Teenagers & Credit Cards
How to give your teen a credit card – and why you should.
Teenagers love to spend money, even when they don’t understand it. Whether your teen is too young for high school, taking out student loans along with other college students, or simply starting to work, credit card companies have taken notice and are doing everything to lure them in. Although laws from the Consumer Financial Protection Bureau (CFPB) prevent your kids from opening credit cards without your permission, that doesn’t stop them from bugging you constantly to get them their own card.
“Credit card companies have been pursuing teenagers and designing credit cards so they can ‘learn’ about the credit system,” says Gary Herman, President of Consolidated Credit. “And although most teenagers don’t fully understand the repercussions of using a credit card and the impact it can have on their future financial situations, more teens are working and are spending their own money. Credit card companies believe they have hit the jackpot.” That means it’s important for parents to help teenagers understand the cost of credit, how to use it wisely, and how to build credit early.
But if it’s such a risk, why get your teenager a credit card in the first place? Here are a few valuable lessons you can teach your kid more easily with a credit card: