LM: credit card for kid

Want kid to get a CC to start to develop a responsible relationship with credit - ideally with something like a $500 limit. I've read a few reviews but I'd like to hear your experiences with offspring's first CC. 

When I started college at Miami of Ohio in 1989 I was offered a Visa card (with a starting limit of $250) and given a free 2 liter bottle of Mountain Dew. How could I resist?

No advice, but watching with interest (no pun intended).  My eldest just started her senior year.  She got her first job over the summer so I took her to the bank to open up a checking account with a debit card and we haven't really had the credit card discussion yet, but in two years when she turns 18, I'd like to be prepared for that.  I know that when I turned 18 and was offered a credit card for the first time it didn't really go all that well.

Can kids start establishing credit as an "authorized user" on their parents' card?  I know that used to be a credit improvement trick - pay someone for them to get a card issued on their account with your name on it, they keep the card, and then you can piggyback off their responsible usage.

When my little brother was about her age this is how I helped him:

Had him get a secured card from a credit union that he could join. For him, it was NavyFed because that's what I had and he could get an account just for being my sibling. He's 23 now and stuck to the rules of smart credit card usage. He has over 820 credit score. 

You could make her an authorized user on one of your major cards then put a spending limit on their particular card. I'm not sure if that still helps build credit for someone that doesn't have credit. 

If she has a checking account and debit card ask that same bank what are her options to get a credit card under them. They'll most likely recommend a secured card. 

In reply to wae :

Get her a card. Buy something and pay that something.

Let's say you/she buys something from Amazon for $79.23.  Complete the transaction and immediately you can also go online and make a payment to credit card from checking account for $79.23

The money will get there before the bill is due but just let the money sit there. The two will catch up.

Then going forward, make less or even zero purchases, but be a good dad and  send the credit card company $5 every month. They'll report that she is paying on time (even though she has bought nothing.)  The best part is they either send her the money back or apply it to future purchases.

More in depth, see my post (last post, page 1) in this thread

Her own card helps more than being a user on yours. I did the same as posted above, secured card at a local bank. That way the limit is set, and it's 100% in their name. After 6 months the bank offered an unsecured one, which helps even more credit wise. 

In reply to John Welsh :

It makes me happy that 6 years later my thread detailing my mistakes can still help people before they make them. 

I finally got Dana, whose had no credit score for a few years since her bullE36 M3 with her ex ruining her credit got off her reports, to get a secured credit card thru her bank. She gave herself a $200 limit, and uses it just to pay our HBO subscription. In the first month she went from no reported score to a 650. 

I also got myself a Lowes card this week. With my current credit scores bordering 800, I was given a $9k limit, but Holy E36 M3 they're charging 27%. There is a 5% discount in purchases at Lowes when using the card though, so it'll be treated like a debit card. Buy something to get the discount then turn around and pay it off. This is my first new card since 2016. It had a negligible effect on my scores getting approved for it, and really cranked up my available credit. It'll be fun to watch how that goes over the next year. 

As a  stepparent Of a 14 year old, I'm planning to get her a secured card at 16 if possible to have for emergencies when she starts driving. If that doesn't work, I'm going to go authorized user with hard limit on one of my cards just to try to get her building up. May not be the best strategy, so I'll be following along to see what others recommend in this thread. 

We started daughter with debit card in high school and as a Miami University of Ohio college student she has a $500 credit card. I'm not a fan of it but my wife and her made the decision.  I do agree she needs to learn as she isn't living with me in the future (HA!)

This is one of the past Dave Ramsey guys that got the "free pizza" college credit card and it ended poorly or ended well as it has a Christian message.
 

I had zero clue about credit when I was 22 and went to college. I got two there due to the hard sell at the multi use building stands. Besides recreation the MUB was there to berkeley kids like me. I ended up dropping out of the engineering program to snowboard and get laid up in the mountains. I ended up with a 540 credit score when I tried to get a loan for a car or house, I can't remember what loan was first.

Fast forward to when I am 35. I marry an awesome girl, still the love of my life, and she was 23. Zero credit, never taught about it. My credit was mid 700s at the time after much research and jumping through hoops. Hers was 3, I think that means you can fog a mirror if you breathe on it.

We both now sit hovering around 800, I think my best was 820. Not at all bragging, I just played the game after learning it.

We do not buy unless we have cash, for the most part. Emergencies suck. We pay our credit purchases off in 2 months max. We also roll some bills through our cards monthly just for the game.

I am at $6k max, she is at $3k max. We never max. We never let them raise our limits.

Get them the card and teach them how to manage it. I wish I had that instead of where my ignorance took me.

In reply to preach (dudeist priest) :

Just curious why you don't let them raise your limits. Typically my limits get raised without me even asking.

I have one main card I added the fiance as an authorized user on (instantly raised her score about 25 points) that we use for everything. Utilities, gas, groceries, entertainment, etc.

It has I think a $28k limit. 

In reply to z31maniac :

We do not need more. If I did it would just be a phone call away to get them to up the limit.  When they raise them without my consent I get it put back.

Maybe I don't want the temptation, but really I don't need to buy something for $6000 if I don't have the cash for it. If I did I'd probably get a cash discount on it.

I plan on having zero debt when I retire in 8 years. The wife will probably work 10+ more and we'll be on easy street. All I want to do then is farm/hunt our (2 people and 2 dogs) food and build the cars I love. Then rip them through the glorious hills of the mexican smokey mountains.

My parents put me on their credit card when I was a child. I never had an actual card but I'm in my early thirties with a 20+ year credit history. That has helped me for sure. 

As for your initial question when I went off to college, Discover seemed to be the place for the low limit (I think it was $500) card for people wanting their first card. I'm not certain but I don't think I needed my parent's on the account but maybe I did.

The other thing my parents instilled in me is that you have to pay off your CC bill every month. I think that's an extremely important mindset when going into the CC world. 

Thanks for the responses. 

In 1982 I applied for a Sears credit card and had to give personal references and they checked with one of them.  Got the card and bought a few tools.

I'm a big fan of teaching kids about money.  My ex, not so much.  I wanted to get them debit cards at about 12, give them an allowance weekly, let them figure out what that $20 a week could buy you.  Then, I figured a pre school year injection of how ever much school supplies and clothes were going to cost, and work them up over the years to being responsible for those purchases by the end of high school.  (Still financed by me, but they could add to the budget from their own sources.)

Didn't happen.  They are both good now, but my younger daughter said a couple of years ago,  "When I was  kid, I thought we were rich, because Mom never said no."

"Yeah," I said.  "Did you notice the 60+ hours a week I wasn't home?"

wae said:

Can kids start establishing credit as an "authorized user" on their parents' card?  I know that used to be a credit improvement trick - pay someone for them to get a card issued on their account with your name on it, they keep the card, and then you can piggyback off their responsible usage.

From our experience, yes.  Our daughter is an authorized user on our main card for the past two years, and has a score near 800 as a result.  Caveat is that if you do this, make sure your score is high, payment history remains spotless, and your credit utilization  is low ... or you end up potentially hurting your child's score vs. helping build it.  

See if your bank has a child bank account my family's bank vystar has something called VyKids and VyTeen

How old is the kid in question?  Has this kid learned to save and spend cash wisely?  Has this kid learned how to maintain a checking account with a positive balance and not getting fee'd to death?  If the answer to the 2nd two is no, my answer is no.  If the answer to the 2nd two is yes, I need to know the answer to the first question. 

Honestly, my parents did a crap job of teaching me about money.  My son wasn't interested in learning.  My daughter is learning at 9.  She is in the cash only phase.  If she wants something and it's not a birthday, Christmas or a gift, she has to earn the cash, save the cash and then buy it herself.  She also has a savings account where I match any money she puts in.  We will do a checking acct when she is in HS with debit card.  If she can handle that, we will talk CC when she is in college. 

Also have you locked your kids credit to prevent identity theft?  I keep mine frozen / locked so no one can open a new account in my name.  Even for the newest job, they had to call me and pretty please ask me to unfreeze it so they could check it.  Given this was a pretty high check.... I was surprised. 

In reply to AnthonyGS (Forum Supporter)
My kid is 21 and understands earn:spend. 

You make a Great point about freezing their credit. Thanks for the reminder. 

In reply to OHSCrifle :

Get a $500 to $1000 credit card, rock on.  Then freeze the credit and monitor.  Work through any issues together.  Ask for honesty, expect mistakes.  Learning from mistakes is faster and more valuable than being good all the time.  
 

Teach your kid to read and seek out knowledge on money.  Rich parents teach their kids this stuff, poor ones haven't a clue.  
 

I will never be rich but I'm happy where I am.  Your kids can retire at 40 to 50 if you start them out right and they understand money.  If my daughter ever has to work a job she doesn't like, it will be 100 % on her.  I will retire at 62 and probably take a part time job I want to do for fun.  
 

Super tip on frozen credit.  I can unfreeze / thaw it whenever.  However to open new accounts I have to go on 3 websites or make 3 calls.  This eliminates the impulse accounts.  I have several CCs I keep paid to zero.  One is always offering me 6-12 months zero interest.  I use that one for travel (work) and daily stuff, pay it off monthly or within the time limit and move on.  By then another card is offering zero percent.  I try not to use a debit card as it is linked to my bank accounts.  
 

I also had a subscription I cancelled at a gym keep charging.  I filed a dispute.  CC company tried being a pain.  I told them we cancelled 3 times verbally and in writing and moved away from that gym.  Told CC stop transactions or I will close the account.  Problem solved.  

When my father died he had a second and a third mortgage on Mom's house that Mom didn't even know about. He also had my sister in another house that he owned that was mortgaged to the hilt. 

"Sign here dear. Don't bother to read it."

I had to move mom into my house when Dad died and half of his pension and all of his social security went away. Her creditors followed her to my house. Nasty phone calls, letters and court dates followed. Often for debts she didn't know she had. Sis's house went into foreclosure when her drug dealer husband went to jail and the whole house of cards fell down. Sister's house went into Mom's name when dad died and the whole mess went on her credit report.  I helped Mom sell her house and got my sister's house sold and out of foreclosure. About a year later, Sister died of kidney disease brought on by Meth use. Mom just recently died of Covid in a nursing home.

Banks are like crack dealers. How much do you want to borrow? Oh well. 

In reply to Snowdoggie (Forum Supporter) :

Man sorry to hear that.  I knew your mom passed away, but all of this too and your sister.  That is terrible and makes me pretty sad.  Life is too short and precious and family and friends are more important than other things.  
 

I agree banks are not your friends.  I often use an extreme example to state my point.  Lots of things are legal but I consider them immoral.  Payday loan places are high on my list.  Guess who owns all those as well as the large pawn chains?  If you guessed big banks, you are correct,  

I was taught about saving/spending from a cash perspective as a kiddo, my parents were really good about that. I was not really taught much about credit and credit cards beyond "don't spend what you don't have, interest will **** you up" which... is true, but also credit cards can be used to your (huge) advantage once you are responsible and set your own ground rules.

Anyway, I had a checking account and debit card in middle and high school, whenever I could get both of those things. Worked and paid for my own gas/insurance when I started driving. Didn't get my first credit card until I was out of college and it was a huge disadvantage to be 21 years old with exactly zero credit history. I had to go in to DC to get my gas service turned on because there was nothing attached to my name and social when the gas company went to run my credit for my first apartment. Ugh.

First card was from a small bank who gave me a $500 limit or something, I used it for six months or so and then got a Discover It card. They were, at the time, a really great option for someone just starting out. I have since branched out (hah) and keep an eye on various cards for start-up offers (spend $X in first X months, get X points or cash back) and have used those to travel for free for many years.