How Young Is Too Young for a Credit Card? NJ Expert Weighs in
Would you let your teenager or child carry a credit card with their own name on it?
T. Rowe Price finds credit card use among youth is on the rise, with 18% of those aged 8 to 14 carrying credit cards as guests on their parents' accounts. That's up 4% over the past four years. Thirteen percent of parents living in the Northeast report that at least one of their underage offspring is in possession of a credit card.
An uptick in usage by youth is being attributed, at least in part, to the popularity of in-app purchases, as well as add-ons for multiplayer video games.
Paul Oster, president of credit repair firm Better Qualified in Eatontown, said there's no easy age to proclaim as the best age for someone to start using credit — since people's maturity and understanding develop at different rates. But parents, before handing a credit card over to their child, can do themselves a big favor by having "the credit card talk," he said.
"They don't sit down and explain to the child — this is what you should do, this is what you shouldn't do," Oster said of clients. "Lay out some consequences ... and then monitor the account as closely as you possibly can, especially in the beginning."
An 11-year-old's idea of an "emergency," Oster added, may be very different than their parents' definition.
Oster said early usage of credit could be an educational experience for youth, but it also has the potential to damage the credit rating of their parents, and launch an early start to the youth's own credit problems down the line. An individual can start building or tearing apart their credit before the age of 18.
While individuals under 18 can't get their own credit card without a cosigner, guardians can make minors an authorized user. With many banks, there's no minimum age.
Oster said parents can save themselves some financial agony by handing their child a prepaid debit card.
Contact reporter Dino Flammia at email@example.com.