It can be daunting for any parent to give new responsibilities to their children, whether it is giving them their own car, full access to the internet or cable, or trusting them while they are out with friends. Similarly, giving your teen the responsibility of a credit card is a task that requires careful consideration. The big question here is if teenagers be allowed to carry a credit card? There are many parents who think handing a credit card to their child is not a good option. Many others think it is a great way to teach their children about the responsibility of handling money.
While many people have their own views on the question, this article helps you understand the benefits and downfalls of your teen carrying a credit card.
The Benefits of Teens Having Their Own Credit Cards
- While obtaining a credit card is a big responsibility, it is also a really good way to introduce your children to the practice of handling money.
- Teenagers can learn from carrying credit cards. They can learn about credit scores, paying bills on time, staying out of debt and much more.
- It can teach your child that credit cards can be a helpful tool if used properly and responsibly.
- Another good reason for giving your teenage kid a credit card is to help them start a credit card history. Establishing a credit history is very useful for your child’s future as it can help your child rent apartments, secure auto loans, etc.
- You don’t have to ask for money or carry cash if you have a credit card. It also helps teens during emergencies like car issues, medical emergencies, etc.
- It is a great way to see what your child is spending money on. Parents can look at the credit card report each month to see where the money is going. Knowing their parents are overseeing their expenses also discourages teens from spend money on things that are prohibited by the parents.
The Downfalls of Teens Having Their Own Credit Cards
- Teens can be irresponsible and reckless with their spending. They can cause serious damage to their future credit score. They can forget to pay their monthly bills or max out their credit limits.
- Many teenagers are impulsive buyers. Sometimes if they have access to a credit card, they might not think twice about spending money on something they need which can really rack up debt.
- Many teenagers have their parents as joint credit card holders. With irresponsible buying on the teenager’s part, the parents can get into more debt than they would want to.
- Parents may not know what or how much their kid has spent until after they get the monthly credit card report. By then, it will be too late to do anything about all the expenses.
- Some teens might not feel like they are spending “real” money while using a credit card. For those teens, cash may be a better option.
- Many teenagers are jobless or working part-time on a low income. It could be easy for them to get buried under a lot of debt if they are not responsible with their credit cards.
Handing over a credit card to a teenager is a great responsibility. Therefore, it is best to give them a credit card once they have fully grasped the concept of managing money. Make an account for them first to see how well they handle their savings and expenses and then decide whether they’re ready for a credit card or not.