“`html

Empower Your Child with Financial Responsibility: A Guide by O1ne Mortgage

Using credit cards for purchases instead of cash offers convenience, safety, and speed for both businesses and shoppers. According to 2022 data from Pew Research Center, 41% of Americans report that they don’t make a single purchase with cash in an average week. In an increasingly cashless world, is giving your child a credit card a smart move?

Your child can use a credit card for emergencies, food, and activities when they’re out with friends. If you’re considering letting your child use a credit card, here’s what you should know.

4 Expenses Kids Could Use a Credit Card For

1. Emergencies

Your teen stayed out late with friends and is too tired to drive home safely, and you’re busy at a business dinner 40 miles away. A credit card can help get your child home safely via Uber, Lyft, or taxi. Smaller emergencies like running low on gas or forgetting a sack lunch can also be handled via credit card, easing everyone’s stress.

2. Food

Food is a top spending category for teens. Credit cards can make paying for after-school snacks, pizza delivery, or meals out with friends faster and easier. If your kids have after-school extracurricular activities or sports practices, you may not have time to eat dinner together. With a credit card, kids can grab their own pre-practice snacks or post-practice dinners, or order from food delivery services like DoorDash and Grubhub.

3. Entertainment

Is your kid begging to watch the latest season of their favorite show, but you don’t want to add another streaming subscription to your bills? Have your kid use a credit card to pay for streaming services, gaming subscriptions, or mobile apps they want and pay you back with cash or housework. Or foot the bill for the basic service yourself and have the child cover desired premium upgrades or “extras” like in-game purchases.

4. Shopping

Both debit and credit cards are generally safe for online shopping, but using a credit card can have some advantages, including rewards, extended warranties, purchase protection, and faster refunds for disputed purchases. Protect your child’s identity by teaching them the warning signs of online shopping scams.

When Should My Child Get a Credit Card?

According to the 2022 T. Rowe Price Parents, Kids & Money Survey, 17% of children ages 8 to 14 have credit cards. Although kids can’t open credit card accounts of their own until they’re 18 and have independent income, you can add a child to your credit card account as an authorized user much earlier.

As an authorized user on your account, your child gets a credit card they can use to make purchases. You can see all their account activity and are responsible for paying the bill. If the card issuer reports authorized user activity to at least one of the major consumer credit bureaus, the card’s credit history will appear on your child’s credit report, which can help them build credit.

How to Teach Your Kid to Use a Credit Card

Credit cards are valuable tools—if you show your child how to use them. Here’s how:

• Explain that every time you use a credit card, you’re borrowing money that you must pay back when the bill is due. Show them that if you don’t pay the balance in full, it accrues interest, which can eventually snowball.
• Demonstrate how you’ll check your credit card account activity online or on the card’s app, so you’ll know what they’re buying.
• Explain the importance of keeping the physical card and the card number safe and not sharing them with friends.
• Help them figure out how to track their credit card spending and keep it within limits they can pay off each month. Older children can use the card’s app for this.
• Note when payment is due each month. Explain that they’ll need enough money to pay their share at that time. (If your child has a checking account, you can show them how to make a payment online themselves.)
• Clarify which purchases they are responsible for. For instance, you might agree to cover emergency Uber rides or school fees, but not video games.

The Bottom Line

Making your child an authorized user on your credit card can generate a credit report and credit score for them. However, a credit report for a child who doesn’t have a credit card could signal identity theft or fraud. You can use Experian’s minor request form to see if your child has a credit report.

While you’re helping your child build good credit, consider safeguarding their identity by signing up for Experian’s family identity protection plan. It monitors the dark web, credit reports, and more for up to two adults and 10 children, and provides fraud resolution support and identity theft insurance.

For any mortgage-related needs, call O1ne Mortgage at 213-732-3074. We’re here to help you navigate your financial journey with confidence.

“`