Parents may consider putting their kids on their credit cards

One way parents can help their children build a credit history is by adding them as an authorized user to one of their credit card accounts.

The new Credit Card Accountability, Responsibility and Disclosure Act is going to make it more difficult for people under 21 to get a credit card. The goal is to protect younger people from amassing credit card debt early on in their lives.

Having credit card debt does seem to be a problem for college students, as is indicated by numbers from Sallie Mae. According to a 2008 survey of college students, the average amount of credit card debt for a graduating college senior was $4,100. Furthermore, the average credit card debt for an undergraduate was $3,173.

The problem is that younger people may find it more difficult to build a credit score because of the law, which will make it harder to secure loans. Kathleen Pender, a columnist with the San Francisco Chronicle, suggested that parents can add their children as authorized users on their accounts.

“The child gets a card in his or her name and inherits the account’s history, good or bad,” Pender said.

If parents opt to add a child as an authorized user, they should pick a card that has the best credit history. That includes picking an account with the best payment history, and one that has a low utilization rate.