Why add my granddaughter as an authorized user on my credit card

Welcome to Personal Finance Insider, a bi-weekly newsletter that connects you with the stories, strategies, and advice you need to better manage your money.

Here’s what: Adding a friend or family member to your credit card can help them build good credit

At the age of 20, I thought I was the paragon of financial responsibility. I had never owned a credit card; I had never asked for a loan; everything i bought was cash.

I then discovered the world of travel rewards credit cards and learned how the points they accumulate could allow me to travel whenever I wanted and (almost) for free. My attitude towards credit cards quickly changed from skepticism to feverish lust.

As I walked confidently through the bank, I knew exactly what I wanted: the Chase Sapphire Preferred card. I thought the sales people would be so impressed with my cash history that they would obsequiously shove any card I wanted into my lap.

What happened was quite the opposite. Because I had never applied for credit, I had no credit score. I was basically “off the grid” and credit issuers don’t want to trust you with their


best credit cards

if you do not have a history of responsible behavior with credit. I was verbally escorted out of the building, now desperate to receive any type of credit card – just so I can promote good credit and possibly open better ones.

Whether you’re young, new to the United States, or just haven’t used credit often enough to build a good credit score, establishing good credit upfront can take time and effort. But there is one thing you can do to boost your credit score vicariously: become an authorized user on someone else’s credit card. In most cases, you will benefit from the primary cardholder’s account information as it will appear in your personal credit file (think payment history, credit usage, etc.).

An important note: when you add an authorized user to your credit card, you are solely responsible for payment. You should only add people you implicitly trust. Likewise, you don’t want to tie yourself as an authorized user to a primary cardholder with a bad credit history. Authorized user activity revolves around trust.

It’s a great strategy for parents who want to give their kids a head start with their credit score – one of the most important numbers in their lives. It unlocks mortgages, car loans, and even (almost) free travel with rewards credit cards. And get this – several banks, including Chase, Capital One, and Citi, have no age limit for authorized users. That means you can add kids even as toddlers and let their credit history bake for 18 years until they’re officially eligible to open their own card.

My wife and I are expecting a girl in May and plan to make her an Authorized User before she turns a year old. I can eventually use this tool as an opportunity to teach him about money too. As long as I remain financially responsible, she will enter the world of adulthood with Willy Wonka’s golden ticket – a stellar credit rating and the resulting favor in the eyes of credit issuers.

— Joseph Hostetler, credit card reporter for Personal Finance Insider


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