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As we move toward a cashless society, many parents wonder if it’s a good idea to give their kids debit cards or credit cards. There is plenty of debate about whether or not using cashless forms of payment is healthy for children. Learn more in this blog as we answer questions about kids and credit cards.

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Can I give my child a credit card?
When should I give my child a credit card?
Do credit cards help kids with money management?
What should I look for in a credit card for my child?
Which is better for kids, credit or debit?

Can I give my kid a credit card?

Answer: Yes, children can be added as authorized users on credit cards and bank accounts, but their cards may come with some restrictions.

It depends on what you mean by “credit card.” Many people use the terms credit card and debit card interchangeably, but the distinction between them is important in your decision-making process. 

No one under 18 can take on debt, so children cannot have credit cards in their name. However, you can add minors as authorized users on a credit card account. You can also add them as authorized users of bank accounts and give them a debit card. 

When should I give my kid a credit card?

Answer: The age will depend on the child. At a minimum, children with access to credit and debit cards should have basic math skills, a good understanding of money and its value, and have demonstrated that they can keep track of valuable possessions like a phone or tablet.

It also makes sense to wait until your child is independent enough that they need access to a card to make their own purchases. Some banks have age limits and won’t allow you to add authorized users under 13 years old. 

To prepare your child:

  1. Start having them shadow you when you make purchases.
  2. Explain to them how you budget for a shopping trip and estimate what the purchase will cost. 
  3. Have them practice guessing how much the total will be before paying at the register.
  4. Look at the receipt together and explain to them how tax works. 

When you believe your child is ready, discuss their spending limits and show them how to check their balance (if their card has an app). Your child should know not to share their PIN or leave their wallet or purse unattended.

Do credit cards help kids with money management?

Answer: Yes, credit and debit cards can be a valuable tool to help kids with money management. 

However, any tool can have pros and cons. Part of learning any new skill is making mistakes, so it’s good to be prepared for the difficulties your child might experience.

The Pros and Cons of Giving Your Kid a Credit Card

Build credit
Learn positive financial habits
Have money for emergencies
Can be canceled if lost (unlike paper money)
You have less control over impulse spending
You are financially responsible for overdrafts

What should I look for in a credit card for my child?

Answer: The exact features will be up to you, but many parents prioritize spending limits, instant transfers, and preventing overdrafts. 

Some accounts may charge a maintenance fee to add limits and unique features to an authorized account, but it could be worth the peace of mind you’ll have. 

Which is better for kids, credit or debit?

Answer: It depends on your financial situation, but we think starting with a debit card is a good idea. 

As far as your child is concerned, the debit card and credit card function the same: you let them know how much they can spend, and they spend it. 

However, for you, the difference is whether or not you pay interest on the money your child spends. If you can pay down the balance of your child’s credit card every month, then it should be fine, but if you don’t, you’ll be spending more in the long run on their purchases because of interest.

Unchecked credit card debt can lead to problems in the future and could leave you scrambling to take control of your debt. If your credit card debt does get out of control talking to a Consolidation Specialist about your debt solution options could help.

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