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Kids can’t get a credit card without a parent until they are 18, or 21 if they have no independent income. Find out if you should help them get one.
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Kids are not allowed to open a credit card account on their own until they turn 18 — and, even then, they may need a cosigner if they don’t have enough independent income to show a creditor they can pay the bills.
However, you can get a credit card for your children if you want to. You can add them as an authorized user to your own account, or cosign for them if they are between 18 and 21 and don’t have the income to qualify on their own.
But just because you can help your child get a credit card doesn’t mean you should. Before you sign your child up for credit, you’ll want to be on the lookout for these five signs that they are ready for the responsibility.
1. They earn income to pay the balance
Unless you want to pay your child’s credit card bills for them, you may want to wait until they have income of their own to help them get a credit card. If you make them an authorized user on your card, you’ll be responsible for all charges they incur. And even if you help them get a card of their own, you don’t want them to damage their credit by not making payments on time.
2. They know how to live within limits
It’s very easy to get out of control with a credit card. But you absolutely do not want your child to max out the card and charge up to the limit — or even get close to it. Not only could a maxed out card lead to a huge balance that must be paid back, but it could also damage the cardholder’s credit score.
See, your credit score takes into account your credit utilization, or the amount of credit used relative to credit available. If you use more than 30% of your available credit, you’ll find yourself with a reduced score. Whether this happens to your child or to you if you made your child an authorized user, you don’t want this to occur.
So, unless you are confident your child knows how to keep track of limits and stop charging long before maxing out the card, you don’t want to help them get it.
3. They have a good handle on their spending
A credit card makes spending money seem effortless since you don’t have to part with cash. It’s also easy to justify putting just one more thing on the card and worrying later about how you’ll pay it back.
Since you don’t want your child to end up drowning in credit card debt, be sure you can trust them to spend responsibly and not go overboard once they have a card of their own.
4. They can be trusted to make payments on time
If your child will be responsible for making payments on the card themselves, you’ll want to be sure they’re organized enough to do it on schedule. Once a payment is 30 or more days late, the late payment is reported to the credit bureau, and this can do serious damage to a credit score. A late payment could also trigger an expensive penalty APR and a late fee — both of which you’d want to avoid.
5. They have a bank account they’ve managed responsibly
Finally, it may be a good idea to start your child with a bank account before getting them a credit card. While you can still get into trouble with a bank account if you overdraft your account, the consequences of mismanaging a bank account are usually not as dire as that of mismanaging credit.
Once your child shows they can be responsible with the bank account, that’s a good sign they’re ready to move up to a credit card. Plus, ideally, they’ll have the money in the bank to pay the credit card bills they rack up so you don’t end up in a situation where you might have to bail them out of trouble.
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