Sharing a Credit Card With Your Child
Children are becoming more and more aware of the adult world as the years go by. Technological advances give them toys we may have only dreamed of during our youth, not to mention the cell phone boom. Kids as young as 10 have begun demanding cell phones from their parents. Though it is doubtful you will begin sharing your credit card with your 10 year-old, perhaps when they are in high school it would be a good idea to start enlightening them on the responsibilities of being an adult.
Sharing a card with your child, however, can be a little tricky. There are a few routes you can attempt, and depending upon how much you trust (or think you can trust – an excess and availability of money does strange things to anyone) your child, some options may sound better than others. You can take one of your current credit cards and add your child on as an authorized signer. Your child will have to be at least 18 to do this. With your child on your card, this can give him or her access to whatever credit limit that card currently has. It doesn’t matter if you tell them they are only allowed to spend $100 or $200 because there is no way to stop them if they go over.
Getting a child his or her own credit card without any guidance can be a mistake; the child might go out on a spending spree, get too excited, and suddenly their credit history is severely damaged before it has even truly begun. However, you can take the reins and get them a card with a very specific number of limits. Instead, you can get a card and request an extremely low limit, such as $400. There is no room for the child to spend over that amount. Depending upon how you handle your child (setting rules, whether or not they pay the bill), he or she might easily understand how credit is to be used, and when doing so, you can offer to increase the limit. Even though they may never spend up to that limit, knowing they can and that you trust them enough to raise it can give them a sense of accomplishment and pride.
There are a few credit cards out there that do offer separate limits for another signer on your card. If that is the case, you might want to consider doing so. It saves you the trouble of opening an entirely new credit account and also the concern of your child spending way too much money. It is a win-win situation. Just make sure to monitor the card’s second limit in case the credit card company decides to increase it themselves.
Any of these options can be a great way of teaching your child about credit card use and responsibility. The only thing you have to do is make sure they obey any and all rules you set down, understand how credit works (it is not free money), and inform them of the options out there that credit cards offer, such as rewards, photo ID, and what they might want to look for in a card when they are old enough to get their own. Lastly, if your child shares a card with you and breaks the rules, make sure he or she deals with the consequences. If they have a job or other way of receiving money, make them pay for what they have purchased instead of doing it for them. They have to understand that having a credit card is serious business and letting them get away with overspending or ignoring other rules is a bad example. After all, in the real world, the creditors will not be so forgiving, and the consequences of a bad credit history are far worse.