If your teen is going off to college this fall, you may be considering getting him or her a credit card to use for unexpected expenses and emergencies. The prospect of a credit card in your son or daughter’s hands, however, may be frightening. Following are some things to consider to protect your child’s credit and yours.
Kids who aren’t yet 18 cannot get a card in their own name. If your child hasn’t turned 18, you will need to add him or her as an authorized user on one of your credit card accounts, which is easy to do. Authorized users get their own card. However, you’re still ultimately responsible for anything charged to the account.
The good news for you is that, depending on the issuer, you may be able to limit the amount your child can charge. The good news for teens is that they’ll have the card’s history added to their credit report, which can help them obtain credit later on.
Young people who have already turned 18 but are not yet 21 can get their own card. However, they need a co-signer who’s over 21 unless they have their own source of income that’s enough to cover their bills. This is determined by the card issuer. If you co-sign on a card with your child, you both are liable for repaying anything charged to the card.
A number of financial institutions and other card issuers have credit cards that are especially designed for college students and other first-time credit card customers with little or no credit history. For example, you can get a secured credit card, where card is “secured” by money you place in an account. There are also unsecured credit cards designed specifically for students. It’s a good idea to shop around online to find one that you think is best.
By giving your college student the opportunity to use a credit card responsibly, you help minimize the chances that he or she will get into serious credit card debt later in life. However, you want to monitor that use in order to protect yourself and your child from accumulating debt you can’t pay off or damaging your credit rating.
Source: Nasdaq, “Getting a Credit Card For Your College-Bound Kid,” June 30, 2017