Want to build credit history for your kids? Add them as an authorized user

20 March 2023

Editor’s note: This is a recurring post, regularly updated with new information. 

Having an established credit history and a good credit score is an important part of being financially independent. Teaching your kids about responsible money management should involve a discussion of credit cards. And one of the easiest ways to help your children build credit history while learning about credit cards is by adding them as authorized users.

An authorized user on a credit card is someone who has a copy of your credit card with their name on it. You, as the primary cardholder, are responsible for all of their charges and for paying the bill. In other words, the authorized user gets to swipe, but you have to pay.

Letting your kids run around with a credit card may sound risky, but there may be benefits for both you and your children. For parents and legal guardians, adding an authorized user to your credit card account sometimes includes extra perks (bonus points on a welcome offer, statement credits, additional lounge access or other card benefits). In addition to benefits for you, there are long-lasting benefits for your kids. Here’s a closer look.

Related: Credit cards with the greatest value for authorized users

Advantages of adding kids as authorized users

Adding a child as an authorized user on your credit card can help them start building a credit file — or can help to minimize bad credit history that they may have established for themselves. This way, they can get better credit offers (loans, mortgages, car leases and more) and lower interest rates on those products once they are older.

When you add a child as an authorized user, it reports as a new account on your child’s credit report, and the account history and details will affect their report.

This goes both ways, however. Good credit card activity and payment history can benefit your child’s credit report; bad activity, such as a high utilization ratio, can harm it.

Related: Credit utilization ratio: What is it and how it affects your credit score

Adding your children as authorized users to your credit cards will help them build a credit history and will hopefully lead to better credit scores as they transition to adulthood. MASKOT/GETTY IMAGES

Having a card in their own name also helps your children learn to manage expenses while still under your protection, establishing healthy financial habits early.

Of course, there are also benefits for you. Every dollar your authorized user spends earns the same points and miles as if you were the one doing the spending. Some banks allow authorized users to spend the points, too. For example, Chase Ultimate Rewards points can be transferred into the loyalty accounts of one authorized user who is a household member (this can be a handy way to top off a child’s airline account to reach an award redemption). However, you are limited to one person who meets these criteria, so don’t use the functionality for a child if you’d prefer to transfer those points to a spouse.

Related: Your ultimate guide to family points pooling

Age requirements for authorized users

There is no overarching legal requirement for a minimum age to add an authorized user to your credit card. Thus, issuing banks can establish their own rules, policies and processes for adding minors to card accounts. Most banks make it easy to add an authorized user online while logged into your account or by calling the number on the back of your card. Here’s a look at the various policies:

Card issuer
Minimum age
Reports to credit bureau?

American Express
13.
Yes.

Bank of America
None.
Yes.

Barclays
13.
Yes, at age 16.

Capital One
None.
Yes.

Chase
None.
Yes.

Citibank
None.
Yes.

Discover
15.
Yes.

First National Bank of Omaha (FNBO)
None.
Yes.

HSBC
None.
Yes.

PNC
16.
Yes.

Synchrony
None (though not all cards permit authorized users).
Yes.

U.S. Bank
13.
Yes.

USAA
None.
Yes.

Wells Fargo
None.
Yes, at age 18.

This information is related to personal credit cards. Small-business cards typically have their own rules. Some banks ask for the authorized users’ Social Security Number (SSN) but shouldn’t pull credit reports on the authorized user since the primary cardholder is the one who is responsible for making payments.

Things to consider before adding a child as an authorized user

There are a few reasons why you might not want to add your children as authorized users on your credit cards.

First, you’ll responsible for all purchases made by authorized users. Ensure your kids are mature enough to understand the cause and effect of swiping or entering a card number for every purchase. You can add your child as an authorized user and not actually share the card with them if you think they are not ready for the responsibility. You also may be able to set spending limits for your authorized user.

AMERICANEXPRESS.COM

Next, some cards charge an annual fee for adding authorized users (which can be hefty with premium cards). If you’re only using this card to teach your kids about credit or to help them build a credit history, use a card that doesn’t charge fees for additional users.

Lastly, most — but not all — credit cards report authorized user activity to the credit bureaus. Understanding this is even more complex when the authorized user is a minor because not all banks allow authorized users at the same age or follow the same reporting rules for minors. If you want to help your child build credit history, ensure you know when (or if) this information will be reported to the credit bureaus.

When it’s time for your children to open a credit card account in their own names, they can do so even if they are authorized users on your account for the same type of card. However, do know that authorized user accounts can influence the way Chase views 5/24 status. However, if you speak with Chase, it can usually manually discount that card from the 5/24 total.

Related: Want to open a new Chase card? Here’s how to calculate your 5/24 standing

Remember that if you incur negative marks on your credit accounts, it may affect your authorized users too. If you run into financial trouble, you should remove your children as authorized users to protect their credit histories.

Related: How I’m teaching my kids about points and miles

SYDA PRODUCTIONS/SHUTTERSTOCK

Alternatives to adding your children as authorized users

Adding your kids as authorized users on your credit card isn’t the only way to build credit history or teach them about finances.

You could take out a small loan (including a credit-building one) and help your child establish credit history by making payments on this loan. However, these tend to have high interest rates. Plus, ensure you only borrow what you can confidently pay back.

Another option is a secured credit card. Only those age 18 and above can be primary accountholders on credit cards — including secured cards — but this is a great option for ensuring your child doesn’t overspend while learning to use a credit card. You could open a secured card with your child as an authorized user before their 18th birthday and/or help them open a secured card of their own after age 18.

Bottom line

There’s no standard time or age when you can add children as authorized users on your credit cards. Moreover, it’s important to weigh the pros and cons to see if your child is ready and could benefit from it. By adding your kids as authorized users to your credit cards (depending on their age and the issuing bank), they will appreciate their positive credit history when they apply for their own credit cards in the future.

Additional reporting by Benét J. Wilson and Dan Miller.

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