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HomeFinanceCredit cards for kids: Which cards to get and when?

Credit cards for kids: Which cards to get and when?



FAQs about credit cards for kids

How old do you have to be to get a credit card?

To open a credit card in your own name in the US, you must be at least 18 years old — a legal adult. That goes for both secured and unsecured credit cards.

That said, some may find opening a credit card frustratingly difficult before age 21 — particularly one that’s not secured. That’s in part because of the Credit Card Accountability Responsibility and Disclosure Act of 2009, which effectively prohibits anyone under 21 from opening a card unless they’ve got ample proof of steady income that they can use to pay their bills.

What is a good credit limit on a first credit card?

A good credit limit on your first credit card is around $1,000.

That might not sound like a lot, but it should be more than enough for most teenagers. My first credit card offered me an initial $500 limit — which was plenty for the way I was using it back then. And with some good repayment habits, my limit increased to $1,500 within two years.

At what age can you start building credit?

You can start building your credit as soon as you’re born. A child can begin their credit journey if their Social Security number is added to an already existing credit account — usually that of the parent. The most common method is adding a child as an authorized user on a credit card.

Read more: How to get a free credit report and credit score

What is an authorized user on a credit card?

If you apply for and open a credit card, you are the “primary” cardholder. Authorized users are “secondary” cardholders.

As the primary cardholder, you can add authorized users to your card, which gives them the ability to use your credit line. Parents often add their children as authorized users for a variety of reasons, which we’ll touch on in a second.

Each credit card issuer enforces a specific age limit for authorized users:

  • American Express —13 years old
  • Bank of America — No minimum age
  • Capital One — No minimum age
  • Chase — No minimum age
  • Citi — No minimum age
  • Discover — 15 years old
  • U.S. Bank — 16 years old
  • Wells Fargo — No minimum age

In most cases (with Citi as the exception), you’ll have to submit the Social Security number of the authorized user as well as their name and date of birth.

Do authorized users build credit?

Authorized users will build credit. However, the credit history they acquire as an authorized user mirrors the credit of the primary cardholder. If the primary cardholder is late in paying their credit card, the authorized user’s credit history will be marred.

It’s only a good idea to add an authorized user if the primary cardholder has good credit habits.

Read more: Can being an authorized user help you build credit?

Can adding an authorized user hurt my credit?

Adding your child as an authorized user to your credit card means that they can use your credit line — and essentially spend your money — when their card arrives in the mail. If you’re not careful, you may find quite a tab that you weren’t expecting. If you can’t pay it off, you’ll incur interest. And depending on the size of the balance, your credit score may even drop.

However, there’s no harm in adding your kid as an authorized user and then cutting their card into pieces when it arrives. After all, they don’t have to use the card to build credit.

Read more: Authorized cardholders — the cros and cons

How safe are credit cards for kids?

Relative to other payment methods, credit cards are actually one of the better options for kids. Unlike debit cards and cash, there’s no real harm done if your child loses their credit card. You can simply cancel their authorized user card and order another.

The obvious downside to a credit card is that it’s slightly more difficult for kids to understand the principles of budgeting when they can’t witness a cash wad, or even a bank account balance, as it depletes.

FAQs about debit cards for kids

What are the advantages of debit cards for kids?

The main advantage of kids using a debit card is that a debit card can teach fundamental financial lessons. If a kid draws from their own bank account, they can see the money drain from their precious balance  — and they aren’t able to spend more than they’ve saved.

How old do you have to be for a debit card?

Most banks enforce some sort of age limit for debit cards, often around age 13. However, you can find kid-focused cards that have age minimums as low as six years old.

Obviously, the child will still need an adult parent or guardian to oversee the account.

Do debit cards build credit?

Most debit cards don’t help their users build credit. Traditional debit cards simply take the money out of your bank account to pay for your purchases — there’s no credit involved.

However, a new breed of debit cards is clawing its way into popularity. These cards work similarly to secured credit cards. Here’s what they do:

  • They give you a credit line equal to your bank account.
  • When you swipe your debit card, the card gives you a single-use credit line for that purchase.
  • The next day, the card will pay itself by withdrawing money from your bank account.
  • In this way, you’re technically using credit, but spending your money as you would with a debit card.

How safe are debit cards for kids?

Debit cards are intrinsically less safe than a credit card. If you lose your debit card, you’ve got to report it immediately or you could end up losing a serious amount of money. If you report a missing debit card even three business days after it’s been lost or stolen, you’re on the hook for up to $500 per federal law.

Now, debit cards are still more secure than cash. But, then again, your kids probably aren’t walking around with several hundred dollars in cash.

FAQs about prepaid cards for kids

What are the advantages of prepaid cards for kids?

Using a prepaid card is an excellent way to help your child budget. Expenditures are limited to the amount of money you load onto the card, and kids have to make that last until you decide to load more money for them.

How old do you have to be for a prepaid card?

Many prepaid card services stipulate a minimum age, but there are some that don’t. With companies like Greenlight you can set up a prepaid card for kids of any age.

However, the age limits on kid-focused cards, often around six years old, shouldn’t be too prohibitive. Not many kids below that age will care about or understand the value of money, anyway.

Do prepaid cards build credit?

We’re unaware of any prepaid card currently on the market that builds credit. The closest approximations to credit-building prepaid cards are secured credit cards, which provide a credit line matching a chunk of money you deposit as collateral, or the aforementioned credit-building debit cards.

How safe are prepaid cards for kids?

Prepaid cards are slightly more safe than debit cards for one reason: They’re not linked to a bank account. They only have as much money as you load onto it. So if you want to give your kid $100 per month, that’s all you’ve got to lose if the card is stolen.

Summary

The perfect payment card for your kiddo depends entirely on their age and the stage of life they’re entering. But whether they’re a kindergartener or a college student, there are always steps that you as a parent can take to help your kids along in their financial journey.

We suggest the following strategies for different ages:

Ages 0–12

When they’re too young to fully understand the value of money, you can nonetheless add a kid as an authorized user on your credit card and cut it up when it arrives. They will instantly begin gaining good credit from your positive financial habits.

Ages 13–17

When they start getting a token allowance and doing chores, you can open a prepaid card or debit card for them and show them the value of work and savings.

Age 18+

Once they’ve reached legal adulthood you can encourage them to open a secured credit card or student credit card with a manageable credit limit. After a few years of responsible use they’ll likely be able to progress to a bonafide, unsecured credit card.

By gradually incorporating different types of payment cards into your child’s life, they’ll already have a robust credit score and good financial habits when they’re old enough to be truly financially independent. They’ll even be able to get auto loans and other credit lines without you having to cosign!

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