[This article was first published on The Simple Dollar in 2020. It was updated in March 2022.] Depending on your card issuer, you may have access to account settings that let you limit the amount of money your authorized user can spend each day or each month. Generally speaking, you should also be able to set other stipulations on your authorized user’s account, such as limiting or denying cash advances made with the card. Also: The best credit cards for good credit By adding your teen (or anyone else) as an authorized user, you are taking full responsibility for any purchases they make. In other words, it’s up to you to set the ground rules to make sure everything goes as planned. While it’s easy to assume that teens and credit cards don’t mix, adding your teen as an authorized user on your account comes with four benefits: Also: The most exclusive credit cards Letting your teen ease into using credit as an authorized user, on the other hand, with your watchful guidance, allows them to learn about credit in a relatively safe, low-risk environment.
All liability is yours: When you add an authorized user to your credit card, you take all liability for their purchases – whether those purchases were authorized by you or not.
Potential credit damage: If your teen gets out of hand and runs up a balance you cannot repay, any late or delinquent payments will go on both of your credit reports. That’s why it’s a smart move to put a cap on how much they’re allowed to charge or use a card with a lower credit limit.
Possible drama: If your teen has trouble with spending limits, uses their credit without your permission, or is otherwise unreliable, you can expect some bumps along the road.
While these disadvantages are real, the easiest way to avoid a sticky situation is to set account limits on how much your teen can spend – and when. By adding these limits, you can save yourself the headache of finding out that your teen overspent.
