Dear AYR,

Helping your children establish credit when they are young can be very helpful for them as the become adults, if you teach them how to use credit responsibly at the same time.

The worst mistake I see parents make is allowing children to use their credit cards without teaching them about the obligation to repay the balance.

I recommend waiting until your children are in their early teens before establishing credit in their names. Teenagers are at what educators call a teachable moment. Teens are interested in credit because they want to buy new things, are old enough to understand what credit is, and are typically mature enough to learn how to use it wisely if they have guidance.

The best way to establish a credit history for your children is to add them to one or more of your accounts as an authorized user. That keeps you in control of the account while allowing your children access to it.

You still get the billing statement, so you will know exactly how your children are using the account. If they misuse it, you can remove them as authorized users and put a quick end to their credit use.

Supervise their first purchases, perhaps in a trip to the mall. Discuss with them why they might be using credit rather than cash. Talk to them about how you plan to repay the charges and why there might be additional interest and fees.

Sit down with them each month and go over the billing statement. Walk them through writing checks or perhaps online payment processes. Make it very clear that credit is not free money and that every penny they charge must be paid back.

If they get an allowance or have a job, consider having them pay for at least part of their charges from their own income. If they are ready for that, you might open a joint account and make them entirely responsible for purchases and payments. You would verify that payments are made, of course.

It could be one of the most valuable lessons they ever receive.

Thanks for asking.