That's great. I wish my parents had done that with me when I went to college. Unfortunately, my parents themselves aren't very responsible with money and filed BK like 12 years ago or something so I don't think I was ever going to get that lesson from them. It took my turning 30 and moving back to my hometown and realizing I wanted to build a life for myself to make me change my ways. The whole message of Rich Dad, Poor Dad is SO true but it can be turned around. I have savings, I have a 401k, I have stock, I'm trying to right all of my previous wrongs.
Good luck to your son at school!
I too will soon be adding my son and daughter to my cards as authorized users. I have a few questions for those of you who already have experience with it if you don't mind helping me out.
1.Is there a minimum age they have to be before being added as an authorized user?
2. Is there a way to limit the spend on the individual AU cards?
3. I have an AMEX and was wondering if I add them to it, when they eventually get their own will they be able to backdate to the day they were added as AU's?
My plan is to at first just loan them out to them when needed and then take them back, but eventually to help teach them in responsible spending I'd like to after that give them their own cards, but have a hidden spend limit of my own choosing on them until I see they are responsible enough to use them without restriction at which time I would lift the limits and then observe their behavior before helping them to begin their own credit journey by helping them research into getting their first cards.
@CreditSeductress wrote:
@VirtualCuriosity wrote:I am curious what the actual FICO score was once CAP1 advises. We started similar with our DD when she was 16, except she carries the Sallie Mae at all times. She uses it for buying gas, college supplies, or other tings she wants and saved for. She then pays us back with her own money. She also has her CU debit card with her emergency money and savings, but we give her a share of the rewards cash from when she uses the card (even though usually not that much). We taught her to go into the CU to withraw the cash to pay back because there is just something about the emotion of holding the cash first before paying for something that keeps you modest (maybe that's why our grandparents were so good with money???). The same thing when she carried the Discover IT, prior to the new SM (IT was destroyed since no longer needed, but still an AU). She will be 18 in a few months. Once she transfers into her campus work program and earns W2 wages for a while, she will get her own card to establish further. But, she is aware that her first priority is to start her own IRA, in her name (she is now a beneficiary to one of our IRAs, but hasn't been told. There may be tax consequences then, but it will still be a good monetary surprise). And obviously at low college wages, we are talking the minimum to start the IRA. I agree that it is very imprtant to teach young teens the importance of financial decision making, budgeting, and that credit is a tool. The planning can be your best friend (budgeting and saving 40-50 years for retirement age), or your worst enemy (getting into debt when you knew you could not afford the consequence). Nobody seemed to think to teach me this when I was young. I learned from personal mistakes, as well as the benefit of good habits. This is why we teach them a better way.
Wow, Kudos to you. I'm learning so much from everyone posting replies to this post.
I also want him to do better than I did. Children learning from home goes a long way when they are taught with and from people having their best interest at heart.
We can also teach them from our life lessons, and only hope and pray that they listen.
Starting an IRA for him now in his own name is something I never thought about. Thanks so much for that.
You are welcome. Do the compound interest math and see the amazing results. It is all about starting early. Let them see the potential with their own eyes. Luckily I learned this in my early 20's before I let too much more time waste. An example would be a mere $500 to start and $50 a month invested at 17 years old for 40 years. Assuming that the young teen only invested that $50 per month for the entire 40 years, without ever increasing it and a decent 10% annual return; that would be approx 340k at 57 years old. With only 24k invested out of pocket. Aadd 2.5 more years onto that since 59 1/2 is the earliest to withdrawl without penalty and they are nearing 450k. Can you imagine once he/she gets a career going and ups the monthly investment amount? We can skip all the debates about what type of IRA is better and the tax rules for each one for the sake of a simple thread that already got slightly off course (sorry OP). The point is to start early, always.
@lonelyisland wrote:
@--HighHopes-- wrote:
I too will soon be adding my son and daughter to my cards as authorized users. I have a few questions for those of you who already have experience with it if you don't mind helping me out.
1.Is there a minimum age they have to be before being added as an authorized user?
2. Is there a way to limit the spend on the individual AU cards?
3. I have an AMEX and was wondering if I add them to it, when they eventually get their own will they be able to backdate to the day they were added as AU's?
My plan is to at first just loan them out to them when needed and then take them back, but eventually to help teach them in responsible spending I'd like to after that give them their own cards, but have a hidden spend limit of my own choosing on them until I see they are responsible enough to use them without restriction at which time I would lift the limits and then observe their behavior before helping them to begin their own credit journey by helping them research into getting their first cards.
So I added my 17 year old daughter to my Amex ED. AMEX allows 15 and up. I was able to give her a monthly limit of $200 on her card, AMEX lets you manage each card limit and you can turn it all the way off for a short period of time if needed. She carries the card all the time, but knows what her usage boundaries are. Since I can see what she buys, I know exactly when she uses the card, and what for. She is so SUPER excited by how the card looks and having an AMEX card, that she follows the rules, so it doesnt get taken away. ;-)
I am not sure how it effects their backdating?
Thx Lonelyisland! I'm glad to hear that. I too have the AMEX ED card so since I know for sure that one works that way I'll probably just go ahead and do it then. It was going to be between it and the Chase Freedom anyway...just wasn't sure how the whole process worked but i was going to wait until 16 to add them, however, if they get backdating benefits I will be adding them asap! The only problem with the Amex where I live is that there are a lot of small businesses that the youth and teens frequent that do not accept Amex:/
@Middleswarth wrote:When my son got his card I stood back and watched. I wanted to see how he handled it. I gave him instructions for a couple years while he was an AU and had him sit with me while I paid bills. He also had his own checking and savings for a couple years.
IMO, you have to allow them to grow. As well intentioned as it may be, getting cards for them and not allowing them to use it (and learn from it) is not going to teach them to be responsible (again, my opinion of course
).
+1 That's my opinion, too. TBH, I'm a little uncomfortable with the fact that the OP applied for credit on his behalf. That really should have been his decision to apply for anything. It's not like AAoA was a concern, since his AMEX MSD was already set a few years ago. Hopefully, it works out for the best.
@SunriseEarth wrote:+1 That's my opinion, too. TBH, I'm a little uncomfortable with the fact that the OP applied for credit on his behalf. That really should have been his decision to apply for anything. It's not like AAoA was a concern, since his AMEX MSD was already set a few years ago. Hopefully, it works out for the best.
That's fine SunriseEarth. I respect your opinion. The fact of the matter is, knowing what I know about credit, I....yes I am going to start both of my boys on the same path credit wise. When I added them as AU's, they didn't know until I received the cards in the mail. Were they excited...oh yeah! The first thing that came out of my oldest son's mouth was, "Oooh, now I can buy a car!" 
LOL! No Buddy, I don't think so! My younger son wanted to go to Walmart and buy up the whole candy section! 
All I could think was, WOW....just WOW! LOL!
He wasn't thinking about applying for anything, and probably wouldn't have. Knowing that he'll need credit in the future, I set him up now. I'm making sure he'll be fine later. Maybe it's not the path you would take, but it's my approach for my children.
He knows he has his own card now, and is excited about it. He was also excited when I told him his Equifax credit score was a 773. (Got that from the paperwork Cap 1 sent.) He gave me a big hug when I told him that. Again, that's something he's not thinking about....but it's being taken care of.
He treated his Mommy to dinner tonight, signed the receipt and gave the tip. (Momma taught him good!) When we got home, the card was put up. He knows he won't be taking that card with him to school. He's not ready to carry a $5000.00 limit around with him. We conversate about credit and money issues all the time. That's why he'll be taking (My Amex) card, not his, that he is an AU on, to school with a $200.00 limit. I say that because, it's in his name, but I'm responsible for the payments. I'm the primary card holder, he's just authorized to use it.
You may not agree, but I've seen grown men with absolutely no credit, in their 30's, because they use cash only. I got my brother's credit profile rockin', and I make sure before the due dates of his cards, he put's the money is in his bank account (that I made him get...and yes, he's 30 something), and I pay them off for him. I guess it's just in my blood. So many people wish they had the start I'm giving my boys. Although, I understand your statement, and concern...I really do.