Consumer Watch: Should you give your kid a credit card?

Teaching kids about credit cards at a young age, could benefit both the kids and parents in their future financial stability (KOKH).

Children are more independent than ever in some ways. From cellphones to trusting them to go out of town without you, each parent has to figure out how much independence and help to give, and credit cards are often a part of the decision.

Giving them a credit card might make things easier especially as the child get older, but it can also be a bad idea for their financial future, as well as your own. Children under 18 years of age cannot get a credit card themselves, and even if they are 18, some companies would need to them prove they have an income before approving a first time credit card applicant for a line of credit. This means the adult is ultimately responsible for what happens with that card.

Jennifer Lown with the Oklahoma Employees Credit Union recommends making your child an authorized user on a credit card, but make sure it has a low credit limit.

“Whenever you are looking for a credit card for a first-time credit card user, I would initially ask for a low credit limit. They may come out and grant a giant credit limit, which isn't what you want. You want something small and manageable,” says Lown.

If a child is an authorized user on an adult’s account, this allows the minor to use a card with their name on it, and learn about finances. It also allows kids to start building a strong credit score early on. Financial experts say if a parent chooses to do this, there needs to be open regular communications because mistakes could cost the both of you.

“Credit cards get a bad rap, but they really are great financial tools, and they are an easy low risk way for kids to start establishing their credit.,” says Lown.

Here are some topics to focus on if your child an authorized user on one of your low balance credit cards.

-Making payments on time.

-Paying the balance in full every month.

-Regularly monitoring accounts in case card is compromised.

Practicing good financial habits while young will help children with developing these habits into adulthood. There are potential benefits for the parents too, because regularly focusing on what it means to have those good financial habits will remind the adults of the steps to stay financially stable.

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