Teens with Credit Cards: A Good Idea?
The thought of a teenager with a thousand dollar credit limit and easy access to a shopping mall is enough to give most parents the willies. But it’s more common than you’d think. According to recent studies, approximately 8% of all American teens now have their own credit cards in their own names. Is this a good thing? That depends on how well-educated the teens are about credit card use - and debt.
Having a credit card at a young age can nurture a good credit score early. Misuse of the card can also lead to poor credit early in life. If you’re a parent of a card-holding teen, make sure they know that credit cards are intended for emergencies. Or set a spending limit of your own, and encourage them to pay off their balance each month to avoid revolving debt and interest.
If you’re worried about your teen’s spending habits, but want to teach them to be responsible card holders, think about getting them a prepaid credit card. That way, you can decide how much they can spend. You can also co-sign for a card and set up online account access so that you can monitor all charges.
Credit cards are definitely a part of today’s society, so teaching kids to use them right is a good thing. Set an example by using your own cards wisely and encouraging your teens to do the same.
Meredith said,
April 27, 2008 @ 11:00 am
Thanks for a great introduction to this important topic. Even with the current credit disaster that is causing many Americans so much pain, people who are smart about their credit card use continue to reap big benefits from wise credit card use. It is NOT TRUE that most credit card users eventually end up in financial difficulty. For example:
1. Approximately 30% of US households pay their monthly balances in full each month.
2. The majority of US households have no credit card debt.
3. 25% of US household do not have credit cards.
4. The average US household pays their bills on time. Over 50% of all consumers have NEVER been reported for late payments.
5. Approximately 40% of credit card users carry a balance of less than $1,000, despite the fact that the typical card holder has access to around $19,000 on all credit cards combined.
Educate your kids from when they are young about credit and debt, and make sure they end up being amongst these positive statistics.
Experts on Credit said,
April 29, 2008 @ 12:50 pm
I don’t even have kids yet, but I am not giving them credit cards. I remember when I was growing up, I had friends with credit cards. The common theme was misuse. In most cases, I think it just isn’t necessary.
FCC said,
May 4, 2008 @ 7:44 pm
I can see this as both a positive and negative. If a teenager has a job and they can learn at a early age to use their credit card wisely, then I say do it! You can get a lot of rewards with a credit card if you use it properly!