I am a big fan of teaching your kids good financial habits and starting them off early on a good track. One idea that I am a big fan of is giving your teenager a credit card, which you can use to teach them good habits and help them build credit.
Contrary to what you may think, giving your teen a credit card may benefit you as well. Here’s how:
Sign Up Offers
Some credit cards offer a sign-up bonus for adding authorized users, such as up to 20,000 MR points after a small minimum spending requirement with the American Express Platinum Card.
This could single handedly book a one way ticket to Europe from the U.S. or a round trip domestic flight within the states, not too shabby for not having to open a new account.
If you have two kids and added them both as authorized users, a similar offer could net 40,000 points, worth $800 by some valuations, which is more than some sign up bonuses alone. My family did something similar and used the points for 2 round-trip tickets to Aruba with Delta.
Additional Card Benefits
Some cards give each authorized user similar benefits to the primary card-holder. For example, if your credit card offers you TSA PreCheck or Global Entry as a benefit, many credit cards also give your authorized user the same perk.
By giving your teen a credit card and them getting the same time-saving benefit as you, imagine how many hours in customs or security it could save. When I was in high school, I benefited from having both of these services while traveling, which is a $100 savings every 5 years.
Additionally, just because your card offers lounge access doesn’t necessarily mean that all your family members will be able to get in for free. However, if your child is an authorized user, he or she may have access as well, making everyone a happy camper. As of Feb. 1, Amex just removed guest privileges form many Platinum cards to Centurion Lounges, meaning that giving your kids their own authorized user cards is the best way to get them into the lounge with no entry cost (the cost to add up to 3 authorized users to the card is $175 per year).
Card-linked Offers
Another great benefit of making your kids authorized users is that they can get their own offers. For instance, if you see an Amex Offer on your card that you get $10 in statement credits when you spend $50 on Amazon, you could use that offer multiple times to get more money back in your pocket.
There have been multiple times where my family has used the primary account and two authorized users to get 3 times the discount. When we stayed at a hotel that was paid (I know, the audacity of me to pay for a hotel instead of using points) and the cost of the hotel totaled a little over $900, we used three cards with three offers, each offering a $60 statement credit when you spend $300.
After the 3 uses, we received $180 off our bill. Had we not had the two extra authorized users, we would have been out of pocket $120. The value of the multiple offers is variable, but they can add up to be significant sums of money in your pocket as opposed to someone else’s.
The Last Point
You do not need to physically give your kid a credit card in order to sign them up as an authorized user, but the benefits of signing them up, can be significant. Not only does tt helps them with their credit, but it can help you to save money in many different ways.
The main reason to get your kids a cc is to help them build a credit rating. All your examples are relevant for AmEx. AmEx is unique in that your kid gets their own cc #., thus building th credit rating. Your reference to Centurion lounge access is misleading because of the $175 fee for the 1st 3 AU added.
I completely agree, the largest benefit is building their credit. While Amex offers/card linked offer are mostly relevant for Amex, other perks are available to AUs such as lounge access with Venture X.