Everyone knows having good credit is important. The significance of having good credit is reinforced so often in our
society many people feel teens should start getting credit cards as early as possible to help establish credit.
Giving a teen a credit card may be scary since in the teenage years, especially right after high school,
responsibility traits are still being learned. If you are sure having a credit card for your teen is the right plan here
are some helpful pointers about credit cards for teenagers.
- Talk first. Enlightening your children on the inner workings of credit cards is essential before giving the
access to plastic. Giving a teenager a credit card without first educating them could cause them to be under the
misconception on how a credit cards works. They might also not realize the penalties for not being a
responsible credit card user.
- Small limit. A teenager’s first credit card should be one with
a small limit. When you receive the statements you should pay the balance in full. If you are a parent paying your child’s
payments to help them establish credits this will let you monitor activity without worrying they are getting out of
control. If you are giving your teenager the responsibility of making their own payments, a small credit limit will
keep them from having a lot of debt early in life.
- One at a time. Teenagers should charge only one thing to the credit card and pay off the balance before
making another charge. This practice will enforce with teens that that borrowing funds from a credit card means you
will have to pay it back. It will also make sure they are only making purchases they can afford.
- Responsibility. If there are any reservations about getting your teen their first credit card, you shouldn’t.
Getting a credit card should be a tool to help start a good credit score for your child. Some Teenagers cannot resist
the temptation of credit. If you are worried about your teen’s level of credit card responsibility, start them off
with a pre-paid credit card. This way they can get used to carrying plastic without the risk of ruining a young
credit score. If you don’t trust your teenager with full financial responsibility you can add them to your account
as an authorized user and you can monitor their activity. This will show them
how a credit card works and you can still make them accountable
for purchases they make.
- Cosign vs. Authorized user. With new credit laws that have recently been passed teenagers under the age
of 21 generally cannot get a regular major credit card without a cosigner. If your plan is to get a
credit card for your teen to help them understand the credit
card world you should add them as an authorized user. Your teenager making purchases as an authorized user on your
credit card won’t help establish any credit. This will however let you monitor their activity, and still show them
how to manage their money to make monthly payments on a credit card. If at anytime they extend their charge
card privileges further than you would like to allow, you can cut them off. If you feel you need your son or
daughter to be a co-signer or a co-primary on a card with you to help them establish good credit, make sure you
explain to them the how the statement is read. Also make sure they understand how all fees like interest and late
fees will affect them. Let them know you are trying to help them create good credit and why credit is important.
Trying to help you teen establish credit does not mean you should let them ruin yours and their credit because
they were not aware of the consequences.
Updated: January, 12 2012