Crypto for the kids

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Hey Money Scoop: How do cryptocurrency wallets work? Are companies creating more user-friendly wallets? Example: a wallet connected to a credit card that I can give to a dependent?—Crypto Curious

Dear Curious, if I read your three questions in order, it sounds like you’re asking if you can connect a user-friendly cryptocurrency wallet to a credit card—and then give that credit card to a dependent.

If I assume that by “dependent” you mean “my child, who has recently gotten into crypto,” I’ll start by explaining what you might already know. In order to give your underage child access to a credit card, you’ll need to make them an authorized user on one of your own credit accounts. This allows your offspring to make purchases on your line of credit—and gives you the legal responsibility for paying off whatever they might buy.

This means that if your little one decides to buy a Bored Ape, you’re paying for it.

You’ll also be paying a lot of fees. When you connect a credit card to a cryptocurrency wallet—which is extremely possible, since fintech companies are actively competing to create the ultimate user-friendly cryptocurrency transaction interface—you’re not actually putting the NFT on your credit card. You’re using your line of credit to buy cryptocurrency, which will then be used to purchase the NFT. Your credit card issuer will code this transaction as a cash advance, and you’ll be stuck paying cash advance fees and cash advance interest rates on the transaction—not to mention all the fees associated with the conversion from USD to crypto and any additional fees associated with the actual purchase.

You’ll also need to find a third-party credit-to-crypto service that allows minors to make purchases. This will be difficult. In theory, cryptocurrency is available to anyone of any age. In practice, most reputable crypto exchange apps prohibit minors from creating accounts.

Why? Well, the fact that there are grown adults losing money in crypto scams is bad enough. Nobody wants kids to get involved in the great crypto casino. I mean—there’s probably somebody who does, but they just want to exploit your child for money, so steer clear.

My actual advice is for you and your dependent to watch this video. It may change the way you think about cryptocurrency—and, as a bonus, it includes a very detailed explanation of how cryptocurrency wallets work, which is the one question I didn’t have space to answer.—Nicole Dieker, Money Scoop guest columnist



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