Many people are adamant that teenagers have no need of credit cards. However, the reality is that plastic is the preferred method of payment. Our money has become increasingly abstract, and teens need to know how to handle credit cards and debit cards as part of healthy financial development. You might consider adding your child to your credit account to help him or her obtain experience with credit card use. However, you don’t want to give your child a credit card unless he or she is truly ready for the responsibility.
How Responsible is Your Child in Other Areas?
Look at how responsible your child is in other areas of his or her life.
This might give you a clue about how responsible he or she will be with finances. Is your child missing homework deadlines? Do you have to constantly remind your teen to do his or her chores? These behaviors might indicate that your teenage might not be ready to handle the responsibility of a credit card.
Talk your teen about some of the questionable behaviors he or she has been engaging in. Give your teen four to six months to develop new habits and show that he or she can behave responsibly in other aspects of life. As your teenager makes efforts to become more responsible, you can re-evaluate whether or not he or she is ready for a credit card.
How Does Your Child Spend Money Now?
Chances are that you have had 10 years or more to observe how your child spends money. Consider how he or she uses allowance money, and money from an after school job. If your teen sets money aside, saving up for short term and long term goals, that is a pretty strong indication that he or she can probably handle a credit card. On the other hand, if your teen regularly asks you for money to cover funding shortfalls, you might decide that it’s not quite time for your child to have a credit card.
Work with your teenager to help him or her learn about the basics of good money management, and get on track with everyday spending. When your teen can demonstrate that he or she is willing to live by sound financial principles, you can think about getting a credit card for him or her.
Monitoring Credit Use
On top of this, find out how your teen views credit. Ask what he or she thinks about credit cards, and how they are used. Before handing over the plastic, make sure that your child understands that this is not “free” money; it has to be paid back with interest.
Monitor your teen’s credit card use, and make sure that he or she pays of the balance each month. You can discuss the importance of avoiding carrying a balance, and that credit cards are meant for convenience of payment, not for buying items that your teen can’t afford. If your teen begins using the credit card irresponsibly, immediately revoke the privilege until he or she pays back the amount borrowed, and until he or she is ready to behave responsibly going forward.
Janet Hutchins is a writer for Credit, Eh, a Canadian-based blog about personal finance and responsible credit card use, as well as providing information about the best Canadian credit cards.