Credit Cards Family A reader recently pointed me towards an interesting article at MSN MoneyCentral on the topic of restricting the access that teenagers have to credit cards. The Credit Card Accountability, Responsibility, and Disclosure Act of would forbid card issuers from opening accounts for people under 21 unless one of these criteria is met: I understand where this bill is coming from and I agree with it in large part, but I would be opposed to it overall. What I Like About the Bill When I was a new college freshman, I signed up for a credit card in exchange for a t-shirt, then I began to use it for all kinds of stuff — video games and so on.
Close Sharing Widget https: When Do You Start? He saved up for a new phone and donated to the Alzheimer's Association because his late grandmother was afflicted with the illness.
While Sorel is impressed with how Walter manages his allowance and babysitting money, she's less certain about how he'll do with a bigger financial challenge: The Sorels have already begun debating whether they should let him use their credit card for "emergencies" when he heads to college in the fall of For now, they're leaning toward sending him off to school with a debit card.
Here are some steps that can help teach your kids about credit.
Is it primarily a budgeting tool that lets you keep track of your spending, or do you prefer not to carry large amounts of cash?
She suggests showing them your credit card bills, going through the terms of the accounts and explaining what it would mean if you only paid the minimum due each month.
Start With Savings Signing your kids up for a savings account of their own can be a good starting point. This can help children understand banking transactions while establishing their early financial history. You'll need to co-sign any bank accounts for minors.
Debit Cards If your teenage kids prove they can handle a savings account, then it might be time to add a checking account with a debit card. They'll feel more like an adult each time they swipe their card at the store, but their spending will be limited to the funds available in their accounts.
Some financial institutions offer special savings and checking accounts designed for children. Make sure to impress upon your children the risk of a checking overdraft or the loss or theft of a debit card. Tell them to immediately report the loss of a card to their bank, and to never write down their PIN or share it with friends.
Getting Started With Credit It is challenging for any student under 21 who doesn't have a full-time job to qualify for a credit card without a parent's co-signature. If you think your kids have shown they can handle credit responsibly, you might consider co-signing for a secured credit card with a low limit.
Because they will still need to make monthly payments, it's an ideal opportunity to help them build positive financial behaviors. On the other hand, co-signing for an unsecured credit card while your child is in college has the potential to put your own credit rating on the line.
She recommends waiting until your child has built up a good enough credit history with a savings account, debit card and perhaps a secured credit card to qualify on his or her own. You may also consider adding a child as an authorized user on one of your current credit cards; if you do, review the statement each month and discuss how and when it's the right time to use the card for purchases.
With these steps, you'll start a long-term conversation that informs your children's behavior and sets them on the path to building their own bright financial futures.
Make sure to keep an eye on your own financial future too. To load more articles, scroll down the page, or click the list of articles.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.
Credit cards should be viewed as a convenience and not an extension of income.
The goal is for teens to learn to use credit cards as a tool, not as a crutch. Best Student Credit Cards for Credit cards are a great credit-building tool for college students. They can help you learn about the benefits of responsible credit card use, build your credit.
A reader recently pointed me towards an interesting article at MSN MoneyCentral on the topic of restricting the access that teenagers have to credit cards. Having a credit card in high school can be beneficial if. the teen is responsible. the teen is given a credit card with a low credit limit.
parents monitor the teen's spending and payments monthly. parents discuss the choices made, the implications of those choices, the obvious and hidden costs with the initiativeblog.com There was a time that I would have said that teens should never have a credit card, but in the last year or so my perspective has changed a little bit.
The big issue is education. If parents and schools would step up and teach kids and teens how to handle their money responsibly, how credit cards work, and how to avoid credit card debt many teens wouldn’t have a problem in the first place.