4 Reasons to Add Your Teen as an Authorized User on Your Credit Card


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Giving your kid access to your credit card account might make you squirm, but there are some good reasons to do it. Teens need to be educated about credit before they leave the nest and get their own credit cards. While you could just hand them your credit card whenever they want to make a purchase, there are extra benefits to making them an authorized user on your account.

An authorized user gets a card in their own name and can make purchases just like the primary user on the account. However, only the primary user is responsible for paying the charges. That sounds scary but there are ways to handle the situation so that your child gets the most from it without landing you in debt. (See also: What You Need to Know About Adding Another User to Your Credit Card)

Let’s look at the notable benefits that come with making your child an authorized user on your account.

1. Lessons on Credit and Debt

Teenagers may not really understand what credit is until they experience it firsthand. By introducing teenagers to credit early on, they can gain an understanding of what it means to owe someone money — and that every dollar spent must be paid back. They’ll also learn about credit card interest this way, and how not paying your balance in full means owing more money over time.

To make this lesson effective, you’ll need to establish with your teen that they are responsible for paying the charges they make and any interest they incur. If you simply pay for all their purchases, they’ll learn very little about responsible credit card use.

For example, your teen might use their authorized user card for new clothes at the mall without a care in the world. When the bill arrives, however, if you have made it clear that they will have to pay for the charges, they’ll be forced to face the consequences of their spending.

If they’ve kept the cash on hand to pay their bill, they can be proud of that accomplishment. If not, they’ll learn what it means to carry a balance and pay interest. And when those $49 jeans end up costing $61, they might feel the pain of their decisions in a way no other method of learning can convey. (See also: 13 Things to Teach Your Kids About Credit Cards)

2. Lessons in Budgeting

The example above presents a great way to introduce kids to another adult concept — budgeting….

Sasha Harriet

Sasha Harriet

As content editor, I get to do what I love everyday. Tweet, share and promote the best content our tools find on a daily basis.

I have a crazy passion for #music, #celebrity #news & #fashion! I'm always out and about on Twitter.
Sasha Harriet

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