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Some parents want to give their child’s credit history an early jumpstart by adding them as an authorized user to their credit cards before they reach adulthood. But before you try to add your kid to your card, you need to consider card issuer rules.
At an appropriate age, adding your child as an authorized user on your credit card can help your son or daughter build credit, provide access to plastic in an emergency and offer lessons on using an account responsibly, says Brette Sember, author of “The Complete Credit Repair Kit.”
“They’re going to be using credit for the rest of their lives, so it makes sense that you as a parent should teach them how to use it carefully from an early age,” she says.
While some parents might be tempted to put their infant on a credit card as an authorized user so junior can have 18 years of credit history before he can get a card of his own, there’s no need to rush, says Avraham Byers, a financial coach in New York and Toronto. Plus, not every card issuer will allow that.
First, it’s not necessary because a few years is plenty of time for a kid to a build a credit history and an excellent score, Byers says. Also, adding a child too early can backfire, because if you ever run into financial difficulties and you stop making payments on that card and your credit tanks as a result, your kid’s credit will take a hit, too, unless you remove her from the card quickly.
Instead, it’s best to wait until you’re in good financial shape, your credit is excellent and your child is old enough to understand the rules for using, and the consequences for misusing, your plastic.
Can you add a minor to your card? Usually
Most major card issuers allow you to add a minor as an authorized user. Some of those impose a minimum age, others don’t. A few cards prohibit cardholders from adding minors altogether.
The question of whether you can add your child to your card as an authorized user hinges on age.
Half of the 10 major issuers surveyed by CreditCards.com allow minors as authorized users with no minimum age. For example, Bank of America, Capital One, and Chase all allow children to be added to a primary account holder’s card regardless of age.
Of the rest, most allow minors but impose a minimum age in the teens, usually between 13 and 16. For example, American Express and Discover both require authorized users to be 15.
American Express decided on 15 because it seems to be an age when a teen might need access to plastic and be old enough to start learning to how to manage a card, says Marina Norville, vice president of corporate, financial and risk public relations for American Express.
Other cards, however, don’t allow minors access to their parents’ plastic at all. For example, Synchrony Financial rules vary by card program, and some require authorized users to be at least 18, says Carlos Campos, a spokesman for Synchrony.
|Minors allowed?||Minimum age||Date of birth required?||Social Security number required?|
|Bank of America||Yes||No||Yes||Yes|
|Barclays||Yes||13||Yes||Only for nonfamily members|
|Synchrony||Varies by card||Varies by card||Yes, for some cards||Yes, for some cards|
Information demands vary
Credit card issuers also vary in the type of information they request when you go to add your child as an authorized user.
Some ask for only the name and address of the user you want to add. Of the major issuers surveyed by CreditCards.com, only Chase falls into that category. However, others don’t seem to verify age, says Linda Peck, founder of CreditBoards.com. Some parents on that forum have reported they were able to add young children as authorized users to various major and store credit cards with no questions asked.
Citi and Wells Fargo, however, request the name, address and date of birth of the authorized user. And a number of issuers, including American Express, Bank of America, Capital One, Discover and U.S. Bank, require you to provide name, address, date of birth and a Social Security number.
American Express uses that information to verify age, as well as to put fraud checks and controls in place, Norville says.
Some parents have been surprised to bump up against a minimum age rule. For example, Randall Yates, CEO of The Lenders Network, says he tried to add his 14-year-old son as an authorized user on both his American Express and Discover cards, but quickly found out his son is one year too young to be added to both cards.
“I’ll wait until his birthday and add him then,” Yates says.
Managing your child as an authorized user
Before adding your child to your card, consider the ins and outs of how the issuer handles authorized users to make sure you (and your child) get the desired benefits without getting hit by high fees.
First, you’ll want to find out if adding your kid to your card will cost you. Almost all cards from major issuers allow you to add an authorized user for free, but a few premium cards charge a hefty fee. For example, American Express Platinum cardholders must pay $175 a year for up to three additional card guests, while Chase Sapphire Reserve cardholders shell out $75 a year for each additional card.
The fee depends on the card rather than the issuer. For example, The American Express® Gold Card allows you to add five additional users for free, and the Chase Slate card does not charge for extra cards.
Next, you’ll want to find out if and how your card issuer reports authorized user information to the major credit bureaus.
Most major issuers report an authorized user account on the guest’s credit files. However, some issuers report both positive and negative information (such as late payments, etc.) associated with the main account on the authorized user’s credit, while others, including American Express, report only positive items.
“We do not report any negative payment behavior to the additional card member’s credit bureau file,” Norville says.
It’s also important to consider how the issuer handles main and secondary cards on accounts. Most issuers send an authorized user a card with the same card number as the primary cardholder, which can make it challenging to track a secondary user’s purchases.
American Express is the only major issuer that issues authorized user cards with different card numbers and allows the primary cardholder to set spending limits for and receive alerts about the authorized user’s spending. “Alerts and limits help to give the main cardholder a little more control,” Norville says.
These limits aren’t foolproof, though. For example, if a merchant doesn’t obtain an authorization for any reason, that purchase might not get counted toward the limit, AmEx warns in the fine print.
In a pinch, Discover offers a Freeze It option where you can temporarily freeze and unfreeze your account in seconds using a smartphone app or online. This could be used to halt all purchases if, for example, your child loses her card but you’re sure it’s buried in a messy bedroom. However, the downside is it also freezes your own line of credit at the same time, says Daraius Dubash, cofounder of rewards travel site Million Mile Secrets.
Business credit cards, including those issued by Bank of America and Chase, offer another way to monitor and control authorized user spending because they generally offer employee controls, Dubash says. For example, Mark Grossman, a public relations professional in New York, added his 16-year-old daughter as an authorized user on his consumer credit card, but disliked the fact that all purchases were mingled.
So, he opened a business card, which separates purchases by cardholder. “When the bill arrives, it’s clear what she charged versus what I charged,” he says.
Removing your child from your card
Eventually, the day will come when it’s time to remove your child from your card.
You might decide to remove him if he uses your card irresponsibly, but ideally it will be because he’s ready to get a card of his own.
At age 18, a young adult can legally enter into a contract and perhaps get a card, though the Credit CARD Act of 2009 made it harder for young adults under 21 to get credit cards, and they must show proof of income or get a co-signer.
To remove your child as an authorized user, you simply call the customer service number on the back of your card. With some issuers, such as Capital One, you can also remove a user through its online portal. When you remove an authorized user, you are responsible for collecting the card and other means of accessing your account, Chase states in its card member agreement. And the issuer might close the account and issue you a card with a new card number, according to Chase.
Don’t be too hasty to push your kid out of the credit nest. Move slowly so you can remove your child from your card without hurting her credit. Your account typically will disappear from her credit reports once she is no longer an authorized user.
If possible, wait until your son or daughter has applied for, received and successfully used a new card for several months or even years, Peck says.
As a parent, you can be confident that adding your child as an authorized user has spared her from having to start out with low credit limits and starter cards. In fact, Peck says her niece, whom she added as an authorized user when the girl was in her teens, was able to get a mortgage at a good interest rate in her early 20s.
“They’re able to get more credit, at a better rate, with better terms earlier in life,” Peck says of young authorized users.
Editor’s note: This story, “What’s the minimum age to be an authorized user?” originally was posted on CreditCards.com.