When’s the Right Time to Give Your Kids Credit Cards?


kids creditWhen each of Bruce Ailion’s children hit their teens, each received a credit card with a clear explanation of what’s permissible—food, gas, movies, reasonable clothing. Before purchasing anything costly or unusual, they were asked to check in first.

“I am a $20-and-under-T-shirt sort of guy, so they know I would want to know why it was so important to have (a more costly) T-shirt,” says Ailion, of Atlanta.

He had a clear motive in mind: “I want independent, self-confident, self-assured, good decision makers,” he says.

The system worked well for the family; all three children have since become financially responsible young adults.

Since the passing of the Credit Card Accountability, Responsibility, and Disclosure (CARD) Act of 2009, companies cannot issue a credit card to anyone under age 21 without a co-signer or proof of regular employment. But a parent can add a child to their account anytime. How do you know when he or she is ready?

“No one knows their child, and level of financial discipline, better than the parents who have watched the child mature,” says Gail Cunningham, vice president of membership and public relations at the National Foundation for Credit Counseling in Washington, D.C.

Pleas and promises aren’t reason enough for granting credit. Instead, think carefully about:

  • Their ability to deal with peer pressure. Difficulty saying no to a friend can result in unwanted line items on your bill.
  • Their track record with gift money. “Do they spend it before the sun goes down?” asks Cunningham.
  • Their overall sense of respect. “Compliance with household rules—making their bed, coming home on time—can indicate readiness to handle money with care,” says Cunningham.
  • Their ability to act responsibly. Frequent lost items or forgotten appointments may suggest postponing credit for now.

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Once you’ve decided your child is ready, it’s important to remain involved; most teens are blissfully unaware about buying on credit.