The Joys of Raising Financially Confident Teens

A teenager can learn to be responsible with a credit card.

Teenagers can learn to save money. Motortion Films/Shutterstock

Dear Cheapskate: As a teen, my daughter wanted name-brand jeans, clothing, shoes—whatever she thought all the “cool” kids had. She wouldn’t step into a thrift shop or discount store. It was a constant battle until I decided that she would have a clothing/necessity allowance.

I gave her a set amount of money each month to cover those expenses. If there was an event coming up, she would need to save ahead to pay for whatever she needed, including her prom gown and all the accessories.

It worked wonderfully. She learned to sit down and figure out what she really needed, then budget for it. She began shopping at thrift stores and discount stores to save money. She learned to make long-range plans. It was a valuable lesson that I wished I'd started earlier!—Margaret, email

Dear Margaret: The longer I live, the more convinced I am that the only way to train children to be financially confident in ways that will extend far into their adult years is to give them the ability to make their own independent financial decisions while they are still young—then requiring them to live with the consequences of those decisions, good or bad. I applaud your decision to give your daughter the opportunity and the mandate to manage money while she was still under your authority.

Dear Cheapskate: I am in a quandary. My daughter (age 14) has earned enough money to purchase her own e-reader. To use the device to download things, she must have a credit card on file. She is a responsible young lady, and I have no fear she won’t abide by rules I set. Thanks for your advice on the best way to handle this situation.—Kathline K., email

Dear Kathline: I suggest you add your daughter to your existing credit card as an “authorized user.” This will give her the legal right to use the account in her name but without any legal responsibility for repaying the credit card balance.

As an authorized user, your good credit history will begin to show up in her credit file. Even at her tender age, she will begin to build a good credit record by piggybacking onto your credit history.

Just beware that as an authorized user she could go crazy and charge up the account to the limit without you knowing. She would have no legal obligation to repay the debt, and you would have no legal recourse to make her.

Her potential downside is that your credit behavior as the account holder could take a dive, sending all kinds of negative information to her account.

While these possibilities exist, I would say the chances of things turning sour would be slim to none for you and your daughter. Congratulations for having raised a young woman to be responsible enough to have earned your trust in this way. I wish you both the best.

Policies for Major Credit Card Issuers

• American Express: Allows authorized users, referred to as “additional card members,” as young as 13. However, they report authorized user activity to credit bureaus only if the user is at least 18.
• Bank of America: Permits authorized users without age restrictions and reports their activity to credit bureaus.
• Barclays: Allows authorized users aged 16 and older, with their activity reported to credit bureaus.
• Capital One: No minimum age requirement for authorized users; their activity is reported to credit bureaus.
• Chase: Permits authorized users aged 18 and older, reporting their activity to credit bureaus.
• Citi: No minimum age requirement for authorized users; their activity is reported to credit bureaus.
• Discover: Requires authorized users to be at least 15 and reports their activity to credit bureaus.
• U.S. Bank: Allows authorized users aged 16 and older, reporting their activity to credit bureaus unless the primary account is delinquent.
• Wells Fargo: Permits authorized users aged 18 and older, with their activity reported to credit bureaus.

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