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Getting Personal: Starting a financial life
Getting Personal
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On tap this week: A listener wants to list his young children as authorized users on his credit card to start their credit history, an engaged couple wonders how they should deal with hefty student loans and a twenty-something wants to know how to start his financial life on the right foot.
In regards to the question from the viewer about adding his child to a card when they are children, he referenced the episode where the woman mentioned her mother having done that when she was three. I believe that episode was the one where I was asking the question to Chris and David. The caller had it in error--my mother added me when I was 19 and headed to Europe for a year abroad and I would need access to my college savings (my mom was managing the money). I wanted to clear this up as it sounds ludicrous to add a 3 year old to a credit card. In addition to having had been added to this card, I also had built up a good credit score throughout high school when I worked at a department store. In order to get our employee discount, we had to have a credit card and they approved it for us as employees even though I was 17. This paved the initial way to obtain more credit and since then, I've never paid late and keep my balances low (if at all). I hope this helps and I applaud you for teaching your children about money at a young age. It will definitely help as they grow up!
Regarding the topic of starting a financial life (9-3-11), I think it is a bad idea to invest in the Stock Market just for experience with money. Why not suggest a U. S. government bond fund or something that is likely to yield a dividend if you want a better return than you would get with a FDIC insured bank account.
Are you sure that adding a Minor child as an authorized user will help 15-20 years later?
My father added a friend as an authorized user on his credit card to help her out. When they split he got the card back, but never updated the account. Years later he married another woman, and $80,000 later he declared bankruptcy. Any guesses who the bank asked to pay the balance on the credit card?
Seems like this is a sword that could cut both ways. If you know for certain that you will not have any credit problems for the next 15 years then it could help. But one patch of bad luck and you could send your child out into the world carrying a bigger burden.
