When Should Your Kid Get a Credit Card?

Is your child old enough for a credit card of their own? Here's how to know when they're ready.

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Teaching your child about financial responsibility is an important job. You don't want your child to make money decisions when they're young that could adversely affect their future. One of the most important of those decisions is when to get a credit card.

Getting a credit card as soon as possible has some big benefits, such as helping to build a credit history and earn a good credit score. But there are also major risks -- especially if your child doesn't fully understand how credit cards work and how to use them responsibly. You need to make sure your child is ready to take on these risks before getting them a credit card.

If you're unsure whether your child is ready for a card, here are a few key considerations that could help you decide what the right time is.

Is your child over 18?

If your child is not over the age of 18, they aren't considered a legal adult and cannot get a credit card in their own name. You could, however, make your child an authorized signer on one of your credit cards. This would allow your child to use the card, and it would show up on their credit report -- but your child wouldn't have any legal responsibility for the account or any balance on it.

Children who are over 18 but under 21 may be able to get credit cards in their own names. But thanks to the CARD Act, card issuers are now required to either 1) make sure anyone under 21 has sufficient income to pay back borrowed funds or 2) require applicants under 21 to have a cosigner.

If you cosign, your child will get a card in his or her own name, as opposed to just being an authorized signer. That means your child will be legally responsible for any debt associated with the account. But as a cosigner, you will be, too -- so you're taking a financial risk by guaranteeing your child's debt.

Is your child working and earning income?

Your child will need to earn some income of their own to be eligible for a credit card. Otherwise, they'll need to be an authorized signer or have you cosign.

Your child will, of course, also need income to pay back any charges on the card -- unless you're planning to pay the debt back on their behalf. Make sure you consider the stability of the income source, too. A summer job that will end when your child goes back to school may not be good enough if you think your son or daughter will actually make purchases with the card.

Has your child demonstrated financial responsibility?

Having a credit card is a big responsibility. You shouldn't get one for a child -- or help your son or daughter get one by cosigning -- unless you're confident they can handle having access to credit.

If your child tends to save money, sticks to a budget, and isn't a huge shopper, you can usually feel safe helping them access a credit card. But if your child is swayed to spend by peer pressure or is constantly asking for advances on their allowance, they may not be ready.

Answering these questions will help you decide when the time is right

Children mature at different rates, and some take longer than others to learn fiscal responsibility. By considering the answers to these questions in light of your child's behavior and actions, you can make the right choice about when your child is ready for a credit card. Since you will likely have to cosign until your child is 21, you have the right as a parent to help your child make the responsible choice -- so exercise it to help your son or daughter avoid costly credit card mistakes.

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