smart spending

12 days of financial gift giving

Credit card
Credit card

On the fifth day of Christmas, my true love gave to me, a piece of plastic.

The first credit card in one's own name has become a rite of passage in America. But what if your kid can't get a credit card on his or her own? Is the young adult on your list ready? Or would they benefit instead from an account linked to their parents?

"It so depends on the temperament and ability of the child, and parents know their children best," says Seaman. "If what you know about your child is that they get all of the limitations and financial knowledge that you've been conveying, then it probably is less important to have an account that links directly to yours or one on which you have some oversight. Go ahead and set your kids free, and let them learn to manage this on their own because they've demonstrated some responsibility in the past."

Parents have two ways to give the gift of plastic: They can co-sign for a card for their youngster, making them equally responsible for the charges on the account, or they can add their child as an authorized user under their own credit card account, allowing their child access to their preset limits.

But if you're less sure they're ready for plastic, tread carefully.

"You don't want to set up your child for credit score failure by giving them a card that they can't manage effectively too early, because you don't want to start them off with a record of not paying the bills or missing payments. You want to assess their capability before you make a decision," Seaman says.

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