Pros and Cons of Giving Your Teen Access to Your Credit Cards

Should your teens be authorized users?

As a parent, it's important to teach your teens about money to help prepare them to be financially responsible. One way to do that is to give them access to your credit cards. You can do this by making them authorized users, and your card company will send them a card with their name on it.

But before you provide your teenager with access to your card, you should consider the advantages and disadvantages carefully to see if this is the right move for you.

Benefits of giving your teen access to your credit cards

Here are some of the biggest advantages of making your teens authorized users and giving them a card to use for purchases:

• You can help them build credit: If your teen is listed as an authorized user on your credit card, then the card's history will show up on their credit record. They'll benefit from having a longer average age of credit and from the positive payment history your card has. This can help them to start working on earning a good credit score even before they are old enough to qualify for a card of their own.
• You can monitor their spending: If you allow your teen to make purchases on your card, you can see what stores they are shopping at and how much they are spending. This can be better than providing a cash allowance, which would give you little insight into how they spend money.
• You can help them learn to live within their means and use credit cards as a tool: By monitoring your teen's spending and working with them to stick within spending limits, they will be able to learn to use cards responsibly. You can show them the credit-building benefits of credit cards and the potential to earn rewards. This is also an opportunity to explain the high costs that can come with credit card interest charges if you don't pay the balance in full.

Disadvantages of giving your teen access to your credit cards

Of course, there are some downsides to giving your teens access to credit. The biggest one is that they may not be ready for the responsibility of using a credit card and not overspending.

And unfortunately, if you've given your teenager access to your cards and they charge too much, you will be legally responsible to pay off the debt. This could affect your own financial goals.

So, should you give your teens a credit card?

Ultimately, every parent needs to carefully consider how mature and responsible their teen is before providing access to a credit card.

If you are confident your child won't overspend, then there's no harm in providing authorized user status to help them build credit. It can also be more convenient to just let them use your card for purchases rather than having to give them cash if they need to buy something.

But if you don't think your teen is ready, then you may simply want to wait. You can always help them get a card of their own once they reach adulthood and you feel they are financially ready for credit card use.