Why I’ll Never Get My Future Kid a Credit Card

When I was in high school and I started driving, my mom added me as an authorized user on her credit card. This meant that I got my very own credit card that I could charge whenever I wanted. I was like a grown-up without a job! How cool right?

credit card

When my mom added me to her account, I got my own credit card, yet I wasn’t building credit. When someone adds you to their credit card account, you just get a separate card, however you are still not responsible for the debt that you incur. It’s a huge liability if you do not trust the person you are adding, since the main person on the account will always be responsible for paying off whatever has been charged through all the credit cards linked to the account.

I will never add my future kids as authorized users on my credit card… here’s why:

1. I Didn’t Learn the Value of Money

I got the credit card when I was 16, and my mom just handed it to me. I basically knew from watching her countless times, that all I had to do was hand the card over to the cashier and sign the receipt. Boom! Instant happiness. It would have been more effective if she just gave me cash, so I could at least learn just how important money was. I never felt like I was running low on cash like my friends because I had this credit card.

2. No Rules to Follow

The great part about having a credit card on your own is that you are aware and fully responsible for handling that card. You have to make sure to pay your balance or make your payments before the due date or you’ll get charged a late fee. When I had this particular card, I knew that my mom held all the responsibility so it felt like I had total control over my spending. She didn’t give me any rules to follow.

3. No Consequences for Overspending

When you have your own credit card, you are again responsible for everything. There are consequences if you max out your credit card and charge more to it. You have the power to call the bank and ask for a credit limit increase, and if you fail to make payments, your credit score is affected. You could get into a ton of debt for overspending, however with a credit card that was my mom’s responsibility… there were zero consequences for overspending besides getting occasionally yelled at by my mom.

4. Ignorance of Cost of Living

Having this credit card made me so oblivious to how much gas was, what the going rate was for certain items like books, etc. I just forked up the credit card because it was at my mom’s mercy and I didn’t need to think twice about finding a better deal, using coupons, finding discounts, price matching, or going to the cheaper gas station. If I “needed” something, there was always a way to explain it to my mom.

5. It Encouraged Spending

When I was with my friends, they always had cash. Not me! I always had my credit card, so everyone would pay me cash and then I would put everything on the credit card. What I should have done was give the money to my mom since technically the cash was supposed to go back towards the credit card, however I kept the cash to myself! I even wanted to use the credit card in front of my friends because it made me feel so mature. It also made me feel like I always had money, even though I wasn’t supposed to be spending money. This actually taught me bad habits when I finally DID get my own credit card. Tsk tsk.

6. False Independence

The problem with having a credit card in which you are not the main account holder, creates a sense of false independence, especially for a teenager who has no clue about managing money. I didn’t have a steady job, and I didn’t even get to see the monthly statements. I had no idea what the interest rate was, what the penalties were, what the credit limit was, what protections the credit card offered me, and other knowledge gained from managing a credit card on my own.

Good Lessons Can Be Taught

There is definitely a way to teach kids about good spending behavior and other money management techniques, but if you’re going to get them a credit card by adding them as an authorized user, make sure to think ahead and come up with a plan as to how you want to manage the credit card with your child.

You can set up strict guidelines, go over a budget with them, list out the necessities that may only be purchased with this credit card (no shopping!), and have weekly or monthly meetings to show them what’s going on with the card. Talk about the statements, interest rates, what happens when you don’t pay on time, how credit is built, why we have credit scores, and the dangers of credit card fraud. Make sure that your child is aware of the consequences so that they fully understand what they are getting into.

There are so many lessons that I wish I was taught when I first got this credit card, because it would have (possibly) prevented some shopping problems I had when I finally opened up my own credit card.

Would you add your child as an authorized user to your credit card? If you don’t have children, would you do so?

About the Author

By , on Jul 5, 2012
Erika from the website From Shopping to Saving where I share my journey as a recovering shopaholic! I share my experiences with saving, shopping (resisting it), self-improvement, and more. Feel free to ask me questions or follow me on Twitter.

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{22 Comments}

  1. Julia says:

    Brilliant and right on!

    I’d rather give my kids the gift of knowing how to use resources, rather than authorizing them to spend blindly. Thanks for the good read added to my day!

  2. My future kids are definitely going to be practically perfect in every way so I don’t think I’ll need this advice. :) I think your reasons are sound, but I think that I won’t give my kids a credit card because by that point, they’ll be largely irrelevant and they’ll have apps where they can buy things from their phones!

  3. AverageJoe says:

    Funny! We talked about this very topic on the podcast this week. (Great minds!) I think I’d only add my child as a user of a credit card if I could find a way to use it as a life lesson (and not one that ends “you shouldn’t have done that!”). Right now I can’t think of a life lesson I could teach with that strategy, so I don’t think I would (as proof…I have two 17 year olds and they aren’t on our cards….).

  4. Kids don’t need credit cards just like they don’t need many other things. Kids should be adults and have the maturity to handle finances before they even apply for a credit card. I like to operate on the principle that if they can own a house (look after themselves independently) than they can have a credit card. At that point they could apply on their own.

  5. Andy says:

    Thanks for the great guest post, Erika!

    I think I’m with the consensus here as I wouldn’t get my children a credit card either. I’d raise them with the understanding that they should never go into debt and that you should always use cash for spending. Although, there is something to be said for helping them build their credit early and allowing them to fall into the temptation to spend “free money” that they don’t have (on the credit card). That situation would then lead to a teachable moment.

    …hmmm…I don’t know what I’ll do. Man, being a parent sounds tough!

  6. I don’t think I’d give my kids a card. I might give them an prepaid debit card but definitely not a credit card on my account. One bad move and I’d owe a ton of money! Glad to finally see a guest post from you over here :)

  7. Tracy says:

    I applied for a credit card with a $1000 limit. I added both of my boys as authorized users. They were both going to the local community college and I was tired of having to deal with the purchase of books, parking stickers, etc. They are also allowed to use it for fueling the vehicles. Other than the college expenses which are paid for by myself and my husband, they are responsible for anything else they put on the card. We have never paid a late fee or finance charge in two years. They are respectful and responsible to get the card paid on time. I always stress to them not to use the credit card if they don’t have the cash to back it up. Sometimes the card is just easier than getting cash or paying a fee at a foreign atm machine.

    I guess I all depends on your kids. Remember..you have the power to shut the card down at any minute. My kids both know this.

  8. Great post, Erika!

    I probably wouldn’t add a child to a credit card, but I think it would depend a lot on the personality of the child, the quality of the trust in my relationship with the child, and the finance rules at that time (far in the future). My parents never gave me a credit card and I did fine; my husband’s parents added him to one of their cards and they all did fine.

    I think all the money-management lessons can be taught using a debit card, so the only reason to use a credit card specifically would be to build credit, which will probably be an at-that-time call depending on the other debt the child might be taking out (student loans), how close on the horizon a good credit score is needed (probably not too close), and what other credit-building options are available at that time (hopefully more than now).

  9. I never had a credit card as a kid. I always had cash, very little. I think I had way more my senior year of high school because I was working a part time job. I worked 10 hours a week * $10 a hour. That’s a 100 bucks a week, $400 a month. :) It was awesome :) I kept most of the money, and my parents didn’t make me pay for much. I built up my savings to pay for initial things in college. One thing I regret is having my savings so easily accessible. Have to make it harder to borrow money from myself!

  10. bogofdebt says:

    I don’t think I would do it either–I know how bad I was at that age and I also know (through his stories) how bad my fiance was. However, they do need to know how credit cards work (fiances in general) so I’d want to teach them somehow. I wasn’t reallly taught when I was younger and I would want them to know my mistakes and the struggles to fix those mistakes.

  11. I think there should be a rule-you shouldn’t get a credit card AT LEAST until your junior year of college. There’s a shift that happen then, you become more focused on school and getting out of college is suddenly closer than ever. I think that’s a good time to get a first card-you’ve been out on your own a while and have gotten all the craziness out of your system. Just my opinion!

  12. Michelle says:

    Buy now, pay later? YES PLEASE! I think I was too optimistic as a kid (teenager) to have one, too. I always thought I’ll just have more money next month…no problem. CHARGE IT!” haha

  13. I think a pre-paid credit card would be great in this situation. And, I may be a bit “new school”, but I have a feeling cash won’t have the same impact on our kids as it does on us. I think teaching them that credit cards are REAL MONEY, just like cash, you can help build a mindset that you can’t just swipe, sign, and walk away.

    But I am totally with you that credit cards are something that needs to be handled delicately, and judging on who my kid is at age 16, I might NOT give them a card at all.

  14. I wouldn’t let my kid have a credit card either, or be an authorized user. If they have a job, they can get a checking account with a debit card if they want. Then it is all on them.

  15. I wouldn’t add any of my kids to my CC account. They can get their own credit card once they get their first job.

  16. My kid will be 16 in about 9 years and I’m not sure what I will do there. Certainly not give them anything without a small limit. I think they can be used to teach lessons, but only if the parents are willing and able.

  17. I will never give my kids a credit card. Just like you said it doesn’t help teach the value of money and can leading to spending problems for a teenager. You have done quite the job of learning from your mistakes though :-)

  18. Modest Money says:

    It sounds like this really led to your problems with shopping later on in life. Parents do need to be quite careful about giving their kids a credit card. At the same time though, I think done in the right way it could be a very beneficial learning experience. I’d be tempted to get them to apply for one of those student credit cards where the parents can access all the bills. It would also be crucial to really make it a lesson and not just something that it handed over. Maybe I’d even get them to read some finance blogs first lol.

  19. Daisy says:

    I would never do this, because really.. when I was that age I was unbelievably irresponsible with money and I can only expect that kids need to learn before being handed an (what seems like, to them) unlimited amount of cash.

  20. Michelle says:

    I don’t think I would, especially if the kid was young. While I was good with credit cards, there are so many people out there who aren’t.

  21. Edward Antrobus says:

    I have added somebody to my card and have been added to somebody else’s card. In both cases, the new card holder’s credit report got a new item. My irresponsibility with credit hurt my sister when she later went to buy her first home, because it said that she had the over-limit card. I had to send a certified letter to Discover to explain that she was never intended to be an account holder, and only had an authorized card for emergencies.

    When my wife gave Capital One permission to talk to me on the phone (she really hates talking to strangers on the phone), they automatically added me to the account and my next credit report pull showed me as having the card in my name!

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