Want to build credit history for your kids? Add them as an authorized user


Want to Build Credit History for Your Kids? Add Them as an Authorized User

Having good credit is essential for a successful financial future. Unfortunately, for kids, building that good credit can be difficult – it’s almost impossible for them to get a credit card before they turn 18, and student loan debt can be a real burden. With the right strategy, however, you can help your child start working towards a good credit score early.

Adding your child as an authorized user to your credit card can be an effective way to start building their credit history. Below, we’ll discuss what an authorized user credit card is, the benefits of adding one to your account, and the drawbacks that you should be aware of.

What is an Authorized User Credit Card?

When you add your child as an authorized user to your credit card, they receive a card with the same account information as the primary cardholder. Essentially, your child gets to access the account while you remain the one legally responsible for the card’s activity.

Benefits of Adding an Authorized User Credit Card

There are several advantages to adding your child as an authorized user to your credit card:

  • They’ll start building a credit history: Your child’s credit will be linked to the account, and its transactions will show up on the credit report. Over time, their credit history will start to build.
  • They can learn how to use a credit card properly: By having an authorized user credit card, your child can safely learn responsible use of credit. You may be able to set spending limits, or track their activity by setting up notifications or alerts.
  • They can benefit from perks associated with the card: If you have a card with additional rewards or benefits, your child can take advantage of them too.

Drawbacks of Adding an Authorized User Credit Card

You should also be aware of the potential drawbacks of adding your child as an authorized user to your credit card:

  • Your credit score could take a hit: Depending on how your child uses the card, it could potentially harm your credit score. Missed payments, maxing out the card, and other bad practices could result in negative marks on your credit report.
  • It could be expensive: You (as the primary account holder) will be responsible for any of your child’s charges, including fees and interest.
  • There can be potential legal problems: Legally, the primary cardholder is responsible for the full amount of the purchases. So, if your child charges you back for something they bought with the card, you won’t be able to take them to court over it.

Adding your child as an authorized user to your credit card can be a great way to help them build a credit history and learn responsible use of credit, but you should understand the potential risks and rewards before proceeding.

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