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New School Year, New Decisions: 3 Questions To Ask Before Your Child Gets A Credit Card

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New School Year, New Decisions: 3 Questions To Ask Before Your Child Gets A Credit Card

Teaching your child financial responsibility is an important task and one that you, as the parent, should undertake. You don't want your child to learn bad money habits when they're young, or go into adulthood with almost no understanding of how to build up their credit score.

Now that the new school year has started, you might be wondering should your kid get a credit card or not. Here are some considerations to help you with your decision.

Is Your Child Younger Than 18?

If your child is under the age of 18, that means that legally, they cannot get a credit card in their name because they aren't yet considered an adult. Therefore, if you want your child to have a credit card at a younger age, then you would have to add them as an authorized user on your account. What this means is your child can use the card which would help build their credit history.

However, you, not your child, is legally responsible for any charges they make on the account.

Does Your Child Have A Job Or Income?

In order to get their own credit card, your child needs to have a job and demonstrate that they're financially able to pay off a credit card statement every month. Otherwise, you will have to add them as an authorized user to your account.

If your child doesn't have a job and has no means of income, then you need to sit down together to discuss the credit card and how they're allowed to use it. Will it be for emergencies only? Will they have to free reign? Do they have a monthly stipend each month? Or do they have to pay you back for everything they spend on it?

Answers to these questions will vary from family to family, and you have to decide what works best for you.

Is Your Child Financially Responsible?

Having a credit card is a huge responsibility. You shouldn't consider helping your child get one if they can't be trusted to use it responsibly. Remember, as the cardholder, you're legally responsible for any charges they put on your account. If you can't trust them, you shouldn't add them as an authorized user.

Best Credit Card For Children

A student credit card is a great option for your child as they start to build their credit history. The Discover It Student Cash Back card from Discover (NYSE: DFS) is a good option because it doesn't charge a penalty rate if your child is late one month. In addition, it forgives the cardholder one time for late payments.

Helping your child get a credit card can be a great way to help build their confidence and credit history. It will also help teach them valuable lessons they can carry through their entire life.

Posted-In: Education Personal Finance General Best of Benzinga

 

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