When to Add a Teen as an Authorized User on Your Credit Card

Adding your teen or young adult onto one of your credit cards is a good way to help them to build credit. A good time to do it is when you see them being denied credit for having "no credit. Offer it to them, but go over the following points with them first on how to handle a credit card, or accept a credit card offer when it comes their way - because it will.

Having the Talk:

"When you get a credit card offer in the mail, and you wonder if you should take their offer. These are the must do tips:

1. Don’t take it if it has an annual fee
2. Don’t use it to splurge (plan to pay purchases off within 30 days) —“Pay as you go and you never owe”.
3. Use it (if you are short on cash flow only) for stuff you’d buy any way: Food, repairs, pet supplies, then assign some of your next paycheck to pay the full balance it off, but before 30 days so interest is not charged.
4. You can get a card with a crazy interest rate as long as there is no annual fee and you do #3.
5. PLUSES: It builds your credit, let’s you always have what you need in a pinch if you’re cash-strapped, let’s you rent a car easily, and in a real emergency you have access to hundreds of dollars."