I Just Got My 3-Year-Old a Credit Card. Here's Why

My 3-year-old son doesn't know what a credit card is, but one arrived in the mail with his name on it a few days ago. Obviously, at his age, he isn't able to open one on his own, so I added him as an authorized user on my primary credit card. 

I don't plan to actually give him access to my credit line, not even when he's a teenager. But I hope one day he'll be grateful for what I did. Here's why.

What's the point of an authorized user?

Adding someone as an authorized user on your credit card enables that person to charge purchases to your account if they want. They'll get their own card with their name and they can use that to buy items, but you'll get the bill at the end of the month. 

In addition to giving the authorized user access to your credit line, it also adds the credit account to their credit report. And that's why I chose to add my son to mine. 

By the time he's 18 and able to open his own credit account, it'll show that he's already had a credit card for 15 years, and that the bill was always paid in full and on time. This should boost his credit score quite a bit. That, in turn, will open the door to more affordable credit when he's ready to borrow money. 

Who shouldn't make their child an authorized user on their credit card?

The goal of adding your child as an authorized user to your credit card is to help them build a strong credit history over time. So if you feel that your credit behavior wouldn't accomplish this, it's best not to do it. For example, if you struggle to pay your credit card bills on time and have a lot of credit card debt, making your child an authorized user could hurt them more than it helps them. Focus on improving your own credit first and then you can revisit this down the road.

It's also not a good idea to make your child an authorized user if you feel they would abuse their access to your credit line. You'll be responsible for all purchases they make, so it's important to carefully supervise their activity and review your credit card statements for unusual transactions. You could also add your child as an authorized user without telling them so they aren't tempted to use it without your permission.

How do you make your child an authorized user on your credit card?

You should be able to add authorized users to your credit card through your online credit card account. Alternatively, you can contact your credit card issuer by phone. It only took me a few minutes. All I had to do was enter my son's name and date of birth. Some providers also require the child's Social Security number. Then, a few days later, my son's card showed up in the mail.

It's important to recognize that each credit card company has its own rules about authorized users. Some, like Chase and Bank of America, don't have minimum age requirements. You could add a day-old newborn if you like. Others, like American Express and Discover, require you to wait until your child is a teen to add them. Talk to your credit card issuer if you're unsure of its requirements. You may also want to inquire if there are any fees associated with adding an authorized user.

Making your child an authorized user can get their credit history off to a strong start, but this is just a first step. It's important to teach your child how to manage their money and how their actions could affect their ability to secure loans and credit cards in the future. Continue to educate your child in age-appropriate ways as they grow so they're ready to take control of their own finances when they reach adulthood.