In this work, we will learn about  Making Your Child an Authorized User on Your Credit Card. Most credit card issuers demand that applicants reach at least 21 years old. This makes it very difficult for some responsible young adults to have a credit card.  The Federal law even demands that  credit card issuers  verify their personal income before granting a credit card.  To help their children get credit card, many parents make their children authorized users on their own credit cards. They as well do this because they have the permission of the credit card issuer to do so. It is a very ideal way of teaching a child  how to use credit cards, build credit and its history.

However, ensure that your child is very responsible and equal to the task of being a co-applicant of a credit card. If not, you may need to wait longer.Making Your Child an Authorized User on Your Credit Card

Making Your Child an Authorized User Credit Card

; Is Your Child Ready to Be an Authorized User?

Is your child responsible and accountable? Does he have a sense of duty? Having a credit card is a big responsibility. Remember, you are responsible for all the expenses from the card, your child has to be up and doing. If your child is not wise in using money and cannot follow laid down rules, don’t give him a credit card.

Making Your Child an Authorized User on Your Credit Card; Establish Rules on How To Use The Credit Card.

Make decisions to make your child Authorized User Credit Card based on the following questions;

  • How much can my child spend?
  • How long is the authorized user arrangement going to last?
  • What can they  purchase?
  • Should they ask for my permission before making a purchase?
  • Who’s going to make payment and when?

Let your child understand what happens when he does not follow given instructions. You can lower his credit limit or remove his name from the card. Be very firm, do not say one thing and do another. If you say you’re going to remove your child’s authorized user status because they’ve charged too much, make sure you do that. Let the child know that financial institutions are not lenient with mistakes. This will make him know that there are serious repercussions of misusing a credit card.

Which Account Should You Use?

Some parents add the child to a credit card they do not frequently use.  This will expose the child to the online account on his own. The child will not also view the parent’s transactions. In a situation that you have to use one credit card with your child, choose one that has a good credit history. This will help build their own credit in the future. Ensure that you always have enough available credit. Let your child know the limit he can spend, this is to avoid spending above your credit limit and running into debt.

Primary and Authorized User Card Responsibilities

As the primary account holder, the credit card issuer  holds you responsible for the credit card actions. You will pay all the charges to the account. After adding your child  to the account, he becomes an authorized user  and will receive a separate credit card in his  name. Some financial institutions give different account numbers for authorized users. With the card, the authorized user can only make purchases.  They cannot perform any other transaction with the card.

Will It Boost Their Credit Score?

According to FICO, the  most recent credit score model is FICO 08. It applies to only  legitimate authorized user accounts.

The VantageScore 3.0 also considers authorized user accounts when calculating a score.

When to End the Authorized User Relationship

You can do this when your child has earned enough credit score and is old enough to handle his own credit card.