Older children to get greater benefits from credit cards

The credit lending standards might have tightened even as younger credit card customers find themselves in a more difficult situation when it comes to availing credit card offers. The credit crunch has resulted in a situation where those older than 18 years are finding it hard to get a new credit card. New credit card laws that have been introduced this year mandate that for card applicants who are under 21 years there needs to be a co-signor. Younger credit card customers have to get the permissions from their parents before trying to obtain a credit card. The other alternative is to offer proof that they can support themselves through their own income.

According to many reports, one of the best options is to continue the link up of accounts between children and parents. A joint account could also helps where both children and parents are responsible for the transactions that are incurred from the credit card account. The downside of this arrangement could be that either side could suffer from the adverse effects of reckless spending or a bad credit history. However, when used properly, this will work out very well for children as they can utilize the credit history of their parents to start with and try building their own credit history slowly.

Parents have another good option in this context. They can choose to make the children an authorized owner of an account. In that case, the credit card issuer, based on the permission from the parents, can issue to a credit card to a minor through the account which will just act as an extension of the accounts of the parents. The biggest benefit of this is that parents can set the credit limits on these cards and could track down the monthly expenses too. The monthly bills can be set up separately from that of the parents too. This can help managing both the bills and allow the children to build on their credit learning from their parents about the benefits of building up their own credit history. If maintained responsibly even the parents will benefit from the added consistency and history of the new credit card. The major drawback still remains that if children who own these credit cards miss their payments and are reckless with the finances and parents don’t monitor the situation carefully, it could hurt their credit history too.