My College:

Should you add your student to your credit card?

Erica Sandberg

If you have a credit card, there’s a good chance you can add your college student to the account. Set up is easy: just call the company and explain that you want give your student permission to use your account as an authorized user. After providing their basic identification information, the issuer will send a card imprinted with your student’s name to whatever address you request.

However, while sharing your credit card can be a mutually beneficial arrangement, it can also cause serious and long-term problems. Here’s how to know if adding your student to your account is right for the both of you.

The account is yours — only and always.

Because the account was granted to you based on your credit history and financial capability, you retain total ownership of it. All charges made by an authorized user will be yours to handle. If the balance is too large to delete quickly (or at all), you’ll be the one in trouble. Finance fees will rack up, and fast. If you can’t make the payments on time, your credit rating will sink. Payment history, and the amount you owe compared to your credit limit, are the two biggest credit scoring factors.

Managing the account will always be your responsibility. Keep this fact in mind before and after adding your student as an authorized user.

Clearing the income hurdle

If you or your student are confused about the income issue, that’s understandable. What is and isn’t considered acceptable income can seem confusing. It’s not, though. All credit card issuers require that an applicant has the financial means to repay a debt. The credit line will be based largely on the amount coming in and going out.

Any money your student makes from a job is, of course, eligible. It may be from a position where they get a paycheck, such as working at a store or cafe. Estimated tips are fine to include, as long as the amount is realistic. Earnings made from working for an individual, such as a regular tutoring or babysitting assignment, are also allowable.

Your student can include trust fund distributions and a guaranteed cash stipend that you or someone else provides. Scholarships and grants can also be thrown into the income mix.

So what’s excluded? Student or any other loans, because they are are liabilities, not assets. Non-guaranteed financial gifts should not be stated as income either. Think of it this way: being honest and conservative about cash flow not only protects the lender, but the borrower. You don’t want your student to get into the habit of hoping money will come through when odds are it won’t.

So why might you make this potentially risky decision? There are a number of good reasons to make your student an authorized user:
  1. Your student won’t need a job to get a card. College students over the age of 18 or 19 can get their own credit card if they can prove financial independence, but it’s not guaranteed. As an authorized user, your student doesn’t need to qualify. The card will simply be issued and they can start to use it immediately.
  2. Young students can have a card. The age restrictions for authorized users is as low as 13. To qualify for an individual credit card a person needs to be 18 (and in some states 19).
  3. Jump start a credit history. Most issuers report account activity to all cardholders’ credit reports. As soon as the account shows up on your student’s credit reports, their credit history will begin.
  4. You can control spending. You may have a $10,000 limit on the card but if you’re only comfortable letting your child charge $500 a month, you may be able to arrange that. Not all issuers allow this, so check.
  5. Privileges are easily revoked. This is an exceptionally positive feature of authorized usership! As the sole account owner, you won't be locked into your child having permanent access to your account. With a quick call to the issuer, you can end the deal.
  6. Extra rewards points. Depending on the credit card, you may get up to 5,000 rewards points (a $50–100 value) per authorized user. These offers are time sensitive, though, so you’ll usually need to add your student within a few months of the account being granted.

Prepare yourself.

If all this sounds wonderful, great — but wait. You need to find out if your current credit card company allows authorized users. If yours doesn't, consider applying for one that does. Review many different credit card offers. In the “terms” section of an application, you should see detailed information about authorized users, and whether or not rewards points are available for adding them.

Evaluate the student you’re considering adding very carefully. Has your daughter or son been responsible with money in the past, especially recently? Do they have experience using an ATM card and tracking their purchases? If you have any doubts or misgivings, do not make your student an authorized user.

Prepare your student!

If you’re confident that your student is ready to wield a piece of plastic that’s attached to you, move forward. Start by stating your expectations. List your rules in writing:

  1. Shopping. If you’d like to put restrictions on what your student can buy with the card and where they can use it, make that known. For example, you may not want the card used for alcohol or for a spring break trip.
  2. Limits. How much is your student allowed to charge each month?
  3. Repayment. If you want to be reimbursed for certain types of purchases, make that known.
  4. Consequences. What will happen if the rules aren’t followed? Repercussions may include repayment with fees, claiming a piece of your student’s property until the debt is paid off, taking the card away for a fixed period of time, or revoking authorized user status altogether.   

Have your student read the contract. A discussion and adjustment of terms may result, but once you reach a consensus, both of you should sign the agreement.  Such a document provides all parties with clarity and security.

After that, your student is ready to charge! Hand the card over. All you need to do is make sure the account is properly managed. Keep the balances low and send all payments on time.

In as little as a year, your student’s credit rating will enjoy a huge boost, and with a verifiable income source, they’ll be eligible for a wide variety of credit cards. When they are approved for a personal account, you may snip the authorized user cord. Your good deed is done.

Erica Sandberg is a consumer finance expert and freelance journalist whose work appears in a wide variety of outlets including Bankrate,, The San Francisco Chronicle and the National Education Association Member Benefits website. Erica hosts a podcast, Adventures With Money, and for 10 years has been resident personal finance authority for KRON-4 News in San Francisco. An updated edition of her indispensable book, Expecting Money: The Essential Financial Plan for New and Growing Families, is available now.
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