Handing your credit card over to your teenagers might actually be a good idea.
Experts say it could help them learn money management skills and even boost their credit.
If your child’s name is added as an authorized user on your credit card, it can help them establish a strong credit profile, as long as parents are in good credit standing.
Here are some tips if you are thinking about adding your teen to your credit card:
- Establish ground rules and expectations so they don’t go over the top and they know what their responsibilities will be
- Be very specific with how much your child can spend
- Make clear under what circumstances they can use the card and then who is going to pay for it.
- Inform them that parents assume all of the financial risk.
You can also open what is known as a ‘secured credit card’ in your child’s name, most of which require a deposit that then becomes the card’s spending limit. So you control the amount of risk involved.
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