Put the names of the children on the credit cards but don’t give the kid a card or tell him or her
Posted on September 4, 2007
Filed Under Advice, Students Credit Cards, rates | 2 Comments
Parents with a good credit rating who want to give young adults a “boost” with their credit rating can put the names of their children on their credit cards as authorized users when they are young so that they will already have a good credit history when they go to get their first car loans, etc. But don’t give the kid a card or tell him or her!
Then when they get to be adults moving out on their own — after they have secured the first car loan, gotten a good interest rate on their own cards — the parents can then remove the name of the kid from their cards lest the kids do mortal damage to the parents’ credit rating by not paying bills. We did this for our kids, and they were able to secure credit cards at low interest rates, as well as get good car loans.
One of the points I stress with my kids in school is that with universal default, one late payment affects everything else. It’s funny, but knowing that their car insurance rates might go up affects them more than what might happen to their credit card interest rate.
I tell all my kids to have the minimum credit card payment made automatically so they don’t forget and then add to that what they have budgeted. Obviously the best case scenario is not to charge what you cannot pay.
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Yeahh, so they’ll be able to run up a big bill for me with one of the credit card companies. I’d rather have them earn their own good credit rating.
Tell me, how would they be able to “run up a big bill” for you if you don’t tell them about it? How would they know they have a credit card on their name that they could use if you don’t tell them the credit card numbers, expiration dates, etc???