“How to Help Your Child Build Credit: A Guide for Parents”

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Empowering Your Child with Financial Literacy

At O1ne Mortgage, we prioritize consumer credit and finance education. This post aims to provide an objective view to help you make the best decisions for your financial future. For any mortgage service needs, call us at 213-732-3074.

Minimum Age to Be a Credit Card Authorized User

Teaching your children smart money skills is one of the greatest gifts you can give them. From budgeting and saving to investing and understanding debt, these lessons can equip your young adult with the essential knowledge they need to navigate their finances in the future.

One way to teach your child how to handle credit responsibly is by adding them as an authorized user on your credit card. However, card issuers may require authorized users to meet an age requirement. The minimum age to be a credit card authorized user varies from 13 to 18, and some issuers have no minimum age requirement.

Minimum Age Requirements by Credit Card Issuer

While you must be 18 years or older to get a credit card of your own, your child may meet a card issuer’s minimum age requirement to become an authorized user much earlier. Here are the minimum age requirements from some of the most popular credit card companies:

• American Express: 13
• Bank of America: Not specified
• Capital One: Not specified
• Chase: Not specified
• Citi: Not specified
• Discover: 15
• U.S. Bank: 13
• Wells Fargo: 18

As you can see, credit card authorized users generally must be at least 13, but some issuers have different age requirements, and many don’t specify any age requirements.

How Much Does It Cost to Add an Authorized User?

In many cases, there’s no cost to add an authorized user to your credit card, particularly if your card has no annual fee. However, many premium cards charge a fee to add an authorized user, which could be $75 or more. Before proceeding, contact your card issuer or refer to your card member agreement to confirm any authorized user fees.

Should You Add Your Child as an Authorized User?

Managing a credit card is a serious responsibility, so exercise caution when considering adding your child as an authorized user. Use your best judgment and only consider adding a young authorized user when you’re certain they can handle the responsibility. Remember, you’ll be ultimately responsible for paying the bill: Authorized users are not responsible for payment, regardless of how much they charge on the card.

If you’re considering this path, it’s best to do so as part of your child’s broader financial education when they understand the importance of savings and avoiding unnecessary debt. For this reason, it’s probably best not to add a young child as an authorized user, even if you don’t give them access to the card. A young person’s teenage and college years may be a more appropriate time to develop financial skills, including managing credit.

Benefits of Adding Your Child as an Authorized User

There are benefits of adding your kid as an authorized user, such as:

• Learning responsible money habits: Authorized users can charge purchases to your credit card (if you allow it). Under your supervision, your young cardholder can learn how to pay off charges on time each month without incurring interest.
• Establishing credit: As long as you’ve managed your credit card account responsibly, adding your child as a user can help them establish credit. Your full account history is added to their credit reports when they’re included on your account, or at age 18 with some card issuers.
• Earning rewards: If you have a rewards credit card, any eligible purchases your child makes on the credit card will earn rewards. While these may be small purchases, any rewards you earn add up over time. This perk could be valuable if you need to meet a spending requirement for a welcome bonus or more points for a discounted trip.
• Accessing emergency funds: A credit card can come in handy in emergencies, especially for older children. If your teen’s car unexpectedly breaks down, for instance, their credit card could pay for repairs to get the car back on the road.

Giving a credit card to a child may seem risky, but you can take steps to limit your risk. For example, your card issuer may allow you to set a limit as low as $200 for authorized users to reduce the potential for high spending. That way, your child can learn how to build and manage credit responsibly before venturing out on their own.

Set a Positive Credit Example for Your Child

Adding your child as an authorized user on your credit card may help them build their credit, but it could be adversely affected if you carry a high balance and thus have a high credit utilization ratio. As such, lead by example and make sure your account and your credit are in good shape. Show your child how paying the account balance in full and on time each month helps avoid interest charges while building a positive credit history.

It’s also a good habit to monitor your credit regularly to stay on top of it and track your efforts to improve your credit score. Following these practices may help you strengthen your financial health while teaching your child responsible credit habits.

For any mortgage service needs, call O1ne Mortgage at 213-732-3074. We’re here to help you navigate your financial journey.

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