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Would the gift of credit lead to too much credit card debt?

When children arrive at the momentous milestone of graduation, many parents may wonder what makes an appropriate gift. One question posed was whether the gift of credit would be a sound choice. However, it is important to ensure that a family doesn't incur too much credit card debt in the process. Washington families may benefit from reading about some of the pros and cons of gifting a child with credit.

Since a parent cannot open a credit card account for their adult offspring, they can choose to name them as an authorized buyer on their current bank cards. Taking this step can be a smart method of educating young people in the wise use of credit accounts. The family may choose to allow the child to charge certain expenses without consequences, while limiting entertainment charges by requesting the spender to pay them back.

As long as the parents' accounts are in good standing, allowing a child to use the card within reason can also enable them to build their own good credit history. In addition, having access to a credit account can ensure that the inconvenience of stolen or lost cash and paper checks is avoided. There are downsides, however, that could be taken into consideration, such as the possibility that the young person abuses the privilege and winds up causing the parents to carry too much of a debt burden. Moreover, some lending institutions may charge excessive annual fees for issuing additional cards to authorized users.

In the end, it is up to each family to weigh the benefits of allowing their child access to their credit accounts. Some Washington families may consider it a right of passage while others may select a different gift for their graduate. It may bear remembering that, sometimes, even the best financial planners end up carrying excessive credit card debt or other seemingly overwhelming monetary burdens through no fault of their own, such as a result of a prolonged illness or job loss. These families may seek to educate themselves concerning the options that may be available to them. In many situations, a bankruptcy filing may enable them to relieve the burden of insurmountable debt while providing an opportunity to pursue a healthy financial future.

Source:, "Is a credit card a good graduation gift?", Jason Steele, May 12, 2014

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