Should you get your child a credit card? Read this post before you make the decision.

As a parent, one question you might have regarding your child’s finances is if they should have a credit card. Whether they’re a teen or young adult, you might be wondering if they really need a credit card? Would it be a smart move, or would it actually hurt their financial standing? When should they get one? Think about these things before making a decision.  

Should You Get Your Child a Credit Card?

July 25, 2017

Should you get your child a credit card? Read this post before you make the decision.

As a parent, one question you might have regarding your child’s finances is if they should have a credit card. Whether they’re a teen or young adult, you might be wondering if they really need a credit card? Would it be a smart move, or would it actually hurt their financial standing? When should they get one? Think about these things before making a decision.

It can teach them about credit.


A big part of parenting is teaching your children good habits early in life so they can become successful adults. Allowing your child to have a credit card, whether it’s one you co-sign for or a secured card in their name, can help teach them the basics of credit. It’s better for them to learn early on about credit cards than to have them go through credit trials and tribulations later down the road.

The key is to teach them good habits before they open a card. Without direction, they may not realize the damage they can do if they use a card inappropriately.

 

They can learn how to manage finances.


Having a credit card can help your child learn how to budget and utilize their money. It will also help them understand what common financial terms mean, such as APR (annual percentage rate), late payments, financing, credit limits and more. Introducing them to credit while they are still within your household, whether high school or college, will allow you to monitor their account and help them learn as they progress with their credit.

Helpful tip: Start with a savings and checking account, along with a debit card, before opening a credit card. Think of personal finance as a pyramid; these three items are the building blocks of personal finance. Credit can then be built upon them, once your child has a good grasp of basic personal finance.

 

It can help instill responsibility.


A credit card is a lot of responsibility! You need to stay within your credit limit, make payments on time, keep tabs on your credit score and continually try to improve or maintain your score. This could be a lot for a student or young adult, but if you feel like your child can handle it, it’s probably a smart decision. They can start building their credit early, which will help them down the road when they apply for apartments, jobs, insurance and a mortgage.

Read next: Simple Ways to Boost Your Credit Score

Be ready for emergencies.


Emergencies happen. It’s important to be prepared for them so they don’t derail you more than necessary. It’s often a smart idea to allow your child to have a credit card in case of such emergencies. It can be attached to your main card or have their own credit line. Just make sure they realize it’s an emergency-only card. Then, if their car were to break down, a medical emergency arises or some other high-cost incident occurs, they won’t need to stress about how to pay for it. The funds are there and available.  

Take it at your own pace. 


Credit is an important part of personal finance, and teaching your child how to utilize it correctly will help them flourish as they grow into an independent adult. All families are different, so take the credit journey at your own pace. You may decide you want your 16-year-old to have access to a card, or that you want to wait until they are in college and able to open their own account. No matter what you decide, the key is to teach your child how to responsibly use their credit. Starting out well-educated will help them build their credit score and set them out on a secure financial footing.

 

No matter what your age or status in life, you must use a credit card responsibly in order for it to reflect positively on your financial standing. Before you open any type of credit card for your child, have a series of discussions with them about personal finance. Teach them the basics of how to budget, not to spend money they don’t have, and what happens when you’re late on payments or make minimum payments.  If they don’t have a savings or checking account, make sure they have those first before you step into the world of credit.

Have your own credit questions? Let us know in a comment below! You can then pass the knowledge down to your child the next time you discuss finances.

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