I want to help my kids build up their credit history so I added them to my credit card – will this help?

^{Flywheel Publishing has partnered with CardRatings for our coverage of credit card products. Flywheel Publishing and CardRatings may receive a commission from card issuers.}

It’s always a fantastic idea for parents to set their children up for financial success by educating them early. Undoubtedly, financial education and literacy are things that are not taught (or taught too well) in schools. As parents look to equip their youngsters with invaluable personal finance knowledge, they’re effectively giving them a fishing rod rather than the fish so that they’ll be able to feed themselves for a lifetime. Indeed, it’s never too early to get started with the lessons.

Whether it’s buying a child a piggy bank playset, setting up a custodial brokerage account for a teen hoping to buy that first stock, or just opening up a bank account to gain first-hand knowledge of how interest rates work, there’s always something fun one can do to get one ahead in their financial journeys.

In this piece, we’ll check in on the case of an individual who wants to add their teens as an authorized user on their credit card. Indeed, adding them could give them a nice headstart on building credit. Undoubtedly, having good credit scores earlier on in one’s life can come with its set of perks. And it’s not all about gaining approval for a personal loan or a lower interest rate, either.

Key Points About This Article

• Adding teens to one’s credit card could make sense in some scenarios.
• However, there are risks to having authorized users on your credit card.
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There’s value in building up good credit early.

Many landlords check credit scores before even thinking about approving rental applicants. Additionally, some employers check on credit scores as a gauge for how responsible someone is. Staying on top of one’s bills may give the impression one is not only financially responsible but responsible in general. Either way, building credit is a vital skill. And the sooner one can do it, the better.

That said, not everyone is going to be comfortable with adding teens to their credit cards, even if th. Indeed, if a teen goes on a spending spree without the funds to pay for the monthly statement, you’re going to have to pay up.

Further, it’s my opinion that building credit is a marathon rather than a race. So, if you’ve got a 16- or 17-year-old teen, I’d argue it’s better to wait a year or two so that they can get their own starter credit card and begin building credit that way. Indeed, one may be more responsible with how they use their own credit card, rather than one that’s tied to their parents. 

The bottom line

In any case, if such a teen is willing to spend in a responsible manner, I don’t see any reason for not adding a teen to one’s credit card. Of course, if they’re both spending considerable sums, expect your credit utilization to go up. This may or may not impact your personal credit score negatively. Typically, lower levels of utilization are more conducive to building higher credit.

To make sure, just check in with your financial adviser. They can help with more than just building credit. Indeed, they can help give pointers for you and your youngsters on how to raise children to be financially literate and begin the retirement savings process sooner rather than later.

^{Flywheel Publishing has partnered with CardRatings for our coverage of credit card products. Flywheel Publishing and CardRatings may receive a commission from card issuers.}