$40,000 in debt: Parents' credit card becomes a trap
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A financial practice common in the United States is drawing attention after experts warned it can backfire badly for children. While adding children to parents’ credit cards can help build credit early, it may also damage their financial future.
In the US, many parents add teenagers or young adults as *authorized users* on their credit cards to help them build a credit history. Since credit scores play a major role in American financial life, this strategy is often recommended by financial advisors as a way to establish strong credit early.
Financial journalist Laura Grace Tarpley highlighted the risks using a fictional but realistic example. In the scenario, a young woman is added to her parents’ credit card at age 16. Six years later, she learns the account carries $40,000 in debt.
The debt was not created by the young woman herself. Instead, most of the liabilities came from her parents’ spending on their shared credit account. However, because her name was linked to the account, the high debt and any missed payments could still negatively affect her credit score.
This case highlights a key feature of the US credit system: a person’s credit score can be influenced not only by their own financial behavior, but also by accounts they are connected to. Late payments, high credit utilization, and large balances can all lower a score, even for authorized users.
The system works differently in Germany. Creditworthiness is mainly measured through the *Schufa score* (*Schufa credit rating system*), which rewards stable and reliable financial behavior. Paying bills on time, avoiding debt collection cases, responsibly managing loans, and maintaining long-term bank accounts generally improve a person’s score.
Although parents in Germany can also provide additional cards or account access to their children, this usually does not create an independent credit history. More importantly, parents’ debt normally does not directly affect the child’s personal credit profile, making the German system less risky in this regard.