Boy 2.0 will be a full time student beginning this fall, 18, living independently - but at our hometown university, so 5 minutes from home, with an accessible stocked pantry and freezer and toolbox and stuff. Nevertheless, we’re discussing whether he would be wise to apply for a low-limit credit card, for 2 reasons: establishing a credit history, and in case of emergency (what if he needs a tire during a road trip, or has to have a motel room while waiting for a car repair, that sort of thing.) He is good with budgeting, sensible enough to understand that having money in his pocket isn’t the same thing as being able to afford something - bills are due next week. His checking account is tied to ours right now, because he still lives at home - makes it easy for me to transfer $ to him if I need him to pick up dog food or reimburse the copay for his dental appointment.
Naturally, I’m aware of the potential for disaster. But I also see the benefits. Any advice on how to handle this? Horror stories? Recommended cards, and companies to avoid like the plague? Things I haven’t even thought about? Thanks!
I don’t think credit cards make all people blubbering idiots. There’s probably the same level of potential disaster now as there will be in 10 years. Credit isn’t a mystery - if you spend $300 you owe $300 in a short while instead of right now. End of story.
So if your kid is reliable and not too stupid to understand how credit cards work then what is the harm? If I were a parent I’d be glad to know my kid has stuff covered in case of an emergency. It makes me, personally, feel better that I have that sort of buffer too, as a cardholder.
I still have a credit line going that I got in 1998, my second semester of college. My parents didn’t even know I got it - I signed up at a baseball game for a free sweatshirt. I’ve generally kept it paid off but in thin times I had to carry a balance and sometimes I had to pay the minimum. Using a credit card really, really wasn’t hard to figure out. No more than keeping my gas tank full or remembering to eat dinner every day. You know - adult stuff.
If you feel the need to watch him like a hawk you could get a nice card like the Amazon Visa (lots of cash back) that only someone like you with a higher credit score could get, and put him as an authorized user, in which case it should show up on his credit report too. The bills would go to your house but you could go paperless and have him log in and pay it every month, and you can log in and see how he’s doing. You wouldn’t use the card, just him. I did this for a friend of mine who needed to boost his credit score and it worked well.
Credit is just a tool. It can be used stupidly or with care. It’s far better for someone to be educated about credit and learn how to manage their finances responsibly. So make sure he knows what he’s doing and what the consequences of his decisions will be, and let him at it.
This is my instinct. He will be at home until July or August. And within strenuous walking distance for at least two years to come. Just like he has learned to drive under circumstances where I have a lot of control and teaching opportunities (“Slow down.” “Give me the keys to my truck.” Etc.) I’d rather he learn the benefits and limits of a line of credit while I can help him correct minor mistakes. I’d rather pay his minimum payment a couple of months and make him come do $25 worth of yard work while he learns the value of managing that line of credit, you know?
I also had one by 20, probably by 18. And while I wasn’t as disciplined as glee and have paid some interest in my life, it is a good tool and at some point a necessary tool.
I really wouldn’t worry too much about a credit history though. That will get established over time.
And it depends on the kid. My kids, right now, at sixteen and seventeen, I wouldn’t encourage credit cards for them. They’ve both had cash cards since they were young.
I worked at a University for many years, not an uncommon sight to see the same students use their card to buy a soda, sandwich, then a fancy coffee (about $12 worth) every single day. They were either made of money, or making very poor choices. As long as your son doesn’t develop really bad habits like those kids, he should be fine.
If he wants to get a credit card and run up the bill for a bunch of stupid shit he can’t pay for, he’s 18, he can do that without your permission. I see nothing wrong with advising him to get a low-limit card and start learning to use it. Building positive credit history as early as possible is good for when he will eventually want to buy a car or a house.
If he can’t handle it, better to learn that now with a $1,000 credit limit and you keeping an eye on things than in ten years, on his own with a $20,000 limit.
This is my instinct. My son is 18. He lives in my house and drives my vehicle. I have a few bits of leverage now. I am able to say “son, I will not provide you with a car or cosign your lease if you won’t let me advise you on financial matters.” I realize that credit is vital to modern American success, and I want the boy to understand this. And having a good credit history, dating back to college years, may be the best financial help I can offer him. I have no money to secure his financial success. I am only able to try to help him understand finance and credit, maybe.
This kid doesn’t sound like the type to go ‘blubbering idiot’ just because he suddenly has a credit card.
But what often happens is that it’s really easy to lose track of how much you have spent on the card. Now that they are accepted for so many minor charges, those little charges can really add up by the end of the month. Like DeepLiquid’s example, buying soda & snacks from a vending machine, buying at a coffee shop, etc. on a daily basis will tend to go unnoticed … until the bill arrives.
That said, it’s probably best that he has this happen now – when it’s recoverable, and his Mom can help him out. So go ahead and get him the credit card, under your name but with him as authorized user, and the low limit. Get the kind where you get the bills as well as him, so you can easily monitor his usage.
What is the “really bad habit” you are describing here? That they are spending $12 each day or that they are using a card instead of cash? If they pay it off each month, there is no difference between cash or credit.
So what? How many snacks can you buy in a month?
When the bill arrives, it might with a surprise. But it will only be a surprise the first time.
A lesson learned the hard way.
Although I can’t comprehend how anybody needs to learn it the hard way.
It’s just plain common sense.
Using credit for daily consumables, that cost a lot, seems like a bad habit to get into. If they have plenty of money, no problem, but many of the kids who worked for me would come in all traumatized at the end of the month and wail “I got my CC bill and the minimum is too high, can I have more hours?”. Clearly not a good position, but one that is becoming more common since every single kid seems to have a credit card now.
But the world doesn’t really work on cash nowadays.
However, this is exactly the reason my sixteen year old isn’t ready for a credit card. She does things like this when out with friends with her debit card. With the debit card, she can’t dig herself too big a hole and we are still working out what she needs for gas and stuff. She doesn’t have a job - she is a good student who is involved in activities and right now I think that is her job.
But I can’t stop her from getting a credit card at eighteen. I’m not going to suggest it when she goes off to college, if there is an emergency, she can call home.
Agree that debit cards are a far better choice for the ones who find credit a mystery “how did all the debt get on there?”. Since you can swipe of tap for everything, it builds up very quickly.
Credit Cards are like steak knives. Sure, you can stab yourself in the leg with a steak knife, but it’s still a useful tool to have.
I got my first credit card at 16, when I needed something to buy gas and as an emergency fund if I got stranded. Like glee, I’ve never paid interest on it. That credit history was very helpful when it came time to buy a house a year after grad school.
If your kid’s an idiot with money, they’ll be an idiot with money whether they have a credit card, debit card, or use cash exclusively. If your kid is not an idiot with money, now is a good time to build that credit history. If you can get a rewards card, even better as you’ll be effectively spending 1% less. Lacunae Matata sounds like they have a normal kid, so I’d get them a card pronto. Just make sure they know they have to keep track of their spending and pay it off every month. You know, like the adult they already are.
I started with a secured card with a $300 limit (and an underlying $300 deposit) at 25 or so. I really, really wish I’d started earlier; I never got into debt in college, but I also had essentially zero credit until relatively late in life. It turns out that the same credit issuers who are desperate to hand every idiot a credit card in college are no longer excited about doing so once you’re into the real world, unless you signed up back then.
If you do go the secured route (and I recommend it), make sure you look for one with minimal or zero annual fees. It’s not as though he’ll be earning rewards points or anything.
Why would you ask a question like that? :dubious: A) is sensible, B) is not as sensible, but very few young people (in my experience) have checking accounts with $10,000 in them).
