Should Your Teens Have a Credit Card?

In financial parlance, being in the red is not a predicament that you want to end up in. Red is definitely not cool when it pertains to being over your head in debt. This is what happens when spending on credit is allowed to go uncontrolled – something that is so easy nowadays with a great number of credit card companies all issuing pre-approved credit cards even to teenagers. There is a growing number of youngsters not even in their twenties who are joining the ranks of people in the red. Most of them have not even managed to get their own jobs and move out of their parents’ home. And yet, they want only spend money that they do not have on trivial things. With such a predicament, it would be a wonder how they could manage to learn how to handle their finances responsibly.

There are mixed opinions about the answer to the question of should teens have a credit card. This question really could be answered on a case-to-case basis. There are pros and cons to giving them to teens. The most dangerous thing about letting kids have them is when they start thinking of their plastic cards as a license to spend money they do not have for things they want rather than for things that they need. Unfortunately, the charges in their plastic would have to be paid back on a specified due date every month. A teenager who is not able to manage his “income” or his allowance properly is likely to fall deeply into debt without him noticing it.

Another school of thought supports the use of it as a tool to teach teenagers proper financial management and to prepare their credit record for future needs. But, charge cards should not be given before the stage is set so to speak. You have to teach your teenagers some basic money management concepts before giving them a big responsibility like a plastic card. Start out with observing how they handle their allowance. You can make it a joint project with your teenager to raise half the minimum required opening balance for a checking account while you take care of the other half. The checking account will serve as the revolving fund where your teenager’s monthly budget will be credited. Allow him to write his own checks and balance his checkbook ledger. Once he has successfully been able to do this on his own, then you can say that perhaps he can be given a card with a low credit limit. Consider starting out with a prepaid credit card with a minimal credit limit.

Should teens have credit cards? The answer to this is another question: Are they responsible enough to manage their own finances? Only when they have demonstrated some degree of responsibility towards their finances – both saving and spending ends of the spectrum, should teens have it. Without this kind of a disposition, it will be a big mistake for parents to allow their teens to have plastics. Chances are, you will be bailing them out from thousands of dollars in credit card debt before they can even build a substantial amount of funds to cover their basic everyday needs.