Kids and Credit Cards
Our twins started middle school this year, which ushers us into a new chapter for our family. There’s more freedom, more responsibilities, more opportunities, more friends…they’re handling it like champs, but it’s a definite adjustment from the safety net of elementary school.
One change that we made as a family is getting our kids phones of their own. We didn’t come to this lightly. It’s a big decision that is different for every family and every kid. The kids are doing pretty well with the phones, and we are working to set a foundation of not spending life being tethered to a device, even if it’s constantly accessible.
Plus, we monitor those devices like a hawk, which is a full-time gig. Shout-out to all the parents managing this! It’s not for the weary. Admittedly, Kaimey and I had a “date night” activity the other night that consisted of kid phone checks. Very romantic! She scrolled through everything on Harper’s phone, I scrolled through Hudson’s, and we basically laughed the whole time at the nonsense that makes up their lives and their friendships. They’re good kids, and the phones have just provided another bundle of teaching moments we get to guide them through.
Another thing we’ve recently done is add our kids as authorized users to one of our credit cards. This sounds risky because it is. But let me tell you a few reasons why I did this and a few things to watch out for, in case you decide to do it with your kids as well.
When defining a person’s credit score, one factor used is the length of time the person has had established credit. So adding your child as an authorized user is a great way to establish their credit early. They can get a healthy track record before they are even aware of what credit is, and it’s a great way to teach them before they get out in the real world.
Also, you may remember my previous post on the importance of freezing your credit. When you add a child on a credit card, that opens up their credit line. Then you can go ahead and freeze it. This prohibits anyone from using their name and social security number to open a credit card and hurt their credit score. (Yes, hackers love to steal the identities of children and deceased people – go figure.)
You may be thinking, “There is no way I would add my child to my credit card. What if they ruin my credit score??” This is a valid point. Kids are crazy and can do any shocking thing at any moment. The other day one of my friends posted on facebook that her 5-year-old daughter got into Amazon, ordered hundreds of dollars of toys, and shipped them to her door! Simple. Because kids are irrational and unpredictable, I’m not advocating for giving your child free-reign of the credit card. Or even giving the credit card to your child at all! The kids do receive their own credit card when you add them, so you’ll want to be intentional about protecting them from themselves and what could go wrong.
Personally, I added my kids to a card I only use for recurring online bill payments. This way, I stick my card and my kids’ cards in a secure place and do not carry them around. And nobody is using them to spend frivolously. Occasionally we use these cards if the kids want to buy something online so they get to have some ownership in paying with “their” card. They just pay me cash from their spending jar so they still feel the cost.
Another word of caution: when you share a credit account with your kids you can both help or hurt each other’s credit score. Above I mentioned that your child could mess up your credit score. Similarly, if you are irresponsible with credit, you could also mess up your child’s credit score. If this is a worry at all for you, don’t bother adding your child on your credit. It’s not worth the risk for the benefit it may provide. Work toward teaching healthier habits to your kids about credit before they reach adulthood.
Every stage of parenting brings new decisions and approaches as kids evolve. In all the different aspects you’re juggling, don’t forget to put some intention into your kids’ financial maturity. Reach out to me if you’d like to discuss what you can be doing with your kids today to help them be financially secure in their futures!
