Sand Hill's Chief Investment Officer, Brenda Vingiello, CFA, joins Jenny Harrington on “Halftime Report” to go over their most recent portfolio moves. Brenda's commentary begins
Getting Credit
Published Date : January 25, 2018
From setting allowances to extending shared credit, parents must contend with constant challenges related to how money affects their children. But challenges are also opportunities, and most money matters involving children have the potential to provide useful learning experiences. Take, for example, the basic issues surrounding credit and debt. Since even young children can use credit cards, and will likely get them on their own much earlier in life than previous generations did, it is probably never too soon to begin this kind of education. In fact, real, but controlled, experiences with credit and debt at an early age might be quite valuable.
However, most credit card companies do not offer individual credit cards to minors, because children are not able to enter into legal contracts. This same condition also applies to electronic payment services like PayPal, for similar reasons. And yet, many companies allow children to be linked to parental accounts, though age limits often apply. The minor who holds an additional card is called an additional cardholder, authorized user or secondary account holder, but only the primary account holder is legally responsible for making payments.
Depending upon needs and circumstances, it might make sense to include children on credit card accounts. For example, credit cards are widely accepted and can be used to get cash, too. They can also be replaced quickly if lost or stolen, which might be useful for children who travel or go to boarding school. Still, it might make sense to set spending limits up front before handing over the secondary card, or ask children to pay their own charges — or at least cover special items. If children are older than eighteen but denied individual credit cards because of lack of credit history, it might also make sense to co-sign their applications. Many companies allow people with good credit to co-sign accounts for others who need to establish credit. However, co-signers, like primary account holders, are legally responsible for the debt; and their own credit could be damaged if payments are not made by others on the account.
Another option is a specific kind of credit card known as the charge card, which still provides the convenience and relative safety of “plastic payment”. Unlike true credit cards, though, which offer revolving credit and minimum monthly payments — usually with high interest accruing on carried balances — charge cards require full payment each and every month. This might be preferable if children are responsible for covering the charges because it would instill the discipline of making full payment every month, and thus discourage the habit of letting large unpaid balances accumulate that can become difficult to eventually pay off.
Other alternatives include debit cards, which withdraw funds directly from bank accounts; prepaid cards, which contain only what is loaded on them in advance; and secured cards, which are backed by money deposited with the issuer that will be forfeited if the cardholder defaults. Finally, regardless of whether children are given access to any of these various payment methods, their credit should be checked from time to time with credit bureaus, because even small children can have their identity stolen and their credit history damaged — and if this should occur at a young age, it can often go undetected for many years. While most parents, and even grandparents, rarely get credit (pun intended) for their advice to kids, including the financial type above, it is still important stuff to consider. We are here to help you think it through.
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Information provided in written articles are for informational purposes only and should not be considered investment advice. There is a risk of loss from investments in securities, including the risk of loss of principal. The information contained herein reflects Sand Hill Global Advisors' (“SHGA”) views as of the date of publication. Such views are subject to change at any time without notice due to changes in market or economic conditions and may not necessarily come to pass. SHGA does not provide tax or legal advice. To the extent that any material herein concerns tax or legal matters, such information is not intended to be solely relied upon nor used for the purpose of making tax and/or legal decisions without first seeking independent advice from a tax and/or legal professional. SHGA has obtained the information provided herein from various third party sources believed to be reliable but such information is not guaranteed. Certain links in this site connect to other websites maintained by third parties over whom SHGA has no control. SHGA makes no representations as to the accuracy or any other aspect of information contained in other Web Sites. Any forward looking statements or forecasts are based on assumptions and actual results are expected to vary from any such statements or forecasts. No reliance should be placed on any such statements or forecasts when making any investment decision. SHGA is not responsible for the consequences of any decisions or actions taken as a result of information provided in this presentation and does not warrant or guarantee the accuracy or completeness of this information. No part of this material may be (i) copied, photocopied, or duplicated in any form, by any means, or (ii) redistributed without the prior written consent of SHGA.
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All video presentations discuss certain investment products and/or securities and are being provided for informational purposes only, and should not be considered, and is not, investment, financial planning, tax or legal advice; nor is it a recommendation to buy or sell any securities. Investing in securities involves varying degrees of risk, and there can be no assurance that any specific investment will be profitable or suitable for a particular client’s financial situation or risk tolerance. Past performance is not a guarantee of future returns. Individual performance results will vary. The opinions expressed in the video reflect Sand Hill Global Advisor’s (“SHGA”) or Brenda Vingiello’s (as applicable) views as of the date of the video. Such views are subject to change at any point without notice. Any comments, opinions, or recommendations made by any host or other guest not affiliated with SHGA in this video do not necessarily reflect the views of SHGA, and non-SHGA persons appearing in this video do not fall under the supervisory purview of SHGA. You should not treat any opinion expressed by SHGA or Ms. Vingiello as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of general opinion. Nothing presented herein is or is intended to constitute investment advice, and no investment decision should be made based solely on any information provided on this video. There is a risk of loss from an investment in securities, including the risk of loss of principal. Neither SHGA nor Ms. Vingiello guarantees any specific outcome or profit. Any forward-looking statements or forecasts contained in the video are based on assumptions and actual results may vary from any such statements or forecasts. SHGA or one of its employees may have a position in the securities discussed and may purchase or sell such securities from time to time. Some of the information in this video has been obtained from third party sources. While SHGA believes such third-party information is reliable, SHGA does not guarantee its accuracy, timeliness or completeness. SHGA encourages you to consult with a professional financial advisor prior to making any investment decision.
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