| | | | Helping Teens Cope With Credit |
By Bonnie Conrad
Not that long ago, credit cards were reserved exclusively for adults, but these days many college students and even high school aged teens are being actively solicited for credit cards. The benefits to the credit card companies are obvious, as those new spenders hit the malls in droves. The benefits to the teens can be harder to find, however, and it is important for parents to take the steps necessary to teach their teens to use that credit wisely.
It is important, first and foremost, to not allow teens to purchase things that they cannot afford to pay for today. If they will not be able to pay off the bill when it comes due, the purchase should not be made. Following this strategy is one of the best ways to keep teens, and adults, out of credit card debt.
For this reason, it is a bad idea to allow a teenager who does not hold a steady after school job to apply for a credit card. While a credit card can be a good way for teenagers to learn about managing money, getting a credit card without a source of steady income may mean that the teen must turn to mom and dad for a bailout. A bailout like this can cause problems later on, as the young person may look for a similar handout in the future.
It is also a good idea to make that first credit card a secured one. Unlike a traditional credit card, which may allow the teen to vastly overspend, the credit limit on a secured credit card is limited to the amount of money deposited in a special bank account which is tied to the card. Secured credit cards often come with some charges and fees, but those fees can be money well spent if they teach the young person how to handle money wisely and avoid overspending.
And of course it is important for mom and dad to set a good example when it comes to their own use of credit. If the young person grows up seeing his or her parents juggling credit card bills and other debts, he or she may see this as normal adult behavior and mimic it. It is important for parents to be open and honest about financial matters with their teens and older children, and to be able to freely discuss money matters. As with other aspects of parenting, an open line of communication is one of the best defenses against the ravages of debt for teens and young adults.
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