Should I Add My Teen as an Authorized User on My Credit Card?

Proverbs 22:6 says, “Train up a child in the way he should go and even when he is old, he will not depart from it.”

One of the things we hear most often from people who take the Faith & Money Matters Bible Study is “I wish I had learned this earlier.” It’s crazy that we as parents don’t do a good job of teaching our children financial basics. How to manage money is something that every single person needs to fully comprehend. If you struggle with money, you will struggle in life. Many of us have learned this lesson the hard way. 

Teenagers are faced with challenges that we as adults have long since forgotten. They are on the threshold of adulthood and they’re facing new pressures, many of them related to money. There’s money for social events, car insurance, fast food, clothes, school activities, looming student loans, and the list goes on and on. 

My teens are 14 and almost 13 and they can probably count on one hand how many times they have observed me handing over cash to pay for a purchase. Many teens in this generation have only witnessed their parents handing over credit cards or clicking “Buy Now” on their phones. Due to no fault of their own, they are completely detached from the “sting” of a purchase. But the convenience of not having to run to the ATM every time your teen needs some funds is admittedly tempting. If this sounds like you and your family, you may be wondering:

Should I add my teen as an authorized user on my credit card?

Teens need to learn how to manage money as financial disciples but giving your teen the responsibility of a credit card is a task that requires thorough consideration. Different cards have different age requirements for cardholders. There are starter cards for young adults or those with no credit which can be opened in their own name if 18 or 19 years old. If younger than 18, your teen can be added as an authorized user on your personal card. 

There are many parents who think handing a credit card to their child is not a good option. Others think it is a suitable way to teach their children about the responsibility of handling money. If you’re undecided as to whether your teenager should have one, here are some benefits and downfalls of making your teen an authorized user on your credit card:

Benefits:

• Your teen can start building a credit history.
• This is an opportunity to teach them good credit management while they still live under your roof.
• Unlike cash, you can monitor their spending habits.
• It can grant you peace of mind in the event of an emergency. 
• Your teen can run errands for you like picking up some groceries from the store. Who wouldn’t like that?

Downfalls

• Your teen can hurt your credit, and theirs, if they are not responsible.
• Your teen can possibly learn only how to be a consumer rather than learn the correlation between work and reward.
• Without proper training, your teen may not fully grasp the concept of debt 

Guidelines for adding your teen as an authorized user:

Before receiving a credit card, your teen should demonstrate responsibility by managing their own checking account. They should know how to write checks, make online payments, and balancing their account at least monthly. This will help them understand the connection between cash and credit. 

As their parent, it’s your job to teach them about credit and debt. Emphasize the importance of their credit score and what happens if they don’t pay in full each month. Explain the dangers of losing a credit card because it happens to all of us. Clearly explain why they need to track their spending. Show them how to order a credit report and check their credit score periodically. Finally, explain the financial and spiritual impact of debt. As important as this is, this may be a scary conversation to have with your teen as you might have to admit to some of your personal financial mistakes. Teens aren’t perfect and there is a decent chance your teen will overspend. Parents should have a plan in place should they overspend. Give them the opportunity to work for you, to pick up extra hours at work if they’re employed, or to sell something of value. The big lesson here is that bailing them out will only increase the likelihood of it happening again. Finally, visit Compass Catholic’s website and pick up a copy of Spiritual Cents: Faith & Finances for Teens. Spiritual Cents is 16-short financial lessons every teen needs to know, including: wants vs needs; honesty; spending plans; credit cards, loans; saving and investing; paying interest or earning interest; paychecks, setting goals and most importantly their role as stewards of God’s blessings. It can help you lay a solid foundation for your teen before making this important decision.