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Should You Give Your Teen a Credit Card?

Are you thinking about giving your teen a credit card? Get the low-down on teens and credit cards before you make that tough decision.

Many teens think they NEED a credit card. In some circumstances it is a good idea to give your child a credit card when it can be an easier way to give them some money, allow you to monitor their spending, and teach them the responsibility associated with the credit card! Remember, with a credit card comes great responsibility so before even considering the idea you need to make sure your teen has the following understanding:

Before simply giving your teen their first credit card here are a number of tips:

  • Knowledge is Power: Teach your teen what a credit card is and how it works.  This may sound like something they already know but understanding that credit works as a loan and there are penalties for not paying the bills may help them realize that it is not free money.  Explain that each purchase made must be paid back or extra interest will be added to the original amount.  Knowing how it works and the implications of not paying will help them understand the true responsibility behind owning a credit card.
  • Budget: If you think your child is responsible enough to use a credit card, you need to teach him or her how to have the funds for the credit cards.  Make a budget with your teen and show them how to allocate funds for bills. 
  • When is the right time: The younger the teen the less likely they will understand the power your give them with the card. I recommend not giving a credit card until he or she turns 18. A good rule of thumb for the right age to give the child a credit card is if they can’t work they shouldn’t have a credit card.  If you do decide to give them a credit card before they have a source of income explains to them that it is to be used with their permission only or in an emergency.  Make sure that the consequences for breaking that rule are clear.
  • Other options: Consider giving your teen a prepaid debit card or have your teen open a bank account.  This will help them learn to budget money coming in and out regardless of where the incoming funds are coming from.  They will understand saving and what it means to have to pay for your purchases.  This way you eliminate the concern for late payments and interest and resulting ruined credit, and they will still learn how to responsibly spend (maybe even better because it is their own money).  This will help them learn responsibility and give them the responsibility to manage his or her own money without having to worry about them over drafting his/her account or accruing interest. 
  • Dos and Don’ts of first credit card: If you must get a credit card, try and pay more than the minimum payment.  Be conscious of the balance of your credit card and try to keep it down to an amount that is easy to pay off the entire balance each month. 
  • Credit habits: Credit cards are a way to work on your credit, but credit card habit can be addicting so consider teaching your teen and college student the importance of being able to pay for what you purchase.  Be careful and make sure the consequences are clear.

If you do decide to ahead and sign your teen up, make sure you monitor their spending at first to make sure they are being responsible with the card and not getting themselves into debt!

This post is contributed by a community member. The views expressed in this blog are those of the author and do not necessarily reflect those of Patch Media Corporation. Everyone is welcome to submit a post to Patch. If you'd like to post a blog, go here to get started.

Derek V September 20, 2012 at 02:15 PM
Excuse me! It was Bush Jr that ran up the debt. We now have thousands of wounded heros and bereaved families to care for if it were not for the vanity of POTUS 43. As well as a cratered economy. Thanks dubyer.
marianne krause September 20, 2012 at 02:25 PM
Excuse me Derek no one president is fully responsible for the debt this country is in they all had their hands in it and it is just plain moronic to blame just one president.
Leonard Bauman September 20, 2012 at 02:33 PM
Credit cards are a great way for teens to learn how to manage their money and to use credit responsibly. American Express has a prepaid credit card, which is great for parents and children to manage credit card expenses as well as replenishing the card balance from time to time over the internet. It is impossible for the child to overspend the card. Other prepaid MC/Visa credit cards sold at drug stores, etc. also teach children how to use credit responsibly and keep within the balance the parent placed on the card (e.g., $25/$50, etc.). Children need to learn how to manage their money, differentiate their wants from what they really need, and having a credit card with a predetermined balance let's the child learn these things.

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