Essential Guidelines for Giving a Credit Card to Your Child Under 18

The question of whether—and when—to provide your child with a credit card under 18 remains one of the trickiest decisions modern parents face. According to TransUnion, nearly 1 in 5 American teenagers ages 13 to 17 now carries a credit card, with the majority using it at least weekly. Yet this apparent trend doesn’t make the decision simpler. As Sandy Wheat, executive director of the North Carolina Council on Economic Education, points out: “It depends on your relationship with your child and how responsible your child is.”

Legally, teenagers cannot hold their own credit card accounts because they lack the authority to enter binding financial contracts. Until they reach 18, any card in their hands will technically belong to you—they’ll be listed as authorized users on your account. This arrangement transfers both opportunity and risk into their pockets, making careful preparation essential.

Why the Age 18 Matters: Understanding the Financial Framework

The magic number—18—exists for a reason. At this age, young adults can legally enter contracts, establish independent credit histories, and bear direct responsibility for their financial decisions. Before that milestone, your role shifts from financial director to financial guide and safeguard.

When you add your child under 18 as an authorized user on your credit card, their activity gets reported to the credit bureaus (assuming your card issuer reports this activity). This means their payment history—whether positive or negative—begins building immediately. However, you remain the account holder and bear full legal liability for all charges, regardless of who made them.

Preparing Your Teen: The Financial Literacy Foundation

Before handing over plastic, the conversation matters far more than the card itself. Many teenagers demonstrate surprising gaps in basic financial understanding. MaryBeth Bailey, who teaches financial education in Bryant, Arkansas, has observed that seventh-graders consistently struggle to distinguish between credit and debit. Few teenagers ages 13 to 15 truly understand what a credit score is or why it matters to their future.

Your preparatory work should address several foundational concepts:

Understanding Interest and Compound Growth. Credit card interest is rarely a single calculation. Explain how compound interest accelerates debt—a $1,000 balance at 18% APR becomes significantly larger each month the balance remains unpaid. Susan Schroeder, an accredited financial counselor in St. Paul, Minnesota, emphasizes: “We don’t talk about sex once. We don’t talk about drugs once. Why should money be any different?”

Learning the Full Vocabulary. Beyond interest and credit scores, familiarize your teen with annual percentage rates (APR), minimum payments, grace periods, and the consequences of missed payments. Encourage them to review a glossary of credit card terms and understand what each element means for their wallet.

Sharing Your Own Story. Your experiences—both victories and struggles—provide powerful lessons. Discuss how you’ve spent wisely, saved strategically, accumulated debt, and recovered from financial mistakes. This transparency builds credibility and demonstrates that financial maturity develops over time.

Critical Safeguards: Protecting Your Credit and Theirs

Assuming your child will spend responsibly is a gamble you should not take. Multiple protective mechanisms exist:

Spending Limits and Controls. American Express and certain Visa issuers (such as the Costco Anywhere Visa by Citi) allow cardholders to impose spending caps on authorized users. Other options include Navy Federal Credit Union’s prepaid teen card called Buxx, which parents can reload directly, or DFCU Financial’s card designed specifically for ages 14-17 with an initial $250 limit (capped at $1,000). Apps like CardValet send transaction alerts and enforce real-time spending boundaries.

Secured Card Arrangements. Consider a secured credit card where you deposit collateral ($250, for example) that becomes the credit line. Your account remains primary, but your child gains authorized user status with built-in protection.

Strategic Limit-Setting. At minimum, never add your child to an account with a high credit limit. A low-limit card—one your child cannot overspend beyond what you can realistically repay—creates a natural boundary.

Intentional Usage Scope. Decide upfront: Is this card for emergencies only, everyday purchases, or specific categories? Define what constitutes an emergency in concrete terms. Your 16-year-old’s definition of “crisis” may differ dramatically from yours, so establish clear guidelines in advance.

Monitoring and Trust: Finding the Right Balance

If your card serves purposes beyond emergencies, regular review meetings with your teen become non-negotiable. Laura Levine, CEO of the Jump$tart Coalition for Personal Financial Literacy, reminds us that “credit savvy is something you can teach through practice, but the card itself isn’t going to do it.”

The Verification Strategy. Begin with weekly charge reviews if this is your child’s first credit card. If your teen demonstrates consistent responsibility, extend reviews to monthly intervals. Should honesty concerns arise, require receipts for every transaction on the bill. This practice ensures accountability without constant accusation.

Staying Alert. Kids lose things—frequently. Regularly confirm your child still possesses the card. If it goes missing, establish a protocol: your teen should report the loss immediately without fear of punishment, allowing you to freeze the account before fraudulent charges accumulate. Explain the real consequences: “If this card gets into someone else’s hands, they can rack up thousands in charges—and we’re responsible.”

Intervention When Necessary. This is explicitly not the time to grant independence. If charging spirals out of control, stepping in decisively—temporarily or permanently removing the card—teaches the crucial lesson that financial privileges come with boundaries.

When NOT to Proceed: Red Flags for Parents

Three critical warning signs should stop you from moving forward:

Your Own Financial House is Shaky. If you’re currently struggling with credit card debt, adding a child’s account to your responsibility compounds your problems rather than teaching your child. “Don’t consider this as an option unless your own financial house is in order,” Schroeder advises. Your child learns by observing your behavior as much as by hearing your words.

Your Card Issuer Won’t Report to Credit Bureaus. If the issuer doesn’t report your teen’s payment history to credit bureaus, you accept all the risk without building their credit foundation. Most prepaid cards, for instance, never report to the bureaus—defeating much of the purpose.

You Cannot Check if Charges Get Reported. Before adding your child under 18 as an authorized user, verify directly with your card issuer that their activity will appear on credit bureau reports. Otherwise, why shoulder the liability?

Two Fundamental Realities to Accept

You Bear Full Legal Liability. Every charge your child makes—whether authorized by you or not—becomes your obligation. If your teen charges a prom party bus and their friends never reimburse them, you’re paying. If they spend their earnings on dining out and can’t cover their share of a family bill they put on the card, you’re paying.

Your Credit Score Hangs in the Balance. If your daughter is supposed to reimburse you monthly but forgets—repeatedly—it doesn’t matter that she signed the charge slips. Your credit score suffers. Your ability to refinance a mortgage, qualify for a car loan, or secure favorable insurance rates becomes vulnerable to your teenager’s behavior.

Making the Final Decision: Is Your Child Ready?

Some families find compelling reasons to extend credit card access. Perhaps your child attends boarding school or travels frequently with athletic teams, requiring financial flexibility you cannot always provide in real-time. Maybe you work long hours and want to give your teen a tool for unexpected needs. Or you simply believe that learning credit management while still living under your roof—where you can guide and correct—beats waiting until college or adulthood.

If those reasons resonate, approach this privilege thoughtfully. Communicate clearly that carrying a credit card is a responsibility, not a right. Financial maturity arrives at different ages for different people. Be prepared to take the card away if your teen proves unprepared, either temporarily (as a consequence) or permanently (as a reset).

Ultimately, the right decision depends on your specific relationship with your child, their demonstrated responsibility level, and your own financial stability. When conditions align and preparation is thorough, a credit card becomes a powerful teaching tool—preparing your child for a more independent financial future.