Credit Cards for Teenagers?
Should you give credit cards to your kids? Well, to be honest with you, my oldest son will turn eight years old this year. Hence, this problem is a distant one for me (at least for now). What I have friends who have teenage kids who will be in college in a couple of years. Once, they are in college, most will be able to get their own credit cards since lots of credit card issuers offers college students relatively easy these days.
This is how I would like to look at it. First, let’s look at the pros and cons of giving your teenagers a credit card.
First, the pros :
1. You start to educate them early about credit cards and how they work.
2. If you give them a supplementary credit card (not debit card), you can start them on the road to building a credit history. (that is assuming you have a good fico score).
3. If you are afraid of get going crazy on the card, you can get them a debit card and set a budget for them.
Here is where I see the downside to this :
1. If you have not educated your teenage kids on money, and you do not monitor their spending, then you will be spoiling them by giving them a credit card.
2. Access to “easy money” could be a bad thing for some.
Teach Your Teenager the Following Before Giving Them a Credit Card
Before I give my teenage kid a credit card, I would definitely be educating him or her about how credit card works. This is what I would tell my kids before I give them a card.
1. Teach about FICO score and how important they are to their financial lifes.
2. Explain to them the concept of credit and why they should always pay in full.
3. Do some math revision and explain to them what is apr! If you know, try explaining to them how to calculate the real effective interest rate to them if they are good in calculas.
4. I will make them plan a spending budget and make sure they stick to it religiously.
5. Lastly, I will monitor the spending on the credit card.
March 6th, 2007 at 3:11 pm
[...] Credit Cards for Teenagers?Once, they are in college, most will be able to get their own credit cards since lots of credit card issuers offers college students relatively easy these days. This is how I would like to look at it. First, let?s look at the pros and … [...]
March 16th, 2007 at 5:45 pm
I would probably go with getting a specific card with like a $500-$1000 credit limit and put my kid on as an authorized user. once they’ve learned how to use the credit card wisely, then change over.
March 21st, 2007 at 12:18 am
My father got me a credit card when I was a teenager — partly because he wanted me to be able to make purchases for him, but also to build my credit.
Your teaching points are almost exactly what he taught me. Ever since then, I’ve always used credit cards and always pay in full every month. So, nowadays I just get to enjoy nice rewards for using rewards credit cards.
Thanks Dad!