Adding child to credit card as authorized user

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Topic Author
Calico
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Adding child to credit card as authorized user

Post by Calico » Fri Feb 14, 2020 10:32 pm

I think I might want to add my 15-year-old daughter as an authorized user to my credit card and I am just trying to decide if I am overlooking something or if there is a pitfall I am not considering.

A little history. She is going to Europe this summer with an honor band. It's a three week trip. In June, I decided she would need a debit card and a credit card all her own for the trip. I didn't want to give her my debit card since it's linked to all my accounts and a lot of money. So I opened an account for her at a local credit union that is for the school system (for teachers and students). A benefit of it is that students in the school system get free checking accounts with no need for a minimum balance or regular deposits. I also got a credit card for my daughter (in my name, since she is too young) and added her as a user so she has a card. It has a low credit line. It's just enough for her for her trip.

My daughter, with my permission, has used the cards several times. I want her to practice and know how to use them. I've had her make deposits at the ATM and withdraws with the debit card. I encourage her to use the credit card for some spending. She has taken it on a couple of school trips and used it wisely. She always asks first before using it and she never overspends. I usually pay most of the purchases on it (it's stuff I would have given her cash for in the past--like for meals on her band trip), but she also makes "personal" purchases and always pays me back for that spending. She's never lost the card and keeps in one of those "scan free" envelopes so people can't steal the number.

The problem I am having is the the credit union. I thought I would be able to use their app to deposit checks and pay off the card. It doesn't seem to work most of the time. It was even down for several weeks this past fall. They supposedly fixed it, but it's still hit or miss. It's not me, reviews of the app are full of complaints about the glitches. So we always have to go to the credit union ATM to deposit checks. The credit card can't even be accessed by app at all. So for practical purposes, there is no mobile banking.

But the website is flaky too. The passwords keep resetting and I have to keep saying "forgot password" and set everything up again. Again, other uses complain about this and I don't have this issue with other financial sites. It's them, not me. It sometimes takes a day or two to access the account as I wait for a reset. So paying the credit card bill online is a chore. I got this month's bill early this week. Tonight I noticed it's due next week. I was afraid a mailed payment would be late, I couldn't access the website (again) so I ended up calling them and paying over the phone and it cost me $5.

I am just to the breaking point on this. This credit union is horrible. It's just too much trouble to pay the bill. I figure, my daughter has proven herself trust worthy, I will just add her to my Quicksilver card and let her use that. I will keep her credit union checking account and debit card because it's free and she can use it for cash withdraws in Europe (that seems to work okay). I will just have her deposit a large amount a month before she leaves so she's covered and I don't have to jump though hoops to deposit money.

I have basically just the Quicksilver card. I have a backup card, but the Quicksilver is the main one I rely on and it has a high limit. It's the one I am thinking of adding my daughter to. What's nice is it has a feature where every time anything is charged, I get a text alert (the credit union card doesn't offer that feature, I asked). So I know right away if something is amiss. I use my card for everything I can because of the cash back and pay it off every month. It's so easy to use, easy to track, and easy to pay off. I can do everything in the app if I want. I never have issues with that app or their website. I think I rather have my daughter use Quicksilver rather than me jump though hoops each month with "her" card just to try to pay the thing off.

So am I overlooking something? I don't think I am. But I am not sure or I wouldn't ask here. I think the main "risk" would be my daughter over spending, but she's been excellent with her card. I think she's proven herself. The other risk might be if my daughter loses the card. But so far, she's not done that either. She's very smart with her wallet.

One last (maybe) issue. While she's on her trip, I am going on a vacation too, with my mom. I plan on mainly spending cash as I read that's more typical in Germany (where I am going). But she and I will be using the same card at the same time, but in different countries. I am not sure if that will be an issue. I am hoping I will just be able to call the bank and let them know to expect it.

HomeStretch
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Re: Adding child to credit card as authorized user

Post by HomeStretch » Fri Feb 14, 2020 10:43 pm

I think your plan to add child to one of your credit cards as an authorized user makes sense.

I added my child at age 16 as an authorized user to my oldest mastercard mainly for gas purchases (new driver). Child is responsible. It also gave child a credit history/credit score bump which helped child be approved for own Fidelity Visa card as a college senior.

mega317
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Re: Adding child to credit card as authorized user

Post by mega317 » Fri Feb 14, 2020 11:07 pm

It sounds like you have a wonderful child and you really can't go wrong.

I would lose the credit union. Plenty of ways to get free checking, especially for students, without any headaches that make you want to type 3 paragraphs on the internet about it.
https://www.bogleheads.org/forum/viewtopic.php?t=6212

Topic Author
Calico
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Re: Adding child to credit card as authorized user

Post by Calico » Fri Feb 14, 2020 11:15 pm

Thank you to both of you :)
mega317 wrote:
Fri Feb 14, 2020 11:07 pm
It sounds like you have a wonderful child and you really can't go wrong.

I would lose the credit union. Plenty of ways to get free checking, especially for students, without any headaches that make you want to type 3 paragraphs on the internet about it.
Okay, your comment made me laugh at myself. I did spend paragraphs complaining on the internet. haha. But it was a bit therapeutic. This credit union is really that frustrating. You are right, I need to look into other free student checking accounts too.

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celia
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Re: Adding child to credit card as authorized user

Post by celia » Sat Feb 15, 2020 3:30 am

Since it appears you and your child will be traveling in different countries at the same time and both will be accessing the same US bank(?) account for foreign cash from the ATMs, you should check with the bank now to ask if it will be a problem. Besides transactions coming from different locations, if one of you withdraws the daily maximum, the other won’t be able to withdraw anything until the next day. Seems all of this would go away if you charged almost everything to your cc. (Of course, some things need to be paid in cash, such as a bus ride or ice cream cone from a street vendor.)

You should also know that a few credit cards, such as Capital One Visa, don’t charge for currency conversion for charges made on their card. Those fees can really add up when you charge something in Euros but pay off the cc with US dollars.

A-Commoner
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Re: Adding child to credit card as authorized user

Post by A-Commoner » Sat Feb 15, 2020 4:20 am

Is the child’s spending through your credit card considered gifts to her for tax purposes? Let’s say her spending exceeds $15k per year. Will you have to file form 709 to the IRS to report this gift?

fujiters
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Re: Adding child to credit card as authorized user

Post by fujiters » Sat Feb 15, 2020 4:24 am

celia wrote:
Sat Feb 15, 2020 3:30 am
Since it appears you and your child will be traveling in different countries at the same time and both will be accessing the same US bank(?) account for foreign cash from the ATMs, you should check with the bank now to ask if it will be a problem. Besides transactions coming from different locations, if one of you withdraws the daily maximum, the other won’t be able to withdraw anything until the next day. Seems all of this would go away if you charged almost everything to your cc. (Of course, some things need to be paid in cash, such as a bus ride or ice cream cone from a street vendor.)

You should also know that a few credit cards, such as Capital One Visa, don’t charge for currency conversion for charges made on their card. Those fees can really add up when you charge something in Euros but pay off the cc with US dollars.
+1. I always carry 2-3+ credit cards from different banks in case one gets flagged for suspicious transactions. This happens to me a couple times a year (almost always while traveling). Quicksilver doesn't charge foreign transaction fees, so existing card is fine. I'd make sure to have another backup card from a different bank (for what it's worth, I've had no problems with flagged transactions with Chase. Citi and Bank of America cards have had more frequent flags).
“The purpose of the margin of safety is to render the forecast unnecessary.” -Benjamin Graham

SchruteB&B
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Re: Adding child to credit card as authorized user

Post by SchruteB&B » Sat Feb 15, 2020 9:04 am

I have my teens as authorized users on Capitol One’s Quicksilver. Another excellent perk is that if you see any unauthorized spending occur by your teen, you can go online and “freeze” that card instantly. Always gives me peace of mind to have a backup plan when dealing with teens!

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Re: Adding child to credit card as authorized user

Post by Jack FFR1846 » Sat Feb 15, 2020 9:13 am

You say you only have 2 credit cards. I guess people do that, but why? My recommendation is to apply for another Cap One card. Most of them have sign up bonuses so might as well get that. I'd apply for another card also, AFTER you get the new Cap One card. Just so you've got back up. I'd suggest Discover where you will get a bonus for signing up and they double your cash back for the first year.

When you apply for the Cap One card, or shortly after receiving, add your daughter as an AU and reduce the credit limit on the card.

Perhaps explore other credit unions. I've been with DCU for well over 30 years and it's the best thing since sliced bread. I get 6.17% on the first $1k of my primary savings, 1.5% on checking, 1.55% on money market and 1.95% on LTD. They are a part of the co-op network so you can walk into most any credit union branch and use it as their own. They also do everything that any Bank of America can do with the exception of safe deposit boxes. The mobil app is great, the website works well, linked accounts seamlessly show with yours on one page.
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Topic Author
Calico
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Re: Adding child to credit card as authorized user

Post by Calico » Sat Feb 15, 2020 10:54 am

A-Commoner wrote:
Sat Feb 15, 2020 4:20 am
Is the child’s spending through your credit card considered gifts to her for tax purposes? Let’s say her spending exceeds $15k per year. Will you have to file form 709 to the IRS to report this gift?
I've never heard of this before. I guess I just assumed that paying the expenses for dependent children is a given, not a gift. Are you sure about this?

Topic Author
Calico
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Re: Adding child to credit card as authorized user

Post by Calico » Sat Feb 15, 2020 10:59 am

celia wrote:
Sat Feb 15, 2020 3:30 am
Since it appears you and your child will be traveling in different countries at the same time and both will be accessing the same US bank(?) account for foreign cash from the ATMs, you should check with the bank now to ask if it will be a problem. Besides transactions coming from different locations, if one of you withdraws the daily maximum, the other won’t be able to withdraw anything until the next day. Seems all of this would go away if you charged almost everything to your cc. (Of course, some things need to be paid in cash, such as a bus ride or ice cream cone from a street vendor.)

You should also know that a few credit cards, such as Capital One Visa, don’t charge for currency conversion for charges made on their card. Those fees can really add up when you charge something in Euros but pay off the cc with US dollars.
No, we will each have our own separate checking accounts and debit/ATM cards to get cash. I never once used a credit card for a cash withdraw. In theory, I know how to do it, but I don't even know what my pin is (nor do I ever care to use a credit card to withdraw cash). It's kind of expensive.

We would be using the same credit card for credit purchases however. There is no daily maximum, just the credit card limit which is high enough that I've never come anywhere near to it, or even a quarter of it. I suppose my concern is the card possibly getting locked up for suspicious activity. But I can call ahead and clear that with them. I think Quicksilver doesn't just stop a card either. Anytime it's ever been flagged, they text me and I have some time to okay a transaction before the shut down the card. But I don't know if they always so that.

There is no currency conversion on the card. I've used it overseas before.

Topic Author
Calico
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Re: Adding child to credit card as authorized user

Post by Calico » Sat Feb 15, 2020 11:00 am

SchruteB&B wrote:
Sat Feb 15, 2020 9:04 am
I have my teens as authorized users on Capitol One’s Quicksilver. Another excellent perk is that if you see any unauthorized spending occur by your teen, you can go online and “freeze” that card instantly. Always gives me peace of mind to have a backup plan when dealing with teens!
This is good to know (that I can freeze one card if need be). I trust my daughter and she's never given me a reason to worry, but then again, that teen brain can do some weird things.

yohac
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Re: Adding child to credit card as authorized user

Post by yohac » Sat Feb 15, 2020 11:06 am

Calico wrote:
Sat Feb 15, 2020 10:54 am
A-Commoner wrote:
Sat Feb 15, 2020 4:20 am
Is the child’s spending through your credit card considered gifts to her for tax purposes? Let’s say her spending exceeds $15k per year. Will you have to file form 709 to the IRS to report this gift?
I've never heard of this before. I guess I just assumed that paying the expenses for dependent children is a given, not a gift. Are you sure about this?
You are correct. Gift tax doesn't apply to money given to dependents.

Topic Author
Calico
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Re: Adding child to credit card as authorized user

Post by Calico » Sat Feb 15, 2020 11:12 am

Jack FFR1846 wrote:
Sat Feb 15, 2020 9:13 am
You say you only have 2 credit cards. I guess people do that, but why? My recommendation is to apply for another Cap One card. Most of them have sign up bonuses so might as well get that. I'd apply for another card also, AFTER you get the new Cap One card. Just so you've got back up. I'd suggest Discover where you will get a bonus for signing up and they double your cash back for the first year.

When you apply for the Cap One card, or shortly after receiving, add your daughter as an AU and reduce the credit limit on the card.

Perhaps explore other credit unions. I've been with DCU for well over 30 years and it's the best thing since sliced bread. I get 6.17% on the first $1k of my primary savings, 1.5% on checking, 1.55% on money market and 1.95% on LTD. They are a part of the co-op network so you can walk into most any credit union branch and use it as their own. They also do everything that any Bank of America can do with the exception of safe deposit boxes. The mobil app is great, the website works well, linked accounts seamlessly show with yours on one page.
Technically I have three. I have the one I always use, my backup, and my "daughters card" (which is really in my name, she's technically an authorized user). I don't know why I would need more. Two seems like enough: a main and a spare (and I have that third too from the credit union). The one time I had to report the card number stolen (I wasn't really sure, it was a precaution), I was able to use the backup card and just take cash out of the ATM for the few days it took to get a replacement. I am not sure what good multiple cards would do aside from being more stuff to keep track of. Overseas I will have the main plus the two spares as I don't plan on closing the credit union credit card until after the trip... just in case because others said it's good to bring 3 cards. Although when I went to Europe last time, I just had the two.

Maybe it's because my card has a $20k limit. I never come anywhere near that each month. At the most, I might have $2k-$3k on it if I do something like buy international plane tickets. But typically it's $500-$700 a month (and I put everything on it I can: gas, clothes, groceries, etc). The backup card also has a $20k limit. The large limit is one of the concerns I have with putting my daughter on the card, but if the other poster is right, I can catch overspending in seconds (since I get a text for each purchase) and can stop the use of just her card.

Your credit union sounds great! I will check it out. I don't get anywhere near 6.17% on savings. I am currently just getting 1.5% (but that's a bank, I don't use the credit union. Their rates are lower than my bank rates).

JBTX
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Re: Adding child to credit card as authorized user

Post by JBTX » Sat Feb 15, 2020 12:14 pm

Adding a child to an existing card makes sense if they are trustworthy. I wouldn't hesitate to do it. One benefit is it helps build their credit. You can set alerts to monitor spending.

Some amex cards allow you to add users and set spending limits. But amex isn't taken everywhere

Lose the credit union. There are so many financial choices why waste time with one that is incompetent?

A-Commoner
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Re: Adding child to credit card as authorized user

Post by A-Commoner » Sat Feb 15, 2020 3:31 pm

yohac wrote:
Sat Feb 15, 2020 11:06 am
Calico wrote:
Sat Feb 15, 2020 10:54 am
A-Commoner wrote:
Sat Feb 15, 2020 4:20 am
Is the child’s spending through your credit card considered gifts to her for tax purposes? Let’s say her spending exceeds $15k per year. Will you have to file form 709 to the IRS to report this gift?
I've never heard of this before. I guess I just assumed that paying the expenses for dependent children is a given, not a gift. Are you sure about this?
You are correct. Gift tax doesn't apply to money given to dependents.
I don’t know the answer, seeking illumination myself. So if you’re right, you can give your 15 year old dependent child $1 million and that won’t be counted as a gift and will not count against your lifetime gift limit?

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Bogle7
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credit card and child

Post by Bogle7 » Sat Feb 15, 2020 3:35 pm

1. Get a better credit union. I am extremely happy with my CU of 40+ years.
2. We got our daughter her own card when she was 12. She still has that card at 34.

Spirit Rider
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Re: Adding child to credit card as authorized user

Post by Spirit Rider » Sat Feb 15, 2020 3:58 pm

A-Commoner wrote:
Sat Feb 15, 2020 3:31 pm
yohac wrote:
Sat Feb 15, 2020 11:06 am
Calico wrote:
Sat Feb 15, 2020 10:54 am
A-Commoner wrote:
Sat Feb 15, 2020 4:20 am
Is the child’s spending through your credit card considered gifts to her for tax purposes? Let’s say her spending exceeds $15k per year. Will you have to file form 709 to the IRS to report this gift?
I've never heard of this before. I guess I just assumed that paying the expenses for dependent children is a given, not a gift. Are you sure about this?
You are correct. Gift tax doesn't apply to money given to dependents.
I don’t know the answer, seeking illumination myself. So if you’re right, you can give your 15 year old dependent child $1 million and that won’t be counted as a gift and will not count against your lifetime gift limit?
There is a big difference between parental support for a dependent and outright gifts.

Any routine and customary expenses for a dependents health, education and welfare are not gifts. Welfare is an expansive category including; food, shelter, clothing, amenities, activities, etc... I would maintain; internet access, laptops, tablets, smartphones, etc... are a virtual necessity (for good or bad). This trip to Europe is clearly not a gift. It is both educational and a cultural enrichment activity. All well within a parental responsibility.

On the other hand; cars, homes, substantial cash, etc... are clearly gifts even if made to a dependent.

RudyS
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Re: Adding child to credit card as authorized user

Post by RudyS » Sat Feb 15, 2020 4:05 pm

A-Commoner wrote:
Sat Feb 15, 2020 3:31 pm
yohac wrote:
Sat Feb 15, 2020 11:06 am
Calico wrote:
Sat Feb 15, 2020 10:54 am
A-Commoner wrote:
Sat Feb 15, 2020 4:20 am
Is the child’s spending through your credit card considered gifts to her for tax purposes? Let’s say her spending exceeds $15k per year. Will you have to file form 709 to the IRS to report this gift?
I've never heard of this before. I guess I just assumed that paying the expenses for dependent children is a given, not a gift. Are you sure about this?
You are correct. Gift tax doesn't apply to money given to dependents.
I don’t know the answer, seeking illumination myself. So if you’re right, you can give your 15 year old dependent child $1 million and that won’t be counted as a gift and will not count against your lifetime gift limit?
If you GIVE that million, it sure looks like a gift. If you give her money to spend on education, food, clothing, lodging, etc., that looks like SUPPORT. And in my opinion, that travel is educational in nature. There likely is a grey area in between.
So you have heard from an anonymous internet source who is not a tax professional.

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ram
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Re: Adding child to credit card as authorized user

Post by ram » Sun Feb 16, 2020 11:58 am

My American express card allows me ( the main user) to set individual limits for additional users, a feature I have used when my kids were teenagers.
Ram

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