Her parents gave her a credit card at 16 to build credit. She found $40K in debt on it 6 years later

Making a child an authorized user on a credit card can be one of the greatest gifts parents can give. The short-term gift is that the teen or young adult uses the card to pay for essentials, such as gas or textbooks. The longer-term benefit is that the child can start building credit .

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Imagine Emily, who received a credit card from her parents when she was 16. Emily is now 22 years old and just graduated from college. She’s had this credit card for six years and knows she’s only charged around $6,000 over that time.

But she sets up a Credit Karma account and, when reviewing her profile, discovers this credit card has a whopping $40,000 balance. To top things off, the debt has tanked her credit score. She starts to panic. How did she accrue all of this debt — and worse, how is she going to pay it off?

Many teens or young adults don’t understand the logistics of being an authorized user on a credit card when their parents hand it to them. (Heck, the parents may not fully understand, either.) The kid might think this is their credit card. Or, they know they’re an authorized user, but they don’t actually grasp what that means.

When Emily’s parents gave her a credit card with her name on it, they were the primary users on the account. So, purchases made by all three people show up on the credit card statement .