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A Parent’s Guide to Teens and Credit Cards Featured

By Courtney Corbridge


When it comes to teens and their financial responsibilities, no two homes will do it the same. And they don't have to. One teenager may benefit from access to a credit card early in order to learn how to be organized, meet deadlines, and be careful with the quick swipe of a card. Another teenager, however, may quickly become trapped by the buy-now, pay-later rationale and establish a pattern for debt. 


Parents often decide to give their teens credit cards for emergencies, to teach responsibility, or help them establish credit from an early age. But before you take the leap, here are a few questions to ask before deciding if a credit card is right for the teens and soon-to-be independents in your home.


Are you in debt?

Of course kids can learn from our mistakes, but they can also follow them. If you have a habit of overspending or a large collection of credit card debts, it is likely that your child will too. This is yet another case where “do what I say and not what I do” will fall short. 


Do your children "nickel and dime themselves to death"?

Aside from mortgages, student loans, and car payments, it's often not the big things that cause college students and teens to go into debt. It's the daily expenditures they forget to keep track of and fail to live without—a pizza here, a concert there. Budgets are broken on the small stuff.


Do they already save and budget?

Letting your child save up for a summer trip, a car, or a musical instrument can be good ways to test if your teen is ready for a credit card. If they already have a history of saving their funds and keeping track of them, it’s likely those skills will carry over once they have a plastic card instead of cash.


Have you talked to your children about building credit?

College-aged students are more likely to open lots of credit card accounts—one with Target, one with Gap, another with Amazon etc. On many campuses they'll be offered anything from a free T-shirt to a free pizza to apply for credit cards, or at the very least to subscribe to a lifetime of banking junk mail. Teach your kids about the wisdom of only having a few credit cards and paying them off on time. Teach them about building credit, why they will need good credit, and how to maintain good credit. Sit down with them. If they are unwilling to learn about the advantages and repercussions of a credit card, they probably aren’t ready to have one.


Have they already had a debit card through a personal checking account?

Many parents find that debit cards are good options for teens who already have jobs. This gives them experience with tracking their money online and through bank statements without giving them the full buying power of a credit card. With joint checking accounts, parents can also transfer funds to them in the case of emergencies. For this phone savvy generation, most banks have apps that teens can download to keep track of their expenditures, and they will often send texts to warn them when their funds get low.


Article sponsored by the Lift Fund.

Find them on the web at: http://alabama.liftfund.com


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