Why did I make my child an authorized user of my credit card?

Add your child an authorized user on your credit card to build their credit history and start them on the path to financial independence.

As a parent, we want our children to learn and understand financial responsibility. One way to prepare them for money management is by making them authorized users of our credit cards.

It may sound controversial, but there are valid reasons why some parents choose to take this route. In doing so, we can teach our children how to use credit responsibly, monitor their spending habits, and help them build their credit history early on.

However, risks such as overspending and possible damage to our credit scores are also involved.

In this article, we will explore why I made my child an authorized user of my credit card and the benefits and drawbacks of it.

Why did I make my child an authorized user of my credit card

What Is an Authorized User?

An authorized user is an individual permitted by the primary credit card account holder to use their credit card. The authorized user is added to the account by the primary account holder and given a separate credit card with their name.

The authorized user can make purchases under the same credit card account and credit limit as the primary cardholder. Still, they are not responsible for making payments on the account. The primary cardholder remains solely responsible for making payments and managing the account.

Authorized users are often used by parents who want to help their children build credit or spouses who wish to share a credit card account. It’s important to note that any debt incurred by an authorized user also impacts the primary cardholder’s credit score.

What’s the difference between a joint account and an authorized user?

A joint account is a bank account that two or more individuals share ownership and responsibility. They can access and manage the account equally and use checks, ATM cards, or debit cards for transactions.

On the other hand, an authorized user is an individual who can use the credit card account of another person but has no ownership or legal responsibility for it. Authorized users can make purchases, check balances, and pay for some expenses, but they cannot change account details, request credit increases or close the account.

If the account owner defaults on payments, the authorized user is not liable for the debt. In summary, joint accounts are ideal for spouses or partners and are subject to legal obligations, whereas authorized users are for people who require temporary access to someone else’s account.

Authorizing your child is a big step. What happens next?

 When you add kids as authorized users, they are granted access to a line of credit on your account. This means they can purchase using a credit card you can.

However, the primary account holder remains responsible for paying off all charges, including those made by the authorized user. Credit cards allow you to add authorized users through the card issuer’s website or by calling their customer service line.

The card issuer will typically ask for the authorized user’s name, date of birth, and social security number to add them to the account. Making your child a certified credit card user can help them establish good credit habits, but it can also put your credit score at risk if they make irresponsible purchases.

It’s essential to consider the potential risks and benefits before adding anyone as an authorized user on your credit card.

What is the right time to add your child as an authorized user??

As a parent, adding your child as an authorized user on your credit card can be a great way to teach them about responsible credit use and help them build a credit history. However, deciding when to add your child can be difficult.

The minimum age requirement for authorized users varies among credit card companies. For example, American Express and Barclays allow children as young as 13 to be added, while Discover requires the child to be at least 15. Other companies such as Bank of America, Capital One, Chase, Citi, U.S. Bank, and Wells Fargo have no set minimum age requirement.

 It is essential to consider your child’s level of responsibility and maturity before adding them as authorized users. it is necessary to ensure that your child understands the consequences of irresponsible credit use and how it can affect their credit score in the future.

Is it possible for your child to build their credit by becoming an authorized user?

Making your child an authorized credit card user can help them build their credit. By adding your child to your credit card account, each time you make an on-time payment toward your credit card, that same payment could be added to your credit history.

This can help build credit for your child, even before they are old enough to open a credit card. Payment history makes up 35 % of your FICO credit score, so this positive payment record could allow your child to start building a good credit score.

It’s important to note that as the primary account holder, you’ll still be responsible for any charges your child makes to the credit card, so it could also help your child learn responsible financial habits.

Becoming a responsible authorized user and building a solid credit report can also help your child qualify for lower interest rates and better terms when they apply for future credit products.

If your child is an authorized user, how long should they have access?

Deciding how long your child should remain an authorized user on your credit card can be challenging as a parent. The purpose of adding your child as an authorized user is to help them build a positive credit history, which can be helpful later in life.

Some parents prefer to keep the authorized user relationship active even after their child has graduated from college or has a stable job. This is because having a more extended credit history can positively impact their credit score.

However, you may remove your children as authorized users once they have reached a certain point in their lives, such as graduation or starting a job. Ultimately, the decision should be based on individual circumstances and what is best for the child’s financial future.

If you want to check your child’s credit report, how do you do it?

To check your child’s credit report, contact the major credit bureaus: Equifax, Experian, and TransUnion. You can request a credit report for your child by mail or online, but you must provide proof of your identity and relationship with the child.

It’s important to know that your child may not have a credit report until they use it. This could include entering a loan agreement, using credit cards, or opening an account with the bank in their name.

However, checking their credit history can help you identify potential fraud or identity theft. The process of checking your child’s credit report may vary, depending on your child’s age, but it’s recommended to do so at least once before they turn 18.

The Federal Trade Commission suggests that parents order a child’s credit report when they turn 16. Regularly monitoring your child’s credit report can help protect their financial future.

Read More: How to Change Your Credit Score Illegally: Myth or Fact?

How do I check my credit score if my child’s age is below 13? 

If your child is below 13, they are unlikely to have a credit score. However, checking if a credit report exists in their name is always good.

To do so, a parent or guardian should contact the credit bureaus by mail and provide certain identifying information.

Each of the three credit bureaus – Equifax, Experian, and TransUnion – have unique requirements, so it is essential to contact them to find out more about the information you may need to provide to check if your underage child has a credit report. 

It is crucial to ensure that your child’s credit report is accurate before adulthood because it can significantly impact their ability to obtain credit, loans, or housing. So, it is better to be proactive and take control of your child’s financial future.

Read More: How to Add an Authorized User to Your Capital One Credit Card?

What are the benefits of adding a child an authorized user ?

Adding a child as an authorized user on a credit card can bring several benefits. When you add your child to your credit card, they can use it to pay for expenses and build credit.

This is a great way to teach your child responsible credit use and management of finances while also allowing them to establish a good credit score.

The credit card issuer will report the payment activity and utilization to credit bureaus, helping build your child’s credit history.

With an authorized user account, your child could access benefits or rewards the card issuer offers, making it a valuable tool.

What are the drawbacks of adding an authorized user?

While adding an authorized user to a credit card can have some advantages, there are also some drawbacks.

One of the main drawbacks is the potential impact on the credit score of both the primary account holder and the authorized user. The authorized user’s credit score can be negatively affected if the primary account holder has a high credit utilization rate or misses payments.

Adding an authorized user can impact the credit limit and increase the risk of overspending if the authorized user is not responsible for the card.

It is essential to carefully consider the financial responsibility of the authorized user and the potential impact on both parties’ credit scores before deciding to add them to the account.

Here is the comparison table of the Pros & Cons of  adding children as authorized users.

Benefits of Adding an Authorized User
Drawbacks of Adding an Authorized User
Can help build a credit score
This could lead to increased debt
Can earn rewards for both parties
The authorized user could misuse the card
Can provide emergency backup
Authorized users could make late payments
Can monitor spending and track expenses
This could lead to disputes over charges
Can simplify shared expenses
Could impact the primary user’s credit utilization ratio
Can improve the credit utilization ratio
Could impact primary user’s credit score if authorized user misuses card

What should I do to add a child as an authorized user?

If you want to add a child as an authorized user to your credit card account, you must provide the child’s Social Security number and birthday to verify their age and link their name to the report. This way, they can use the existing credit on the card.

You can also add a child as an authorized user when you open a new credit card account. Some card issuers have age restrictions for authorized users, so you must check with your card issuer beforehand.

Adding a child as an authorized user can be beneficial as it helps them establish credit at a young age. Still, monitoring their spending and ensuring they understand the responsibility of using a credit card is essential.

My credit score will be affected if I add my child as an authorized user?

Adding your child as an authorized user to your credit card will not necessarily hurt your credit as long as you are responsible for using the credit card. It can help build your child’s credit history since their name will be associated with a credit account you manage well.

However, if your child overspends or doesn’t adhere to the payment schedule, this will negatively affect your credit.

Set clear boundaries and educate your child on responsible credit use to avoid negative consequences. Ultimately, adding your child as an authorized user can be brilliant if both parties are prepared to handle it responsibly.

How much will my credit score increase if I become an authorized user?

Becoming an authorized user on someone else’s credit card can improve your credit score. However, it is difficult to determine precisely how much your credit score will increase.

The amount of increase depends on various factors, such as the credit limit on the account, the length of the account’s active history, and the payment history associated with the account. If the credit card has a high limit and a long history of on-time payments, your score could see significant improvements.

On the other hand, if the card has a low limit or a history of missed payments, becoming an authorized user may not significantly affect your credit score. Monitoring your credit report regularly is essential to see if becoming an authorized user has positively impacted your credit score.

Does removing an authorized user hurt their credit?

Removing an authorized user from a credit card account generally does not hurt their credit. Authorized users are not responsible for making payments or managing the account, so their credit score is not directly affected by the account’s activity.

However, the authorized user’s credit score may occasionally be impacted by the credit utilization ratio of the report.

If the account has a high balance compared to its credit limit, it could negatively affect the user’s credit score. If the authorized user has only been an authorized user on that one account, removing them could reduce their credit history length, as the account will no longer appear on their credit report.

Ultimately, it is essential for authorized users to understand how their credit may be impacted by the cardholder’s use of the account and to review their credit reports to ensure accuracy regularly.

What is the best time to remove an authorized user from your credit card account?

 If the authorized user does not use the credit card responsibly or raises high balances, it could negatively affect her credit score and credit history. You may also want to remove a child as an authorized user when they become financially independent or do not respect the rules you have set.

Checking your credit report can also be an excellent way to determine if removing an authorized user from your credit card account is time. If you notice any harmful activity, it may be time to take action to protect your credit score and overall financial health.

Communicating openly with authorized users and setting clear boundaries and expectations for responsible credit card use is essential.

Other ways to help your child build good credit

In addition to adding your children as authorized users on your credit card to help them build good credit, there are other ways to help them establish a positive credit history.

  • One way to help is by teaching them about responsible financial practices, such as creating a budget and sticking to it, paying bills on time, and avoiding unnecessary debt.
  • Another way to help is to encourage your child to open a secured credit card or a credit-builder account to build their credit.

However, reminding your child to use credit responsibly and avoid overspending is essential. Regularly checking your child’s credit report and correcting errors can help maintain a positive credit history. Setting your child up for success in this area can positively affect their financial future.

Frequently Asked Questions About Adding an Authorized User to a Credit Card

Can a child be an authorized user on a credit card?

Yes, a child can be an authorized user on a credit card. It is up to the credit cardholder to add their child as an authorized user, and the child will receive their credit card. Nevertheless, it is important to note that the child does not have legal responsibility for the payments, and any charges made by the child are ultimately the responsibility of the credit cardholder. Children can develop responsible financial habits and build a credit history if they are added as authorized users early.

However, it is crucial for parents to monitor their child’s spending and educate them on the importance of paying bills on time and staying within budget. Parents should also set limits and boundaries on their child’s spending and ensure they are not raising too much debt.

At what age can I add my child as an authorized user?

Parents often wonder when they can add their child as an authorized user to their credit card account. Someone 18 or older can be a credit card-charged user without issue. However, some banks may not allow children under a certain age to be added as authorized users. Therefore, checking your bank’s policies before adding your child as an authorized user is essential. 

Adding your child as an authorized user can be a smart financial move, as it can help them establish credit and learn good financial habits. It is essential to remember that as the primary account holder, you are responsible for all charges made by authorized users on your account, including your child.

Will adding my child as an authorized user help his credit?

Yes, Adding your child as an authorized user on your credit card account can help his credit, but it’s not a guaranteed fix. As an authorized user, your child will benefit from your credit card account’s positive payment history and credit limit. However, negative credit behavior, such as late payments or a high credit utilization rate, could hurt your child’s credit. 

Can I add my 14-year-old as an authorized user on my credit card?

You can add your 14-year-old as an authorized user on your credit card. However, it is essential to consider the responsibility of being an authorized user. By adding your kids as authorized users to your credit card, they will have access to your credit limit and the ability to make purchases under your name.

It is crucial to set clear rules and expectations with your child regarding using credit cards and ensure they understand the importance of responsible credit use. adding your child as an authorized user can positively impact their credit score if they use the card responsibly and make timely payments.

Contacting your credit card issuer before adding your child as an authorized user is essential, as not all providers permit minors to be included.

How soon can I add my child as an authorized user?

You can add your child as an authorized user when they are old enough to have their own Social Security number. Mostly, children are eligible for a Social Security number in the weeks following their birth. Parents may add the number to their financial accounts upon receiving it. Adding your child as an authorized user can be beneficial as it helps them establish a credit history at an early age and can help them build good credit habits. 

When considering adding a child as an authorized user, it is paramount to recognize the associated responsibility and obligation. In addition, confirm that the card issuer reports authorized user activity to credit bureaus so your child can access a beneficial credit history. This must be done with deliberation and care.

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About Author

Dhiraj Jha
Dhiraj Jha
As a personal finance and credit cards expert, I provide valuable insights and advice on budgeting, saving, investing, and debt management. I am also an expert on credit card rewards programs and help readers make informed decisions about which cards are right for them. My goal is to help people improve their financial literacy and make better financial choices.

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