![]() ![]() These fees can be as high as $175 per user. ![]() One exception to this is American Express which lets you set the limit as low as $200.įees for authorized users: Some higher-end credit cards charge an annual fee for each authorized user added. 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.Īccess 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. ![]() By teaching your child how to borrow responsibly using credit cards, you could help them avoid these types of financial issues in the future.Įarn extra rewards: Even though you’ve likely limited their ability to spend, their purchases can still add to the credit card rewards you earn. 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. Having a good credit score could equal lower security deposits, lower interest rates on borrowing, and even better job opportunities. Under the Fair Credit Billing Act (FCBA), your fraud liability on an open-end credit account is limited to $50.īuild credit early: Putting your teen ahead of the curve with credit habits and a good credit score pays off. Compared to a debit card, you won’t have to be concerned with liability for costly fraud. Pros of making your child an authorized userĪdding 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, getting a car loan, or even signing up for a new cellphone plan.īetter 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. 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. You’ll be right behind them in case something goes wrong, and you’re teaching them to use credit responsibly while fostering independence. Think of an authorized user card as a credit card with training wheels. After adding a secondary user to the credit card, your account activity begins reporting on their credit profile which includes:Ĭredit utilization (how much of the credit line is used) What is an authorized user?Īdding an authorized user to your credit card is the process of allowing someone (typically a family member or child) secondary access to your card which helps them build a credit history.Īuthorized users have access to make purchases on the credit card, however, the responsibility of making payments still falls under the primary cardholder. Facilitating your child’s financial success in adulthood means teaching them about concepts like credit and responsible spending habits now. Parents are often hesitant to let their children have access to credit cards, but having a credit card could be beneficial with the right guidance. Greenlight, the company that specializes in debit cards for kids, recently released a credit card for parents that allows teens to build credit as authorized users. Here's the best card options and a guide for talking about responsible spending. Kids and teens can access credit cards by becoming authorized users on your account. ![]()
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