children might not. Some kids may even see it as free money and end up overspending. As your child’s credit activity will directly impact your credit score, they could damage your credit profile.
To avoid this, stress the importance of careful spending before adding a child to your credit card, especially if you don’t set any limits. Let them know the money they’re spending isn’t theirs (or yours), so they should only use it when necessary.
You could do a trial run by lending your kid some money and seeing how they spend it. Tell them how much they need to pay back, and see how well they manage it. If you notice any red flags in their spending and repayment habits, work through them before authorizing your child to use your card.
Explain the Details of Using a Credit Card
To instill more financial responsibility into your child, show them that borrowed money comes at a cost. Explain how interest works and what fees they should be mindful of when using a credit card.
Show your child a bank statement so they can see the expenses first-hand. Give them a breakdown of your repayments and explain that interest and fees can be minimal with responsible use.
Source: Clay Banks
Protect Your Child’s Information (And Teach Them How To Do the Same)
Minors are common victims of identity theft. Their personal information isn’t monitored as closely as adults’, which leaves room for synthetic identity theft. This crime involves the creation of a new identity using a combination of fake and real information, often a child’s Social Security number (SSN).
The following excerpt from the Federal Reserve’s paper explains what makes children so vulnerable to synthetic identity fraud:
“Fraudsters target the use of children’s Social Security numbers (SSNs) in synthetic identity creation, as they are typically not being actively used until the child is in his or her late teens. What makes your child’s information so valuable?
- The (typically) unused SSN can be paired with any name and birthdate to create a synthetic identity.
- The probability of discovery is usually extremely low, as parents typically don’t monitor their children’s identities or credit scores.”
Fraudsters can get ahold of children’s information in numerous ways, online interactions being among the most common ones. Some typical vectors include:
- Gaming groups (Twitch, Meetup groups, etc.)
- Social media
Make sure your child understands the importance of keeping their personal information safe. They shouldn’t reveal their credit card security information, SSN, or other sensitive data to anyone.
Despite best efforts, parents often don’t have access to the resources and tools necessary for safeguarding their child’s identity. A popular option is a credit freeze, which restricts access to the holder’s credit reports to prevent new accounts from being opened in their name.
While this is a decent solution, it’s often a difficult, time-consuming, and tedious paper-based process. A good way to be proactive about identity protection is through credit profile monitoring.
If you need an effective mix of credit building and monitoring for your child, FreeKick is the best option for you.
FreeKick—Credit Building and Credit Profile Monitoring for Your Child
FreeKick is a combination of a Federal Deposit Insurance Corporation-insured (FDIC-insured) deposit account and additional services that lets your child build credit on autopilot without risks.
The product—created by Austin Capital Bank—is easy to use, and the whole process is quite straightforward, with minimum involvement on your part. Consult the table to see how it works:
|Make a Deposit||Choose your FreeKick plan from the options shown below|
|Set It and Forget It||When you create the account, FreeKick will help your child build 12 months of credit history to kick-start their credit profile without the need for your direct involvement|
|Keep Growing||When the 12-month period ends, you can renew the subscription for another 12 months to keep building your child’s credit profile or cancel it and have the funds transferred back to your external account|
FreeKick knows the last thing any parent wants is another monthly subscription, so you can choose between a FREE account with a one-time deposit of $2,500 and two other options with lower required deposit amounts and small annual fees:
You can cancel the account at any time—FreeKick does not impose any penalties. Note that credit bureaus don’t accept reporting for minors, so if you close it before your child becomes an adult, no credit can ever be reported for the account. This is because credit bureaus do not accept reporting for minors, only for adults.
Comprehensive Credit Monitoring for Minors and Young Adults
As mentioned earlier in this guide, a typical family doesn’t have the means to monitor their child’s credit. As the government doesn’t do it either, FreeKick aims to help. The service includes credit profile monitoring to minimize the chance of fraud by detecting signs of suspicious activity early on.
To help your child build a strong credit profile and mitigate risks of credit profile fraud, get started with FreeKick.
Other Disadvantages of Putting Your Child on Your Credit Card
Besides the drawbacks associated with credit building listed earlier, making your child an authorized user of your card comes with a few notable downsides:
- You’re liable for all charges—As mentioned, the main difference between a joint account and authorized use is that the latter entails the account owner’s full debt responsibility. Your child won’t be held accountable by the bank in case of any issues, which they might see as a loophole if they’re not disciplined
- You may not be able to limit their spending—Not every bank lets you put a limit on the authorized user’s spending. This means your child might have unrestricted access to all your funds, so reckless spending can do significant damage
- Some banks charge extra for authorized users—You might incur additional fees for adding your child as an authorized user. While these expenses typically aren’t excessive, they can add up over time
- Your spending might get mixed up—Even though your child will get a separate card, it will most likely have the same number as yours. Without careful tracking, it could be hard to tell who’s making which purchases
How To Remove a Child From Your Card (And Why You Might Want To Do It)
There are several reasons you may want to remove your child from your credit card, such as them:
- Being old enough to get their own card or other financial products
- Going over the credit limit and using the card for excessive purchases
- Not making the necessary or agreed-upon repayments
In any case, removing a child from your card is straightforward. All you have to do is call the bank and request the removal. Some lenders might even let you do it yourself through their app or online platform.
Note that when you remove your child as an authorized user on your credit card, all of your credit and payment history will be removed from their credit profile, again reinforcing that the authorized user approach to building credit for minors and young adults has some major drawbacks.
The removal should take effect immediately, and your child’s card won’t be valid anymore. They can take out credit independently if they meet the age requirements and their income and credit profile allows it.
Featured image source: Desola Lanre-Ologun