Choosing the right credit card for your child
Quick insights
- Adding a teen as an authorized user on a credit card can help them build credit early and learn healthy money habits.
- Comparing interest rates, fees and parental controls can help you choose the right option for your child.
- Consider whether a starter card such as the Chase Freedom Rise® credit card or adding your child as an authorized user better fits your family’s needs.
Adding your child as an authorized user can feel like a big decision. A credit card can help teens build healthy financial habits, but it also requires careful planning and structure. Whether you’re hoping to teach responsible spending or help them start building credit, the right card can offer tools that support your goals as a parent. Below, we'll walk through and compare some of the key options to look for in a credit card and explain how interest rates come into play.
Look for teen-friendly card features
Before deciding whether to add your child as an authorized user or help them apply for their own credit card, think about how they may use the card and what features or limits would support their financial needs. Note: Cards are typically not issued to those under the age of 18 and not all issuers report authorized users, which a teen may be, to the credit bureaus.
Consider what your child needs from a card and how they plan to use it. These features can offer a strong starting point:
- Low credit limit: A lower credit limit can help encourage teens to stay within a manageable budget. Keep in mind that the exact limit often depends on the card issuer’s policies.
- Mobile access and alerts: Mobile apps, transaction alerts and spending summaries can help your child monitor their card use.
- Low annual fee: A card with a low annual fee may help reduce costs while still offering essential tools for beginners.
- Parental oversight options: Depending on the card issuer, parents may be able to co-sign or access account statements to help guide their child’s credit use and financial habits.
Compare different credit card options for your child
The right card depends on your child’s age, needs and experience with money. Here are a few types of card options to explore:
- Starter credit cards: These cards are intended for people who are new to credit and want to build a positive credit history. An example of a starter credit card is the Chase Freedom Rise® credit card.
- Student credit cards: Designed for those in college or just starting out on their path to credit, student credit cards may have lower requirements and basic rewards.
- Authorized user options: Adding your child as an authorized user on your account, which usually includes a card in their name, could offer experience and potential credit-building benefits without full access.
Explore the benefits of a starter credit card
A starter credit card typically comes with lower credit limits and fewer rewards, but they may offer a manageable way to help learn how credit works. Some starter cards, like the Chase Freedom Rise® credit card, are tailored to help young adults begin their credit journey with features that encourage responsible spending and on-time payments. The Chase Freedom Rise credit card offers 1.5% cash back on all purchases with no minimum required to redeem rewards.
Cardmembers may also be eligible for a credit limit increase with on-time payments and responsible use. Plus, you may have the opportunity to earn a one-time $25 statement credit after signing up for automatic payments within the first three months.
Compare fees, rates and card features
Before adding your child as an authorized user or helping them apply for their first credit card, take a close look at the fees, interest rates and eligibility requirements. These details can affect how manageable the card is over time. Consider the following:
- Understand the annual percentage rate (APR): The APR is the interest charged if the balance isn’t paid in full each month. With APR, if your child does not pay off their balance each month, they could end up paying a substantial amount of interest. The longer the balance carries over, the more interest they may be charged.
- Check for late payment fees: Some issuers charge a fee for late payments. These fees vary by card issuer, but they can add up quickly if your child forgets to pay on time. Setting up automatic payments or reminders could help avoid these charges.
- Watch for annual fees: Some cards have annual fees just for keeping the account open. While some teen-friendly options may not have them, it’s still worth reviewing the fine print to avoid unexpected charges.
- Review penalty APRs: Missing payments or breaking card terms could trigger a higher interest rate known as a penalty APR. This rate can increase what your child owes over time. It's helpful to talk about the importance of responsible card use early on.
Understand the role of parental controls
Having some oversight could make the credit experience safer and more manageable for both you and your child.
- Authorized user option: Adding your child as an authorized user can help them learn credit basics while you remain responsible for the account. More on this below.
- Customizable controls: Certain credit cards or apps offer controls like spending caps or transaction blocking to help prevent overspending. This varies depending on your issuer.
- Gradual independence: Work together with your child to help ease them into full responsibility over time.
Consider adding your teen as an authorized user
If your child isn’t ready to manage their own credit card, or doesn’t meet the age requirements, adding them as an authorized user can be a helpful alternative.
- Shared access: As the primary account holder, you can see what your child spends while you stay fully responsible for paying the bill.
- Potential to build credit: If the card issuer reports authorized user activity to the credit bureaus, this could help your child establish a credit history early on.
- A way to introduce credit: Your child can get familiar with making purchases within a controlled environment.
- Able to remove later: If the arrangement no longer works, you can typically remove your child from the account without closing the card.
In summary
Deciding how to introduce your child to credit depends on your goals, their financial habits and how involved you want to be in their learning process. Exploring options like starter credit cards or authorized user setups could support their credit journey while giving you peace of mind. For guidance tailored to your situation, you may want to consider speaking with a credit card issuer or financial advisor.
