Should You Allow Your Kids to Have Credit Cards?
If you posed this question to most parents, the immediate and resounding reply would almost certainly be NO! But before you hastily answer in the same way, you might want to stop and think about it for a moment. Certainly children may not be responsible enough to hold a credit card, depending on their age and maturity level. In most cases the idea of offering a line of credit to a child is laughable. But the truth is that they’re going to have to learn at some point how to manage money as well as how to use credit wisely, and unless they take some sort of finance class in college you are probably going to have to be the one to teach them. So you might want to weigh the pros and cons of such a move before simply dismissing it out of hand. Here are a few to mull over.
First of all, you should ask yourself what good, if any, could come from giving your children credit cards. There are actually a couple of positive outcomes that could result from such action. For one thing, you could certainly utilize it as a teaching tool to demonstrate what happens when credit is used recklessly. If you start them off with a card that has a limit of a few hundred dollars, they can’t get into too much trouble with it. And you can make them pay it off with their allowance.
If they max it out (and you may want to let them), you can take it away until they pay it off (likely over several months). Then you can go back and show them what the original purchases cost as well as what they ended up paying with the addition of interest. When your daughter sees that she actually spend $150 of her hard-earned money on a $100 pair of shoes, or you son realizes that a set of concert tickets cost him twice as much as he bought them for, simply because he was irresponsible with his credit, then they will understand better than most adults the perils of overextending where credit is concerned.
In addition, the responsible use of credit cards during adolescence could mean that your kids have actually built up some of their own credit by the time they are working and ready to take out a loan for a car or for college (meaning you might not have to co-sign). Again, you will have to guide them so that they learn to use credit properly, and you certainly don’t want to give a credit card to a child that is too young or is otherwise unprepared for the responsibility, but it’s not always as bad an idea as you might think.
Of course, there are drawbacks. You will almost certainly have to be listed first (as in, a shared account), which means you’ll ultimately be responsible should your children fail to pay (they should still be able to build credit – you just need to check with your credit card company to make sure their credit profile is linked to the account). And children can’t be held to the same standards as adults when it comes to credit, so you have to be willing to put in the time to teach them to behave responsibly. But if you think that your kids are ready to learn to use credit cards, and you want them to adopt this life skill before you send them off to college, card in hand, then giving them access to a credit card and guiding them in its usage may turn out to be a pretty good idea after all.
Jennifer Kardish writes for Granite Card where you can find articles on all things credit related, including credit cards for bad credit with high interest rates and hidden fees.
Image source: metroparent.com