I agree in principle and I think $300 is plenty when she is home, but will be too low when she goes away to college. Her books for one semester alone will blow through that $300 in a minute. When my DD went to school, she got a $1000 limit on her card (which is on my account).
OP, I know for a fact that Amex will let you put her as an authorized user at 16 (that's what I did).
Every situation's different. Right now while she's living at home the $300 is plenty -- and next fall when she goes away to college, I feel sure it'll still be plenty.
My daughter's books will cost zero; her tuition includes book rental. And we're not letting her take her car to school freshman year. The $300 is ample for an emergency room co-pay or any other small emergency that she's likely to encounter as a college freshman. Going out to dinner or buying a dress for a dance aren't emergencies. We're paying her basic college costs, but we expect her to take care of her own spending money, and giving her too much financial cushion will not encourage independence.
I watch Suze Orman and she recommends doing this with minors because your credit score becomes their credit score. So if you have a great score that will be great for her when she goes to get car loans or whatever in her name! I plan on making my DD16 an authorized user on our card next year.
This
used to be great advice, but the laws have changed and children can no longer be "grandfathered in" to their parents' credit scores. Really, it wasn't all that fair a thing to do, so I see why they changed it.
Yes, I may eat my words but at this point, she's extremely responsible. We've got 3 kids and she's by far the best with money. i can't help but think it's safer than me sending her somewhere with a pocketful of cash.
Thank you to all of you for your help and input!
No matter how responsible she may be, you're right to walk her through these steps and help her understand how to use a credit card. I think the biggest issue is to be SURE that she fully grasps that $20 spent on a credit card is identical to $20 cash spent. It's funny when young kids say things like, "Oh, Mommy, it's okay if you don't have any money -- you have checks." But plenty of adults struggle with understanding money that isn't actually passing through their hands. If you can help her grasp that fact at 16, you'll be doing her a great service.
Having read other people's posts, I do think that a pre-paid card might be just the thing FOR NOW. A $50 or 100 pre-paid VISA that she could keep in her purse for emergencies. If it's lost, it's upsetting but not the end of the world.
17 is eons older than 16. Let her prove herself at 16 with a pre-paid card, then move her up to a real credit card (and let her learn to pay the bill herself) next year when she's 17. 17/just before senior year starts is also the perfect time to start a checking account. In contrast,
the wrong thing to do is to wait 'til the week before she goes away to college to open her first checking account.
Another little detail about preparing her to manage her own finances in college: When you visit colleges, note what ATMs are on campus. Especially if she won't have her own car, you don't want to set her up to pay ATM fees constantly.
