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Should Your Teenager Have a Credit Card

Giving your teen a credit card can certainly have it share of problems. Teenagers often times don't understand that credit is a loan and not money, so they tend to max out their cards quickly. Because parents' names are on credit cards, teenagers may have a tendency to not take full responsibility for their spending habits when using the cards since they are not under their name. Careless spending can lead to serious credit damage.

Active Parent Involvement Can Make Financially Responsible Teens

It is, however, important to understand that most college students end up obtaining credit cards on their own once they turn 18, so it may be wise to teach them how to use credit cards responsibly before they head off to school.

There are certain benefits in allowing your teenager to use a credit card. Not only are they convenient, but they can help your teen establish a good credit rating and history, and strong credit is crucial to your child's future as he or she applies for car loans and mortgages. Not only does good credit help obtain these loans, but good credit scores mean lower interest rates. It may be worth considering getting your teenager a credit card if he or she is responsible, the card has a low credit limit and if you monitor his or her spending.

Teach Good Banking Habits

Before handing a teenager a credit card, they should first have experience using a checking account of their own. They should be able to write checks, balance their checkbook and maintain the register. Next, they should have practice using an ATM card that only allows cash withdrawals and eventually a debit card. Finally, once your teenager has his or her own credit card, they should be writing out the monthly payments (in full) out of their own checking account so they fully understand the connection between credit and their finances.

It is critical to sit down with your teen to discuss the responsibilities needed in order to use and manage a credit card, because the choices they make now will impact their financial future.

If your teen or college student has gotten into debt or needs help learning how to budget and manage debt, Advantage CCS can help. Contact us today for more information on our nonprofit credit counseling and debt management programs.