Should Your Kids Have Their Own Cards?

Dayton Uttinger  | 

Like most lessons in life, kids learn responsible financial habits from their parents. They see you pay off your credit card bill every month, say “no” to some luxuries, and stay updated on your bank account, and they know that they’ll need to do all those things too.

As a general rule, though, kids only mimic your financial responsibility. They balance their allowance or wages from their part-time job, they rely on your judgement for many purchases, and they have few actual bills to pay. However, as we all know that childhood zooms by too fast, and they will eventually have to do it all for real. How can you best prepare them, besides just being a good example?

Getting them their own credit card might seem like an extreme solution. Indeed, it’s actually impossible until they’re eighteen: age limits mean a minor cannot have his or her own credit card account. However, they can still have a credit card before then as long as it’s tied to your account, making them an authorized user. This can have several benefits for your kid in the long run, but obviously runs some financial risks too. If you really want to teach your kid some financial responsibility, you should consider getting them some plastic.

Is Debit or Credit Better For Kids?

Their plastic card doesn’t necessarily have to be a credit card at all. Debit cards draw from existing money in an account instead of a line of credit. This can be a better option if you’re not ready to trust your kid with your credit card. This way, a kid can only spend whatever amount of money is in the account, not just keep charging money onto your card. A debit card can also be the first step, so that you can test if they’re ready to become an authorized user.

This obviously only works, though, if they’ve got money to put into an account. You’ll likely have to open a joint account with them, as most banks won’t let a minor open their own checking account, but unless you want to put your own money in there, they’ll have to supply the funds regardless. If they’re not planning on spending a lot of money anyway, being an authorized user on your credit card might be a smarter move. And if it really makes you uneasy, many credit cards let you set a spending limit for authorized users anyway.

Making Your Child an Authorized User

Frequently, people focus on the improved credit history that a child will gain as a result of being an authorized user, or even just the experience of having to be financially responsible. The point is, the focus is on what about the situation is good for your kids, and, while you want the best for your kids, what do you get out of it?

  • Convenience – You probably don’t carry that much cash yourself anymore. It’s becoming less and less present in our digital world. If you fall into this camp, then searching for the appropriate bill every time your kid needs something can be a hassle. Plus, if you do want to use your credit card to buy whatever your kid needs, then you have to be physically present. It is a lot easier when your kid can just swipe a card themselves.
  • Ease of Monitoring – Additionally, with a debit or a credit card, you know exactly what your kid is spending their money on. You can access their account information online and know how much they spend, where they spent it, and even when. This is a luxury not afforded with cash. You might give your kid $20 to buy something for school, but if it’s cash, you can’t actually know for sure that that’s where the money went.
  • Peace of Mind – With a credit or debit card, you know that your kid always has access to money in an emergency. You’ll never have to worry about how they’d pay for a taxi home or a new tire if they needed one. While emergencies are often expensive, you’ll know that your kid won’t be stranded in the middle of nowhere with no way to pay for a ride home.

When Should They Have Their Own Card?

Alright, so you’re convinced this is a good idea, but when should you get your kid their own card? There are really only two factors that matter when considering when to get your child their own card, whether it’s debit or credit.

What Are the Age Limits on Credit Cards, Debit Card, and Authorized Users?

The first is a more practical matter. You’ll have to check with your bank about what the age restrictions are with both debit cards and authorized users. Some banks would allow you to sign on a toddler as an authorized user, but there’s really no reason to do so. Luckily, their credit will be boosted by the age of the account, regardless of when you add them. Others require your child to be at least sixteen before they can have a debit card or be an authorized user, so be sure to double check.

Is Your Child Ready for a Credit Card?

The second is by far the more important question. When will your kid be ready to handle this financial responsibility? As long as you’ve taught them the fundamentals of financial wisdom and are confident in their decision-making abilities, they’re probably ready to take on more responsibility. However, this is a decision that you need to make as a parent, as you are likely the best judge of your child’s character.

Having a debit or credit card is a big deal for a kid, and it should be treated as such. There can be long-term ramifications for both you and your kid if they misuse it. However, it can also be a big help to both of you. It can make being a modern parent that much easier, for one. For another, while kids learn a lot from example, they can learn even more through practice.

Need more information before giving your kids a credit card? Visit our credit card learning center for more tips and guides.

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Dayton is a chronic Wikipedia addict, which is detrimental to her social life but stellar for her writing. She resides in Boise, ID, surrounded by her own frantic outlines, highlighted encyclopedias, and potatoes. The latter was not by choice.