Pay down debt before adding teen to card

To Her Credit columnist Sally Herigstad
Sally Herigstad is a certified public accountant and the author of "Help! I Can't Pay My Bills: Surviving a Financial Crisis" (St. Martin's Press, 2006). She writes "To Her Credit," a weekly reader Q&A column about issues involving women, credit and debt, for, and also wrote for MSN Money, and, and has guested on Martha Stewart Radio and other programs.

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Dear To Her Credit,
My 17-year-old daughter is turning 18 soon. Of course, right now she can't get a credit card in her name, but I can put her on one of my cards, and she can use it that way.

I just need to know which card of mine would be the best benefit to her long term. I have a relatively new card with 0-percent interest for 15 months, after which it goes up to about 12 percent. It has a balance of $5,000 that I transferred from another card. I also have a Discover Card at 10.99 percent, with a smaller balance. I don't pay my Discover balance off each month, but I pay more than the minimum.

Also, I'm trying to decide which card I should pay off first. I got the zero percent introductory rate card so I could work hard on paying that balance off before the interest rate kicks in. But now I'm paying 10.99 percent on the Discover card, so I wonder if I should work harder on that one? I am putting current expenses on the Discover card.    -- Betty


Dear Betty,
Before you can decide which card is better for your daughter at age 17, you need to be clear about why you think she needs one. If it's just for shopping, she can probably do without until she's old enough to get her own card. Sure, it's convenient to pay for things with a credit card -- a little too convenient, perhaps. At 17, she's probably not buying airplane tickets and other things that can be difficult to buy without a credit card. If she needs to buy something online, you can use your card and have her pay you back.

Some parents want their kids to get credit cards to start building a credit score. Credit scores are important later, especially when a person may want to buy a house, but not so much at age 17. She has plenty of time to get her own card and build a solid credit history before she needs one.

Another reason to think twice about adding your daughter to either of your cards is that sharing a credit card with anyone but a husband or wife can get messy. I'm sure your daughter intends to make her share of payments after she uses the card. What happens if she falls behind? How much of the interest expense will she be responsible for? You will get stuck with the bill if she stops paying altogether. If the letters I get from readers are any indication, sharing cards is one fast way to mess up your finances -- and your relationships.

Regarding paying off your own cards, I'd recommend paying off the Discover card first. It has the lower balance and a 10.99 percent interest rate. Pay it off first, and you'll have the satisfaction of paying off a debt, plus you'll save interest expenses every month.

In the meantime, avoid making any more credit card purchases than you have to. Start thinking of your credit cards as payment tools, not a way to buy things you can't afford using this month's pay. Consider carrying enough cash to pay for small purchases, so you're not in the habit of pulling your card out several times a day. Remind yourself when you're shopping: If you can't afford to pay for something with the money in your checking account or wallet, you can't afford to add it to your credit card debt.

After you pay off the Discover card, focus on paying off the 0-percent intro rate balance as quickly as you can. Circle the date on your calendar of when that promotional rate ends and aim to pay it off by that time.

Unless you have a specific reason she needs a credit card, I would advise against putting her on your credit card before she turns 18. In the meantime, continue to set a good example for her by paying off your own credit card debt as quickly as possible and keeping it paid off. Teaching her to use credit cards wisely will help her more in the long term than adding her to your credit card at age 17.

See related: 4 signs your teen isn't ready for credit cards, Ways to pay off high-interest debt

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Updated: 01-18-2018