A healthy credit profile and a good credit score are the financial equivalents of Willy Wonka’s golden ticket: They can open up favorable mortgage rates, qualify you for the best rewards credit cards, help you rent an apartment and more.
These are, of course, adult milestones — decades down the line if you’re, say, a toddler who’s more interested in Bluey than loans. But after I learned the importance of building credit the hard way, I decided to set my daughter up for success. I’ve added my 2-year-old as an authorized user on my Citi Double Cash® Card to ensure she doesn’t have a similarly hellacious experience.
Here’s why letting my 2-year-old have a credit card is not as outrageous as it might seem.
To get credit, you must have credit
I didn’t get a credit card until age 23. I never thought I needed one; I paid cash for everything.
It was only after two trips to Asia that I stumbled upon the magical world of credit card travel rewards. Bitten by the travel bug, I wanted to keep exploring the world but didn’t have the disposable income to fund it. As I feverishly Googled how to travel on the cheap, I discovered that other people were using bank-issued rewards, airline miles and hotel points to pay for their vacations. It was a revelation.
My research ended with the conclusion that the Chase Sapphire Preferred® Card was the perfect first credit card for my needs. There was just one problem: I didn’t have a credit score, which meant I couldn’t qualify.
“Responsible” spending habits aren’t aren’t the only thing that matters in your financial profile. You need responsible credit habits. Banks want to know that you can handle the act of borrowing money and paying it back. If you use cash for everything — like I did — you’ve got no track record.
It will help her when she’s older
Wielding a bottom-of-the-barrel secured credit card, it took me more than a year to cultivate a credit profile worthy of the card I actually wanted. So, in preparing my little daughter for a healthy financial future, I’ve added her as an authorized user to my no-annual-fee Citi Double Cash® Card. This means she’s a part of my account: not an account owner, but someone who can use my credit line.
When you add someone as an authorized user, your account information (typically) appears on their credit report, as well. Adding my daughter as an authorized user will generate for her a credit profile — even at age 2 — giving her healthy credit long before she needs it.
Of course, some issuers have restrictions as to just how young an authorized user can be. A quick rundown of major issuers’ rules:
Authorized user age policy
Must be 13+ years old (only reports to credit bureaus for 18+ year old users)
No minimum age (reports to credit bureaus)
No minimum age (reports to credit bureaus)
No minimum age (only reports to credit bureaus for 18+ year old users)
No minimum age (reports to credit bureaus)
Must be 15+ years old (reports to credit bureaus)
Must be 13+ years old (reports to credit bureaus)
It’s a teachable moment
This isn’t a choice to take lightly. In fact, Alejandra Rojas, a finance professional and money mentor with The Money Mindset Hub, an online platform designed to coach women entrepreneurs, adds a valid warning for parents who implement this strategy.
“Your credit behavior with that credit card will affect your and their credit score,” she says. “Besides, you are setting a precedent for your child on how a credit card should be managed.”
At age 2, my daughter is still several years away from understanding the ins and outs of personal finance. Her physical card currently gathers dust in the back of a dark sock drawer (authorized users’ cards typically aren’t canceled for inactivity unless the primary cardholder stops using theirs). But as she grows up, I can use the credit card as an opportunity to educate her as to how money works.
So, too, can other parents: “Make sure you’re teaching your child what a credit card is, the different dates you should pay attention to, the amounts you should pay and the amount you’ll authorize,” Rojas says.
Several rewards credit cards also come with perks for the authorized user. By adding your child, you (as the parent) may be able to save money on things like airport lounge access.
All to say: As wild as it sounds for a 2-year-old to hold a credit card, there are a handful of sensible motivations that can make it a smart financial move for your entire family.
More from Money:
Kind but Risky: Before Adding an Authorized User to Your Credit Card, Consider These Crucial Factors
Free Weekly Credit Reports Are Now Available Permanently
Kids Savings Accounts: A Complete Guide for Parents