Some parents may hurry to suggest their children get a credit card in order to build up their credit score.
However, parents should make sure their children are responsible when it comes to their personal finances before suggesting they get plastic. Take the case of Kiplinger.com editor Janet Bodnar, who recently recommended her 21-year-old son Peter get a credit card.
Normally, Bodnar wouldn’t have suggested Peter get a credit card, but given how he’s handled his finances, she feels as though he’s earned the right. For a while now, Peter has managed two checking accounts and has been responsible with his bills.
Too often, Bodnar notes, some parents may rush their children into getting a credit card. Furthermore, some parents may assume their older children know more about how credit card debt works than they actually do.
Consolidated Credit warns parents to be cautious when it comes to kids and credit. Young adults can end-up making very expensive mistakes if parents don’t take the time to sit with their children and discuss how credit works, the elements in a credit card statement, and the concept of compound interest. In our current economic climate there are plenty of examples parents can use to illustrate how not to handle personal financial issues.
"I’d prefer to see kids follow Peter’s cash-first route and then apply for credit on their own when they’re 21," Bodnar said. "Right now Peter has three offers sitting on our kitchen counter."
When it comes to getting a credit card, new rules will take effect in February of 2010. Those under 21 are going to be required to get a cosigner if they want to have a credit card, or will have to prove they have the income to support having one.