If you haven't been following celeb news, Suri Cruise, the offspring of Tom Cruise and Katie Holmes, demands fresh-baked cupcakes at 1 a.m., prefers fine china and carries her own credit card, according to a cover story from a Hollywood tabloid.
Now, there is a host of parenting discussions that can come out of those details, but I'm going to focus on this: Suri Cruise has a credit card with her name on it. I can't verify if it's true, but it's definitely possible with some important conditions.
Suri Cruise is too young to get a credit card account in her own name or jointly with someone else. A person has to be 18 years old to enter into a contract, which is what a credit card account is, says John Ulzheimer, president of consumer education at SmartCredit.com.
But Suri -- or any other child -- can be added as an authorized user, or "AU," on an adult's credit card account. The primary credit card holder also can request additional cards in the AU's name. While an AU is allowed to make charges on the account, he or she isn't financially responsible to pay the debt back. That falls on the primary credit card holder. In this case: Katie Holmes.
(The tabloid noted that its source said the account belongs to Holmes, who got her daughter her own card.)
I emailed the major credit card issuers to see if they have age limits on AUs. Chase and Wells Fargo representatives confirmed that their companies don't have minimum age requirements for authorized users.
American Express said its cardholders can request additional cards with custom credit limits for anyone 15 years old and older. This allows parents to set spending limits on the card account and change them at any time.
"The additional card has the teen or young adult's name on it," says AmEx spokeswoman Leah Gerstner, "as well as a distinct account number which helps protect the parents' account if the card is ever lost or stolen."
Exposing your child to credit cards before they are on their own is a good idea, says Ulzheimer.
"Just not at six years old when they're still trying to figure out how to get to their first grade classroom," he says. "Sixteen is a good age as it's an unofficial 'next step' toward adulthood."
That way, your teenager has two years before college to learn smart credit card behavior. You can teach them how to keep charges below 10 percent of the credit limit to boost their credit score. You can show how much money you end up paying in interest if you send in only the minimum payment each month. And all the while, your child can build a good credit history while being an AU on your card, an advantage for them when they eventually apply for credit on their own.
How did/will you teach your kids about credit cards?
Follow me on Twitter: @JannaHerron