Parents give their children a lot of credit.
Almost one in 10 parents (8%) with children under 18 say at least one of these children has a credit card, according to a CreditCards.com report released Monday.
And other data show that the numbers can be even higher: According to a survey released in 2017 by the finance company T. Rowe Price. Almost one in five (18%) parents of children aged 8-14 say their children have a credit card, according to data released in 2017 by the finance company T. Rowe Price. It is 13% of 8-9 year olds; 18% of 10- to 12-year-olds and 19% of 13- to 14-year-olds do the data.
Other parents borrow their kids' cards: More than half of Americans with children under the age of 1
Even worse: Among parents who have a credit card, 21% said their children used their parents' cards without permission, the CreditCards.com survey revealed.
Of course, children with credit cards not only go into a bank and require a credit card – card issuers have age limits, after all. Instead, many parents add their children to their card as an authorized user, which means their children are allowed to use their card, explains Kimberly Palmer, Nerd Wallet's credit card expert. Or they can only give their own cards to their children. (Some cards have no minimum age to add someone as an authorized user, others have it, usually about 13 years or older.)
Parents give and allow their children to borrow their cards for various reasons, experts say: Two make it easier for kids to buy things when they are away from mother and father; so they have emergency money if they need it; to build children's credit; and to help teach them financial responsibility. But should you do that? Here's what you need to consider.
How old and mature is your child? Just because other parents are giving – or letting the kids borrow – credit cards for eight years, doesn't mean you should. "It's hard to imagine a scenario" where it makes sense to give an 8 or 9-year-old credit card, says CompareCards.com's Matt Schulz. He says the later adolescents are probably the most appropriate to give children a credit card – but this is entirely dependent on how mature and responsible they are with money. "There are 16-year-olds who can be responsible enough, but many 19-year-olds who are not," he says. Do things like looking at how your child handles his or her allowance, for example – does he use it quickly and ask for more? – or how he or she behaves when shopping together to help you figure it out.
It is also not a "one-size-fits-all answer" when a child is ready to borrow a credit card, Schulz says. "There are some 10-year-olds who are mature enough to handle it, and there are 17-year-olds you shouldn't leave within 100 yards of your credit card. Finally, it's about knowing your child and setting expectations."  Have you set spending limits? When giving children a card, "to protect their parents' finances, it's a good idea to choose a card with a low credit line and also to be sure to track your purchases carefully – in some cards you can sign up for Warnings – to make sure your child is not exceeded, Palmer says. "It is important to agree on what is acceptable to use in advance, and then use the card to have multiple debt, budgeting, and accountability calls."  Setting of spending rules is also important for borrowing: "Before you borrow the card, make sure your son or daughter knows what you expect from them and what the limits are, so be aware of what the consequences will be if they do not live up to its end of bargain, says Schulz. "It's important to have these calls in advance. It can make it difficult to talk around the dinner table, but it's far better than waiting until the disaster strikes and the excitement is at its peak."
Have you communicated the pros and cons? It is important that children understand both the risk of credit cards – and the benefits. Clearly communicate risks such as the cost of interest in simple examples (say how buying a $ 100 pair of sneakers can end up costing twice), as well as how late the payments and other issues on a credit card can affect your credit score. Also, communicating benefits, such as how to pay the bill on time, can increase your credit score and why it is important.
And make sure you borrow or get a card that you've let them practice using it before letting them borrow in advance. "I believe in talking to children about money very early in life and giving some early responsibility too. Let them put in the credit card in the slot. Let them buy something with their own money and know they will want later that they didn't. These things give the kids the opportunity to make mistakes when the bets are low, so they will be more comfortable taking smart decisions when they are older and there is more on the line, Schulz says.
Have you considered other options? When you give children a card, Schulz says that it might be good to start the kids with something like a prepaid card – where you put a certain amount of money on the card, and that's what the child can use – before giving them a Another option is a secured credit card, where you deposit a cash deposit (say $ 1000) and that's what you can charge on your account.
This story was originally published in 2017 and has been updated .