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Should I Give My Teenager a Credit Card?

American teens spend around $175 billion each year. With a number that big, should they be trusted with a credit card?

If you’re asking yourself “should I give my teenager a credit card?”, you’re on the right track. It’s important to examine all the angles before trusting your child with such a huge responsibility.

Plus, every person and financial situation is different. Here’s a guide to everything you need to know before you give a card to your teen.

Encourage Good Money Practice Early

Not outrageously wealthy? Chances are you’ve had to use credit to get things you need and want.

Your teen will probably have to use credit once they reach the “real world” too. Giving them a card and monitoring its use helps build a good foundation for using credit wisely in the future.

Understand Your Responsibility

This comes down to knowing your teen’s behaviors and attitudes. If they’re responsible in general, then you can trust them with a card.

If they rack up charges and don’t have the money to pay them back, know that you’ll have to step in. You might be the one who ends up paying for reckless spending.

That can ultimately affect your credit score. Consider this before giving them access to a card with a high balance.

Help Them Understand Their Responsibility

Don’t automatically think your child understands the reality of credit. They might assume that piece of plastic is like free cash.

Beyond paying off the balance at the end of the month, help them understand the other responsibilities of owning a card. It’s important to teach them about interest and their credit score.

Find the Best Credit Card for Teenagers

If you know you can trust your teen, you’ll want to find the best card for them. Luckily, there are cards made just for them.

You have to be 18 to have a regular credit card. But from the ages of 14 to 17, a parent can add them as a joint account holder, which helps them build credit.

From the ages of 18 to 21, a child will need a cosigner or proof of income. A secured card, which uses a security deposit as collateral, is usually a good choice.

Finding the best choice of a card doesn’t have to be intimidating. Do a little homework to find the one that works for you and your teen.

Make it a Privilege

You can’t give your teen a card without setting boundaries. Be prepared to take the card away if they can’t handle it.

Having a card should be a privilege. Make sure they understand that unless they’re responsible, the card will be taken away.

Build Good Credit Habits Now

There are plenty of good reasons to give your teen a credit card. Wanting to build credit now, having financial freedom, and teaching good credit habits are all great reasons to start.

Trust your teen but follow up once a month to make sure they’re staying on track. If you want to teach great money habits they can use their entire life, check out our finance blog today!

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