Kids and Credit

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A study finds more parents are giving young kids credit cards

by Chris O’Shea

Chances are, you’ve never considered handing your credit card to your kid and saying “Here, have at it!” That would be like leaving a dog home alone with an open refrigerator — there’s just too much that could go wrong. And yet, empowering kids with credit cards is a very real trend.

According to a recent study from T. Rowe Price, 18 percent of parents with kids ages 8-14 claimed that their children have a credit card. The number is steadily rising. In 2012, only four percent of parents with kids in those age ranges said their children had cards. In 2015, that number had jumped to 10 percent. And it’s not just the older kids who are using the plastic. Thirteen percent of 8-to-9-year-olds have a credit card, compared to 18 percent of 10-to-12-year-olds and 19 percent of 13-to-14-year-olds.

There are some good reasons for allowing your kid to use a credit card — it can help teach financial responsibility, for one. Adding your children to a credit card of your own (assuming that card will report to the credit bureaus on the child’s behalf — you have to check) can also be a good way to build their credit history in a responsible manner.

However, keep in mind that every kid is different. Before you add your kids to your accounts, consider how mature they are. How have they handled money situations in the past? Be sure to have a detailed discussion about how credit works. Explain both the pros (pay off your bill, raise your credit score) and the cons (interest is a money eater) of using a credit card. Talk in-depth about spending limits and what sort of purchases can and/or should be made on the card. If you do decide to add your kids to your cards, make sure you closely monitor them. If things go awry, he or she could really do some damage to your credit score — and your budget.