Credit cards typically allow you to add an authorized user to your account. If the primary cardholder has a solid credit history, this maneuver allows the authorized user to build or repair their credit history. Some parents may opt to make a child an authorized user to give them a financial head start, since a child cannot have a credit card account in their own name until they are 18.
What is the minimum age to be an authorized user on a credit card?
Though you need to be 18 or older to get a credit card account in your own name, the minimum age for an authorized user varies by issuer. Some issuers will report account activity -- on behalf of the primary account holder and authorized users -- to the three credit bureaus. But some won’t report account activity for minors under a particular age, and that age can vary from issuer to issuer.
As such, if you’re looking to help a minor build their credit by making them an authorized user on your account, it’s important to understand the card issuer’s policy on reporting credit card account activity.
What are the benefits of adding a child as an authorized user?
Build your child’s credit: While some credit card issuers won’t report a minor’s authorized user account to the credit bureaus, those that do offer a way for children to build credit at a young age. This can help them qualify for better interest rates and credit cards in the future, among other things.
Teach your child about finances: Adding your children as an authorized user on your account can also help you teach them about spending, saving and budgeting. If you want to help your child learn the financial habits of responsible credit card use, the potential consequences and the rewards of responsible credit card management, adding them as an authorized user on your card is a good way to start.
Earn extra rewards: If your child is an authorized user on your rewards credit card, their spending will earn rewards. As the primary cardholder, you’re entitled to use those rewards how you see fit.
What are the drawbacks of adding an authorized user?
Whenever anyone else’s name is on your accounts -- whether it be a mortgage, loan or credit card -- there are risks to consider. You’re ultimately responsible for paying the bill, so if your authorized user racks up charges that you can’t afford to pay, you could damage your credit score.
Their activity could otherwise affect your credit score, too. For instance, your credit utilization ratio, which is the percentage of your credit limit in use, should stay at or below 30% for the best effects to your credit. But if your authorized user charges beyond that, it may sink your credit score.
How do I add a child as an authorized user?
If you want to add a child as an authorized user on an existing credit card account, call your card issuer. In most cases, the card company will ask for the child’s Social Security number and birthday to verify their age and link the child’s name to the account. You can also add a child as an authorized user when you open a new credit card account.
What’s the difference between an authorized user and a joint account holder?
An authorized user is added to the credit card account by the primary cardholder, who is the person financially responsible for making payments on the account. Authorized users can make purchases only with your card; they can’t make account decisions on behalf of the primary cardholder.
Meanwhile, as a primary or joint account owner, you can add or remove an authorized user at any time and control other aspects of the account. Both joint cardholders are responsible for the debt.
The bottom line
While adding a child as an authorized user on your credit card account can be advantageous, you want to make sure you discuss the details and expectations with them and make sure they understand the potential consequences of irresponsible spending, as well as the benefits of responsible spending.
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