Should Kids Have Their Own Credit Card?
Mon, April 19, 2021

Should Kids Have Their Own Credit Card?



We are slowly transitioning into a cashless society, exposing kids to credit cards, digital wallets, and money apps, noted Liz Frazier of Forbes, a business website. Money apps and digital tools make excellent learning tools for older children, but letting them have their own credit card can be dangerous.

Frazier, who is a financial planner, sees many people buried in debt. Credit cards should not be taken lightly, especially if you want your child to own one. Credit card debt is easy to grow— but if done responsibly— your older child can build credit and practice their money management skills. If you or your child overspends or don’t pay on time, then both of you could get into massive credit card debt.  



Kids Use Their Parents’ Credit or Debit Card Without Their Permission (2018), a credit card comparison website, found that 29% of Americans with kids below 18 years had a child use their credit or debit card without their consent, reported via KSDK, an NBC-affiliated television station. Unlike 52% of respondents, they gave their kids permission to use their credit or debit cards, with 36% allowing three or more purchases. Of those, 48% regretted their decision.

More men (44%) than women (19%) were likely to be victimized by children using their card without permission. The former were also more likely to regret their decision in allowing their kids to use their card (44% of men versus 15% of women). 70% of Americans considered their own parents as very good or somewhat good role models, however, 16% perceived their parents somewhat or very bad role models.

Children should learn to spend for things using their own money. For instance, 69% of parents said that at least one of their kids below 18 years has a financial account compared with 81% having a savings account and 41% of those who have checking accounts.



Parents Racking Up Debt Due to COVID-19

Erika Giovanetti of Lendingtree, the US’s largest online lending marketplace, reported that 56% of parents had gone into debt due to COVID-19-related circumstances, as 40% added credit card debt while 15% resorted to a personal loan. 11% borrowed from friends/family and only 44% had no COVID-19-related debt.

Likewise, parents struggled to pay their April 2020 bills such as their rent/mortgage (31% who answered “paid, but it was tough: and 9% who said “couldn’t pay in full,” credit card bill (29% and 12%), utility bill (29% and 11%), phone bill (21% and 10%), and other debt payments (28% and 14%). The report found that parents spent $1,018.50 on average in turning their homes into virtual classrooms.

Parents purchased the following school supplies for their child’s distance learning: iPad, laptop, or desktop monitor (48%), headphones (25%), software (22%), keyboard and/or mouse (20%), traditional school supplies (20%), office furniture (15%), and printer (13%). 36% tapped into their child’s college fund in order for families to cover their needs. 15% don’t have a college fund while 49% did not tap into their child’s college fund.   



Overspending Is A Deadly Sin  

Things can get awry when young children are involved, said Zina Kumok of Money Under 30, a personal finance website. When Kumok was young, she went on a minor shopping spree using her parent’s credit card. Earning a disapproving look from her mom, Kumok then started monitoring her spending. But in the end, the damage has been done. For the author, giving your child a credit card is like giving them a car. If everything fares well, they will learn to become more responsible adults. But if it doesn’t go your way, it can be a costly, harsh lesson for your lesson.

If you are the main card holder, you will be responsible for paying the balance if your little one purchases a $300 Nintendo Switch or gadget using your credit card. You will also be responsible for any interest fee if you can’t pay off the balance on time.




How to Help Your Child Become a Responsible Credit Card Owner?

1.     Start Them Young

Tim Sheehan— CEO & co-founder of Greenlight (and a dad)— told CNBC Select, a news website that helps readers take control of your money, said, you can give your children household chores so they can understand the concept of earning money, quoted Megan DeMatteo. You can also use stories to teach them about good money habits. Moreover, presenting information about money will be easier for your child to digest than telling them “no” at the checkout. Stories may make your child make invested in solving the beloved characters’ problems.

2.     Differentiate Debit Card From A Credit Card

When swiping your card at the checkout, your child will associate it with cash. A debit card is cash, but a credit card is akin to borrowed money. Before letting them have their own debit or credit card, it is important for your child to understand their differences. While a debit card does not build credit, the habits your child will form from responsibly using their debit card opens more doors to understanding more complex subjects such as borrowing and credit cards, explained Sheehan.

3.     Set Boundaries

For example, you can tell your child to use it for emergencies or it’s for purchasing gas, food, and school supplies. Monitor their spending and set up notifications if your child overspends. Some cards allow you to set up credit limits for the authorized user to prevent mistakes. If your child is an authorized user, they would not have any legal responsibility for the account. This will help them build credit and practice using a credit card without the consequences. But be sure to be upfront with your boundaries with your child.



Young adults who are above 18 but below 21 years can get their own credit card in their own name. However, they must earn sufficient income to pay back borrowed funds or have a signer. If you decide to be the consigner, your child will get a card in their own name and will be legally responsible for the debt the card will incur. You will be responsible for paying off the debt. Before consigning for a card, ensure that the credit limit is something you are comfortable for you. The lower the credit limit, the better; however, it can be increased if your child has learned to use a credit card responsibly.


Giving your child their own credit card can be scary, as they can spend beyond the card’s minimum threshold. But it can also serve as a learning tool to help them manage their spending. Parents need to establish boundaries and expectations early on to prevent financial issues from arising.