Credit Cards for Kids and Teens

Getting credit cards for kids can age you. I should know; even though I write about credit cards for a living, the idea of sharing my carefully curated credit score with my kids was harrowing. And that's essentially what you do when you sign a child up as an authorized user on your account. 

They are good kids, but recently, one told me she could feel her frontal lobe finally kicking in. That's the point, really. A child's brain doesn't finish developing, especially in terms of judgment, until around age 25. Authorized user cards can serve as financial training wheels; they allow your child to feel the heady freedom of credit with some supervision and guidance from you, the parent with the fully-formed brain.

Credit cards for kids: an overview

Generation Z has different spending habits from their Gen X or Millennial parents. Gen Z kids are decidedly digital, embracing peer-to-peer payment apps, for example. Still, many are loyal to cash, thanks partly to TikTok influencers. But by budgeting solely with cash, they miss out on high-yield savings accounts and other banking benefits. It's a good idea to teach them the pros and cons of banking and credit products.

Subscribe to Kiplinger’s Personal Finance

Be a smarter, better informed investor.

Save up to 74%

Sign up for Kiplinger’s Free E-Newsletters

Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.

Profit and prosper with the best of expert advice - straight to your e-mail.

Sign up

Many kids, however, can succumb to temptation without guidance on how to use a credit card. According to LendingTree, almost half of parents surveyed said they had caught their child using their credit card without permission. One of our kids went online and charged $100 worth of video games to our card when she was four! So, kids need to learn about credit cards from an early age.

Parents are understandably hesitant to let their children access credit cards, but having a credit card could be beneficial with the right guidance. Facilitating your child’s financial success in adulthood means teaching them about concepts like credit and responsible spending habits now. 

What is an authorized user?

Adding an authorized user to your credit card allows someone (typically a family member or child) secondary access to your card, which helps them build a credit history. 

Authorized users can make purchases on the credit card, however, the responsibility of making payments still falls on the primary cardholder. After adding a secondary user to the credit card, your account activity begins reporting on their credit profile which includes: 

• The credit limit
• Balance
• Payment history
• Credit utilization (how much of the credit line is used)

Think of an authorized user card as a credit card with training wheels. You’ll be right behind them in case something goes wrong, and you’re teaching them to use credit responsibly while fostering independence.

The thought of granting your child access to your credit card may ignite new anxieties for some parents, but it’s important to note the backbone of this strategy is hands-on guidance and oversight.

Pros of making your child an authorized user

Adding your kid as an authorized user may pose some drawbacks, but it could give them a significant leg up when applying for their first apartment to rent, getting a loan for a used car, or even signing up for a new cellphone plan.

• Better consumer protections: As your child gets used to making purchases online and keeping track of their card, there will likely be instances of fraudulent purchases. Compared to a debit card, you won’t have to be concerned with liability for costly fraud. Under the Fair Credit Billing Act (FCBA), your fraud liability on an open-end credit account is limited to $50.
• Build credit early: Putting your teen ahead of the curve with credit habits and a good credit score pays off. Having a good credit score could equal lower security deposits, lower interest rates on borrowing, and even better job opportunities. Not all card issuers report the data from an under-18 authorized user to credit bureaus, so check the issuer's policy before signing up.
• Teach Responsible credit use: In a 2021 TIAA Institute study, 29% of Gen Z students agreed that debt payments were preventing them from addressing other financial priorities. By teaching your child how to borrow responsibly using credit cards, you could help them avoid these types of financial issues in the future.
• Earn extra rewards: Even though you’ve likely limited their ability to spend, their purchases can still add to the credit card rewards you earn. And some credit cards will give you a bonus for adding an authorized user.
• Personal safety: I feel better knowing my kid has a surefire way to get home or buy a meal. Even if they lose their wallet, kids these days link their credit cards to payment apps, so they will always have a way to access funds in an emergency.

Cons of making your child an authorized user

Adding your child as an authorized user has advantages, but on the downside, most authorized user cards allow the user to access the primary cardholder's full credit limit. If your child lacks financial discipline, this could result in excessive spending, and as the primary cardholder, you're responsible for paying the bill.

• You’re responsible for what they spend: If spending gets excessive and they can’t cover what they spent, you’re still stuck with the bill.
• Access to your full credit limit: Most credit cards give authorized users access to the full credit limit you’ve been approved for and there’s no way to lower it. One exception to this is American Express which lets you set the limit as low as $200.
• Fees for authorized users: Some higher-end credit cards charge an annual fee for each authorized user added. These fees can be as high as $175 per user.
• Negative credit activity hurts: With a secondary user on your credit card, negative actions like missing a payment or keeping high balances could hurt both of your credit scores.
• Your child may not have good security practices: A distracted kid may lose their credit card, or they may fall prey to scams more easily than adults.

Credit card companies and age requirements

There’s no consistent guideline on the minimum age credit card companies accept for authorized users. Each company sets its own standard. In some cases, a credit card may charge an annual fee for adding an authorized user, but that’s not the case for most. We’ve broken down the minimum age requirement and authorized user fees for ten major banks.

Sharing your card's account

Getting your child signed up as an authorized user on one of your current cards is simple. Just decide which card you want to share, sign in to your account, and fill out a short form. In some cases, as noted above, your account may be charged a fee, or it may be free. Here are a few things to consider when selecting which card you want to share.

Foreign transaction fees: If your teen plans to travel abroad, select a card with no foreign transaction fee. Our young teen was headed to Europe with a student travel program. I decided to share the Chase Sapphire Preferred card with her despite the $75 fee for adding an authorized user. My reasoning? I knew she would spend enough on the card to offset the fee with points we could redeem for a family vacation, and I liked that the card has excellent travel insurance.

Keeping track of 529 plan expenses: If your child is or will soon be in college, an authorized card can help you track and document expenses you can reimburse from their 529 plan. We sent our older teen to college with an authorized card linked to my Discover It card. There was no fee for adding her to my account, and I've been able to log 529 expenses like books, food and other payments. The extra cash back is a nice side benefit.

Hook them up with a solid card: If you’re looking for a card that provides good cash back rewards for users of all ages, see our guide to the best cash back credit cards. And if you’d like to open a card that offers points or miles for travelers, see the best travel rewards credit cards.

Credit card options for kids

If you want to set up a separate card to teach your kid about credit, there are
not many options. One kid-focused card from Greenlight Credit has been pulled for an update; the company promises a relaunch soon. A better option might be a debit card from Greenlight, which offers 1% back. And the Greenlight app includes programs for keeping track of chores and allowance.

Making it worth it

I wish I could say that our family sits down for weekly financial check-ins as most experts advise. Maybe your family is that organized and disciplined, but mine is a different animal altogether. So, having our kids as authorized users has given us a window into their financial habits, and we can rein in overspending when necessary. By involving them in the application process and explaining how credit cards work, they now understand the importance of protecting their credit scores. 

You could even say their frontal lobes have grown just a bit more.

Related Content

• Types of Credit Cards Explained
• Kids and Money: Boost Your Child's Future Credit Score
• Best Banks for Families With Kids
• What Kids Need To Know About Finances