Kids & Credit Cards

[iswmle]

I was just wondering what are everyone's thoughts on adding kids on as auth users on your credit cards? As I was working today it struck me how so many people have their kids on the cards... one woman had all 4 of her under 18 year old children on her MC!

I am specifically asking about the under 18 kiddies, not the college bound ones, btw.

[debee]

I think it's a good way to help build a kid's credit score so they have better interest rates when it comes time to buy a first house, car, etc.

[discombob1]

It totally depends on your kids, but many kids today really struggle with responsibility. I work with adolescents and it's not an age known for good judgment. There are cards specifically for this purpose where parents can set credit limits, approve charges, etc. That or a prepaid card seems like a far better option. Kids have to build credit from scratch for a reason.

[debee]

Yeah, I would never give the kid the card. I would just list them as an authorized user so they'd have "age" on their credit reports.

[DesdemonaB]

HI All

I thought piggybacking didn't work anymore, with the changes to the FICO scoring in 2008 the only benefit to being an AU is that you have no responsibility for payment.

Meaning there is no positive effect on our score when added/using the card but on the flip side there is no negative effect if there are any delinquents.

There are so many of those pre-paid MC and Visas that can be used with children under 18, you/they control how much spend per week/month. Most have direct deposit so any paychecks can be loaded directly to the card. If they are paid on Friday and spend it all on Saturday well then they are out of luck till their next paycheck. (just like the rest of us)

Personally IMHO I think they should raise the age requirment to 21 on CC only (this does not include student loans). I have two girls and I can't even think what they would need at the age of 19 or 20 that they need 1000+ credit limit CC, nor do I want to as it is scaring me right now

[debee]

Yeah, the piggybackers were eliminated, but piggybackers and authorized users aren't the same thing. They made it so there is no benefit for people who pay a service (like ICD, etc) to be added to an aged account without being able to use the actual card. Those were the "piggybackers" and that doesn't work anymore.

People can still add spouses, children, etc - people who are authorized to use the actual card - with the full benefit. Here's a blurb about it from FICO: http://www.fico.com/en/company/news/...7-31-2008.aspx

[Amy26]

Yea, authorized users count but they don't give as much benefit as if the card is totally theirs. But it does help and would be an early boost.

[debee]

Yeah, that's how I got my once-upon-a-time FICO to just over 800. I married an American and became an authorized user. I've never even had a job in this country. (Not one that pays anyway.)

I'm not a credit score slave, but I think it's smart to take steps to raise it. After all, a better score = a lower mortgage payment. Nothing wrong with that.

Hats off to you and your score, Amy. You should create a blog and describe what you did/do to get where you are now.

[IBroke]

When it comes to adding minors as users, I don't see a problem in doing so. However, if you actually hand out the card(s) to them is another question.

[DebtHater]

I wouldn't do it. They are still at the age of "entitlement". What every they charge YOU will be responsible for. But then again, I would co-sign a loan for my children either. Call it what you want but too many people get stuck for their off spring's debts. If they don't pay the relationship will be worse than if you don't co-sign.

[IBroke]

Yeah, if you want to help them to establish credit, sign them up but keep the CCs.

[helpmeout]

No way, no how will I ever let my kids have a cc or access to one while they are minors. I don't even want them to have one in college.

[helpmeout]

I think it's a good way to help build a kid's credit score so they have better interest rates when it comes time to buy a first house, car, etc.

I managed to do that without getting a credit card when I was a teen-ager. Good credit means nothing if they don't know how to control it. Kids and credit cards don't mix. They need to learn to save for what they want. I am hoping that they will learn from my mistakes and not get a credit card. And that the only money they borrow is that for a house.

[HHM]

I would probably split the difference. I wouldn't give them a CC to have and carry. But "maybe" make them an AU so they can purchase online. But even then, I wouldn't do it as minors unless I felt really confident in their financial where-with-all.

Perhaps one starting point is to get a secured card or low limit card.

[debee]

I managed to do that without getting a credit card when I was a teen-ager. Good credit means nothing if they don't know how to control it. Kids and credit cards don't mix. They need to learn to save for what they want. I am hoping that they will learn from my mistakes and not get a credit card. And that the only money they borrow is that for a house.

Yeah, I agree that that kids don't need to get a credit card. I was talking about the benefit of listing the kids as authorized on the parent's account without giving them the card.

When my husband bought his first house he had never been late on anything, never filed bk, never had a public record, etc. Great credit history, but not that great of a score because what he lacked was "age".

His monthly mortgage payment was a lot higher than it would have been had his credit score been 100 pts higher.

He paid the extra money every month in interest straight to the bank, but had his parents aged his credit file for him, that extra money could have gone to the 401K, the principal on that first house, etc.

I think not paying more interest than you have to is a lesson worth learning too.