My Teens Have Their Own Credit Cards. Here's Why

At first glance, kids and credit cards don’t seem like a great mix. Most teenagers, and even young adults, haven't had much experience managing finances. So making your child an authorized user on your credit card may seem like a recipe for trouble. 

But giving your kid a credit card and guiding them in how it's used properly -- while explaining the important things like budgeting, building credit and learning how interest works -- can set them up for financial success in the future.

The benefits of giving your teenager a credit card

Like every parent, my wife and I want our three children to grow up to be responsible adults. Our strategy is to give our children as much responsibility as we can reasonably give them, at the earliest possible age. 

Once we account for physical hazards and dangers, we let them register themselves for approved activities, manage their own schedules and make decisions for themselves, with parental guidance. When it comes time to pay for an approved activity or purchase, we want them to have their own method of payment available. 

And just as it is with us adults, the most secure and convenient method of payment for our teenager is usually a credit card. 

Our 17-year-old daughter uses her credit card to pay for her gym membership, occasional lunches and other approved extracurricular activities. We’ve given her a credit card that we use infrequently, so it’s easiest for us to monitor her purchases. 

She now has a part-time job, so our plan is to teach her how to track her own expenses and pay them off. Learning to track her own expenses can help her with budgeting in the future. 

We were also able to use her credit card statement to teach her about compound interest, and the importance of paying your entire bill each month to avoid interest charges.

Adding children as authorized users can also help them build their own credit history, which can help boost the credit score they'll get at 18. Starting life with a higher credit score can help them qualify for student loans, auto loans and mortgages at lower interest rates. Plus, they'll be able to get their own credit card, which they'll already have the skills to manage responsibly. 

What every parent should know before giving their kid a credit card

First, it’s critical to understand that every child is different, and each will be mature enough to handle a credit card at a different age. 

When you feel like your teenager is ready, the first step is to make them an authorized user on your account.

Set ground rules for use, keep close track of their purchases, show them credit card statements to teach them how payments and due dates work, help them budget for payments and use mistakes as learning opportunities. 

When they turn 18, if they're ready, you can help them to apply for and manage a simple card, with no annual fees. I think the Chase Freedom Unlimited® is a strong choice.