There may come a time when I add my children as authorized users to one or more of my credit cards.
Rationally, I know this could be a good way to safely help them build credit, perhaps well before they’re old enough to need credit. But I’m just not ready.
The content on this page is accurate as of the posting date. Please see the bank’s website for the most current version of card offers.
Quick definition: An authorized user is any person who has permission to use a credit card, but who is not responsible to pay the bill.
Parents may add their children to a credit card account but never actually give them a card, which – if the parent is responsible with his own credit – can set their kids on the correct personal finance path. (I’ve been told a good way to go about this is to get the card and immediately cut it up.)
Putting your child’s credit at risk
I know I’m responsible, and yet I don’t want to expose my 11- and 8-year-old to the potential risks of piggybacking, as it’s called, like the mother of one Reddit poster did.
This woman’s bad credit decisions helped (at least temporarily) destroy her son’s credit score without his knowledge. When, at age 22, he began exploring getting a credit card, he learned his mother owed $30,000 on several cards upon which he had been named an authorized user.
But that’s not – to me anyway – the only shocking behavior demonstrated in this thread. Some commenters acknowledged they made their kids authorized users just to collect a sign-up bonus on a credit card offer.
I don’t know if this is a particularly novel thing, but it feels kind of icky to me nonetheless.
How cashing in on your kids works
The market for your credit card loyalty remains super competitive, which is why there are so many good sign-up bonus opportunities. The best of the sign-up bonuses could net cardholders hundreds of dollars or more after meeting some minimum spending requirements.
Some issuers take it one step further by offering an additional bonus for adding an authorized user to the card. The issuers figure that some of those authorized users, at least, will spend money on that card, which is why they’re giving an incentive to add them.
Here are two current offers that include an authorized user carrot:
Chase Sapphire Preferred card
New cardholders can earn 50,000 bonus points after they spend $4,000 on purchases in the first three months from account opening. Chase says that sign-up bonus is worth $625 toward travel when you redeem through Chase Ultimate Rewards.
You can earn an additional 5,000 bonus points after adding the first authorized user and making a purchase within the first three months.
The Hyatt Credit Card
Earn 40,000 bonus points after you spend $2,000 on purchases within the first three months after account opening. Receive an additional 5,000 points after you add an authorized user to your account and make a purchase during the first three months.
This is one way to make a few bucks. I’m just not sure it’s the best way.
Adding an authorized user the right way
CreditCards.com’s Allie Johnson recently wrote a fine piece on knowing when it is the right time to make your child an authorized user. The timing may be dictated, in part, by the issuers themselves, as age restrictions vary.
Still, half of the 10 issuers surveyed have no minimum age requirement.
I’m going to take the advice of the experts in Johnson’s story who warn against making children authorized users too soon. You only need a few years to build their good credit.
And there’s no reason – in my mind, anyway – to make a profit doing it.
See related: 6 questions to ask when adding an authorized user to your account, When an authorized user goes rogue: What to do
