Should Teens Have A Credit Card by Todd Holliday

The rapid rise of credit card debt among college students has often resulted in the same question; should teens have a credit card. While there is no denying that there are some teens who have accumulated credit card debt while in college, for many teens credit card use began not in college but in high school. Although there may be a strong temptation among many parents to restrict their teens from having a credit card, there are actually many reasons why teens should have a credit card.

Should Teens have a Credit Card-Advantages

Not only do credit cards offer a significant amount of convenience, but they also serve other purposes as well. Specifically, credit cards help teens to establish good credit histories early on so that when the time arrives they will be able to qualify for a mortgage and car loans. In addition, establishing a good credit history early will help teens to qualify for lower auto and homeowner insurance premiums and more favorable rates on a variety of loans. A solid credit history can also assist in renting apartments and even qualifying for jobs as more and more employers are electing to use credit scores for the purpose of evaluating prospective candidates.

Credit cards can also serve an important educational purpose as well. Under the right circumstances, teens can learn how to use a credit card beneficially in order to take advantage of the benefits listed above. How do you know if now is the right time for your teen to have a credit card?

First, ask yourself if your teen is responsible. If so, then you can help your teen to establish a good credit history by providing them with a credit card that features a low credit limit. Another option would be to provide them with a prepaid credit card. This is a good option because it serves as an excellent training tool while easing them into responsible spending habits.

You can further help by monitoring their spending and payments on a monthly basis and discussing the spending decisions your teen has made. Specifically, talk of the implications of the choices they have made along with the various costs associated with that decision. Finally, make sure you offer suggestions regarding positive changes which your teen can make to improve their spending habits and reap the most benefits from establishing a good credit history through their credit card.

Should Teens have a Credit Card? – How to Handle it Effectively

Once you have made the decision to provide your teen with a credit card, it is important to be sure they have their own checking account first. They should be aware of how to write checks and maintain their check register as well as balance their checkbook on a monthly basis. Be certain that it is your teen who is writing the check each month to pay for the credit card so that they will understand the payment process and develop responsible spending and payment habits.

In the event that your teen does charge more than they are able to pay, you will have to make a decision as a family as to how you will handle the consequences. By remaining involved in the process, you will be able to correct potentially dangerous spending habits early on and teach your teen how to use credit in a responsible fashion.

Ultimately, credit cards can serve as a convenient tool which can make it easier to qualify for better interest rates later on. By helping your teen to see them as such, and not as an income extension, now you will be providing them with a valuable lifelong tool.