Choose the Best Credit Card for Your Child

Choose the Best Credit Card for Your Child



minutes read

A man is holding a bunch of credit cards.

Guest post by David Bakke. David Bakke lives in Atlanta, Georgia with his young son. In addition to running a reselling business online, David writes about making smart personal finance decisions on Money Crashers.


The best credit card to choose for your child depends on what you are trying to accomplish. There are five basic options:

  • Debit. With this type of card, your child will need a checking account unless you get one that is tied to yours. The advantage here is that there is no borrowing involved, and therefore no interest or late payment fees (though other fees may apply). Bear in mind that using a debit card instead of a credit card will not build credit history.
  • Secured Credit. A secured credit card is typically tied to a savings account, which means missed payments are covered as long as you have sufficient funds. A deposit is paid to the issuer, who then issues a credit card with a spending limit of anywhere from 50% to 100% of the deposit. Your child can build credit history with this option. However, these cards typically have high interest rates.
  • Traditional Credit Card in Their Name. This is another option to build credit for your child. However, by doing so, you put yourself at risk regarding their spending decisions. Make sure that you are comfortable with your child’s overall level of responsibility before going this route. There are a variety of credit cards for students to consider.
  • Authorized Credit Card. Adding your child as an authorized user to one of your credit card accounts may be the most convenient option, as you can complete the process in a matter of minutes. You can decrease your exposure to potential overspending by choosing a card with a lower spending limit. If the account is kept in good standing, your child’s credit history will benefit.
  • Prepaid Credit. With this option, parents apply for a prepaid card in their child’s name, and the card becomes active when money is deposited into the account. When the balance becomes low, more money can be added. Prepaid credit cards are a secure option, as spending is limited to the amount of money deposited in the card’s account, and there are no high interest rates or overdraft fees. However, you cannot build a credit history with a prepaid card.

If your goal is to build credit history for your child, choose a secured card, co-sign for a credit card, or add them to one of yours. If you’re more concerned about safety, then go with a pre-paid credit or debit card.

This is part 2 in a series of 3 by guest blogger David Bakke. Check back next week for “Understanding Credit Card Do’s and Don’ts” 

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