Deciding on whether or not to allow teens to use a credit card is every parent’s challenge. For most of them, the idea of credit card for teens is dreadful because teens are impulsive buyers. No matter how responsible they are in doing home school chores, they are anxious about getting a shopping spree every time they see a credit card.
Since young people aged 13 to 18 do not yet have the privilege to apply for a credit card, their parents authorized them to utilize a credit card associated with their account. That having said, parents become vulnerable to messing up their credit record if their teens fail to use their credit card intelligently.
Amidst all these negative thoughts on providing teens with a credit card, many parents haven’t figured out yet how important it is for young people to be taught with proper fiscal management. Good parents allow them to establish a good lending record at an early age. This way, parents shape their teens’ future.
If you are torn between the idea of giving your teens a credit card or not, reading this is a sure thing. Listed below are the few best reasons why they should have their own credit card.
1. They become more financially-educated.
Make them understand that credit card purchases incur an amount to be paid with corresponding interest. Emphasize the need to pay it on or before the scheduled payment to establish a good financial reputation. Give them the idea of the consequences of unintelligent credit card purchases. Through this, you will teach them the value of self-control and financial accountability.
2. Teens learn how to manage their finances on their own.
Teenage years are tough since it is where transitions happen. Young minds cannot yet decide on their own as they move out of being a child. So, they should be exposed to opportunities that require them to make little decisions. The best way to do it is by authorizing them to use a credit card.
On a similar note, this enables them to be aware of their own spending. They would learn good banking habits like using a checking account and paying the bills on time. But before handing them one, make sure to walk them through the process of writing checks and maintaining their checkbook register.
They become more knowledgeable in debt management and monthly budget. They cannot learn all these things if they do not have money to manage. But make sure to set a credit limit. Don?t mess up your own finances in paying their credit card debts just to give them some teachable moments.
3. Teens start to build their own credit record.
As they get themselves ready for college, they must start establishing a good tracking record with a chosen lender. This prepares them to get a student loan in the absence of their parents? signature. Allowing them to have a credit card before college helps them become responsible and trustworthy borrowers. So, parents worry no more about loaning money for their children?s college tuition in the years to come.
There is no such thing as a perfect age to start using a credit card. The decision remains at your hands. But teaching your teens the right way of spending as early as now can save them from being financially wild when they become adults. But here?s a thing. Raising a financially-responsible adult cannot be done overnight. Constant reminders and proper guidance to them at their teenage years are deemed important.