Should Teens Have Credit Cards?
As your children get older it may become tempting to protect them from the ravages of the world that they don’t quite know they’re going to face. After all, that is the roll of the parent right? Well yes, but it’s also the role of the parent to prepare your children how to fend for themselves as responsible adults on their own. The balance of these two theories, as with the rest of parenting, can be a dreadful task to juggle.
Perhaps the most important aspect of individual responsibility you can teach to your up and coming young adult is how to handle their budget and finances. Paychecks and savings accounts are the easy party, what about when it comes to managing and controlling credit? Should teens have credit cards?
Don’t wait to throw them to the wolves..
Lets face it, banks and creditors don’t care about your life. They don’t care about your child’s life either. If anything, they appreciate it when anyone is in debt to them for the simple reason that they make money off of it. Providing your teen with the opportunity to learn proper self-control and spending habits now, while they’re under the protection of a safe environment, can prevent them from digging themselves too far into a hole that they can’t crawl back out of.
To be sure, a young person with virtually no credit history as of yet will generally only be approved for a credit limit that is enough to buy a couple toys here and there. It is enough to feel the pressure when the end of the month arrives, but not quite enough that they’ll be filling for bankruptcy if they don’t find a second job. This allows for an easier transition to the economic reality that is adulthood without quite as much risk that such a journey entails otherwise.
Equipping them with a credit score…
Another point to consider is that this is the only time in your child’s life that they are able to build credit strictly through the use of their own money. After this they will have to count solely on paying their bills, honouring their payments to self- acquired debt, and the general stresses of utilities that will follow them throughout the rest of their adult life. Utilizing this opportunity in their life to acquire a positive credit rating will give them a powerful jump-start for when they are on their own.
Think about advising your teen to invest in a pre-paid credit card with a moderately low credit limit. Using this strategy will not only teach your child the benefits and risk of credit but will relieve the pressure of payments in it’s entirety as it’s their own money (or perhaps yours as a birthday or Christmas present). It is also a lot more difficult for the teen to spend frivolously -especially in this day and age with on-line shopping so readily available- when it’s money that you’ve put forth beforehand.
Let Visa give you a helping hand…
“Hey Dad, I’m out of gas. Can I have twenty bucks till payday?”
“Mom, I NEED this skirt. I’ve had the same clothes for two weeks! I’ll pay you back.”
Teens are the worst people on the planet for living from payday to payday. Where do they come to when they run out of money from one too many parties? Well, you know the answer to that. Why not let a credit card help you out with your own wallet? If your teen has something to fall back on when their paychecks inevitably runs out, they can’t (notice I didn’t say won’t) come running to you as easily. Further, they will learn the destructive nature of spending your hard earned money without thought and not planning ahead.
Most people when they’re starting out in the real world live through the ‘paycheck to paycheck’ phase for quite some time before they learn that it can go on forever and not get them anywhere. Teaching your teen this lesson early will most definately benefit them later on in life and releive some of the pressure from you. You now have the reply to their endless requests for handouts:
“You’ve got a credit card, get it yourself!”
If one were to ask their children if teens should have a credit card we’re all pretty sure what the answer would be. Well I agree that yes, they should, under the right circumstances. If the environment is controlled and safe, the benefits and risks are explained, and the amount of credit allowed is not too high it can be a very educational and beneficial learning experience for your teen.