Posted on: 29th Sep, 2007 01:40am
Credit card debt problem faced by many teenager students is a serious concern these days. These cards are issued to the teenagers when they are not even in the college but in high school. This brings a very pertinent question into fore – should teenagers be issued credit cards?
Various studies have found that majority of the teenagers are very novice regarding money matter, including credit card usage. This is the root cause behind alarming proportion of credit card crisis of the teenagers.
The most important advantage of this plastic money is that it is very convenient to use. The underlying aim for issuing credit card for teenagers is to help them establish better credit score. A good credit score can help the teenagers in many ways.
It is often seen that teens don’t use the credit cards for right purposes. Without understanding its implications, teenager students use this plastic money recklessly. This in turn leads to serious unsecured debt problems for them. Here are the tips for right uses of teenager credit cards.
Parents have lot of responsibilities to shoulder. This is first step in bringing the kids in the right paths in financial matters. Make it a common practice to discuss with your kids on money matters. The virtues of following best financial practices should be taught to your kids by you. However, you should not complicate things for your kids. You should try to keep it very simple and help your kids follow the basics.
To start with, you should arrange a pre-paid card for your kid. In a pre-paid card, your kid can’t draw money which is above and over what is loaded in the card. This will expose your kid to the world of plastic money but with a reality check.
Try to imbibe the sense of budgeting in your kid. Just teach your kids the virtue of keeping track on income and all expenses at a regular basis. This will in turn help your kids a lot when they grow up.
You can open a checking account for your minor kid for financial transactions. Your kid can make deposits in that account and can even reconcile a checkbook. Thereafter you can tie a debit card with that account.
Once you think that your kids have passed all these stages, then it’s time for a credit card for your kid. If your kid is a minor, then you have to co-sign the application.
With rational use of the plastic money, your kid can establish a good credit. This in turn helps your kid to fulfill mortgage goals.
Various studies have found that majority of the teenagers are very novice regarding money matter, including credit card usage. This is the root cause behind alarming proportion of credit card crisis of the teenagers.
Need of credit card for teenagers
The most important advantage of this plastic money is that it is very convenient to use. The underlying aim for issuing credit card for teenagers is to help them establish better credit score. A good credit score can help the teenagers in many ways.
- To increase the chance in getting a job
- To raise the chance of getting approved for a car loan
- To lower down the homeowners and auto insurance premiums
It is often seen that teens don’t use the credit cards for right purposes. Without understanding its implications, teenager students use this plastic money recklessly. This in turn leads to serious unsecured debt problems for them. Here are the tips for right uses of teenager credit cards.
1. Parents should talk with teens on money matters
Parents have lot of responsibilities to shoulder. This is first step in bringing the kids in the right paths in financial matters. Make it a common practice to discuss with your kids on money matters. The virtues of following best financial practices should be taught to your kids by you. However, you should not complicate things for your kids. You should try to keep it very simple and help your kids follow the basics.
2. Arrange a prepaid card for your kid
To start with, you should arrange a pre-paid card for your kid. In a pre-paid card, your kid can’t draw money which is above and over what is loaded in the card. This will expose your kid to the world of plastic money but with a reality check.
3. Imbibe the sense of budgeting in your kid
Try to imbibe the sense of budgeting in your kid. Just teach your kids the virtue of keeping track on income and all expenses at a regular basis. This will in turn help your kids a lot when they grow up.
4. Open up a checking account for your kid
You can open a checking account for your minor kid for financial transactions. Your kid can make deposits in that account and can even reconcile a checkbook. Thereafter you can tie a debit card with that account.
5. Arrange a credit card for your kid
Once you think that your kids have passed all these stages, then it’s time for a credit card for your kid. If your kid is a minor, then you have to co-sign the application.
With rational use of the plastic money, your kid can establish a good credit. This in turn helps your kid to fulfill mortgage goals.
Hi,
My daughter is just 17 and she landed up with a job at the spencer's . It's only today that she got a mail from a cc company regarding a credit card. She does not have on and I wouldn’t prefer her to have one as hardly she knows how to manage her money. But then she is willing to. I don't know how to stop here…it's bothering me how the cc company got an info about her actually, I just pray no more such mail comes in.
My daughter is just 17 and she landed up with a job at the spencer's . It's only today that she got a mail from a cc company regarding a credit card. She does not have on and I wouldn’t prefer her to have one as hardly she knows how to manage her money. But then she is willing to. I don't know how to stop here…it's bothering me how the cc company got an info about her actually, I just pray no more such mail comes in.
not a problem if the company is a good one. First find out which company it is and what are the terms and conditions.
Hi Guest,
It can be a very dangerous if you do not educate your child before she gets a credit card for her. So, if you can make her understand how credit cards work and how she can manage her credit, it will be a great help to her. Then she will not face a problem further.
It can be a very dangerous if you do not educate your child before she gets a credit card for her. So, if you can make her understand how credit cards work and how she can manage her credit, it will be a great help to her. Then she will not face a problem further.
Hello Worriedmom,
Credit cards are helpful in developing a sense of responsibility in the teenagers. If it is handled properly, it helps her to establish a good credit history which will be beneficial in the years to come. It would be better if the first time users are given the card with a low credit limit. You should keep a watch on her spending and monthly payments. The misuse of the card might result in serious financial problems. So once you find she is not responsible enough to manage her credit, hold it back and give it to her only in emergencies.
Credit cards are helpful in developing a sense of responsibility in the teenagers. If it is handled properly, it helps her to establish a good credit history which will be beneficial in the years to come. It would be better if the first time users are given the card with a low credit limit. You should keep a watch on her spending and monthly payments. The misuse of the card might result in serious financial problems. So once you find she is not responsible enough to manage her credit, hold it back and give it to her only in emergencies.
No No and um Noooooooooo....
Now don't get me wrong. I am sure that we all have perfect children and none of us ever got cc's at the start of our adult lives. But I personally don't think cc's are ever a good idea. I agree with my Grandfather, if you can't pay cash you really don't need it.(my broker disclaimer- except for mortgages of course) And don't give me the but I can't afford it any other way garbage... because if you do the math, if you could afford the credit card charge then it probably wouldn't take that long to save up. We live in a society of give it to me now! It isn't too hard to save for a year or two or three to get what you want. If you are healthy then you have a long time to live so what is a few years.
Now I know, now you are saying, explain this to my 17 year old and that is a completely different conversation all together (one I am definately not qualified for and have another 7 years until I have to do it)...
"it's bothering me how the cc company got an info about her actually"
That's actually bothering me as well. As far as I know it is illegal to offer credit to anyone who is not of age, competent, and aware of what they are being offered. This used to be pretty common and I myself had a credit card when I was 8 (funny story). How did they get her information is the question. It is likely if she is close to 18 and getting ready for college one of the many people she has been checking education items with sold her info. No telling though.
- Edit -
Upon more review I don't think it is illegal to give a credit card to a minor. The actuall act is not illegal the act of holding them liable is.
Meaning they can get the card but they are not actually legally liable.
This is what happened to me when I was 8. The CC company actually told my parents that they would be responsible. My parents laughed and told them to sue me. It was ultimately the CC issuers fault for simply activating the card without any additional information.(remember when those real cards used to come with the pre-approvals)
Now don't get me wrong. I am sure that we all have perfect children and none of us ever got cc's at the start of our adult lives. But I personally don't think cc's are ever a good idea. I agree with my Grandfather, if you can't pay cash you really don't need it.(my broker disclaimer- except for mortgages of course) And don't give me the but I can't afford it any other way garbage... because if you do the math, if you could afford the credit card charge then it probably wouldn't take that long to save up. We live in a society of give it to me now! It isn't too hard to save for a year or two or three to get what you want. If you are healthy then you have a long time to live so what is a few years.
Now I know, now you are saying, explain this to my 17 year old and that is a completely different conversation all together (one I am definately not qualified for and have another 7 years until I have to do it)...
"it's bothering me how the cc company got an info about her actually"
That's actually bothering me as well. As far as I know it is illegal to offer credit to anyone who is not of age, competent, and aware of what they are being offered. This used to be pretty common and I myself had a credit card when I was 8 (funny story). How did they get her information is the question. It is likely if she is close to 18 and getting ready for college one of the many people she has been checking education items with sold her info. No telling though.
- Edit -
Upon more review I don't think it is illegal to give a credit card to a minor. The actuall act is not illegal the act of holding them liable is.
Meaning they can get the card but they are not actually legally liable.
This is what happened to me when I was 8. The CC company actually told my parents that they would be responsible. My parents laughed and told them to sue me. It was ultimately the CC issuers fault for simply activating the card without any additional information.(remember when those real cards used to come with the pre-approvals)
I think i's perfectly fine for a responsible adult to have a credit card. However, I don't think that at the age of 17 she is financially resonsible enough to have a credit card. At 17 we are still not sure about what we need and what we want. I'm sure there are exceptions to the rule but for the most part not. It's hard for most adults to control their spending habits and at age 17 its hard for them to realize the horrible effects that debt can cause in their lives. She should be more focused on saving for the future instead of how to borrow.
I agree with livinginnky on this one. If you don't have the cash for something then you probably don't need it. I do have a credit card that I use for my monthly expenses, but I always have the money in the bank to pay for it at the end of the month, as well as an emergency fund to pay for unexpected expenses.
If she has both of those things in place then maybe she is responsible enough to learn about how credit cards work and how much responsibility goes along with them.
I agree with livinginnky on this one. If you don't have the cash for something then you probably don't need it. I do have a credit card that I use for my monthly expenses, but I always have the money in the bank to pay for it at the end of the month, as well as an emergency fund to pay for unexpected expenses.
If she has both of those things in place then maybe she is responsible enough to learn about how credit cards work and how much responsibility goes along with them.
Hi Dcrum,
Welcome to our community forums.
The emergency fund is something that I too maintain. I think certain things are necessary if you wish to manage your finances...such as an emergency fund, a retirement savings plan such as 401k, a flexible spending plan etc. One needs to keep aside cash for financial obligations as well as health-care costs too.
Regards,
Jessica
Welcome to our community forums.
The emergency fund is something that I too maintain. I think certain things are necessary if you wish to manage your finances...such as an emergency fund, a retirement savings plan such as 401k, a flexible spending plan etc. One needs to keep aside cash for financial obligations as well as health-care costs too.
Regards,
Jessica
A word of advice from someone hwo has gone through this. I thought it would be a good way to establish credit for my 18 yr old son. No way .It is to them and endless supply of cash and to much temptation for the young and inexperienced.He ended up with 2 ccs and over the limit on both and not the ccc are harrassing all of the family.talk to her and ask that she wait , she is only 17 so if you get one anyway get like a 200.00 one, look at limits.
I would really have to sit and think long and hard on this one, a teenager with a credit card. Has she been showing up for work, being responsible? If she is she may do okay, just make sure that she only charges things she can afford, It may be a wonderful opportunity to start credit for her.
But my question would be can they hold a minor legally responsible for debt? I did not think this was possible. I learned something today. :D :D :D :D :D :D :D :D :D
But my question would be can they hold a minor legally responsible for debt? I did not think this was possible. I learned something today. :D :D :D :D :D :D :D :D :D
Well jbarto as Eric says, no minor will be held liable for non-payment of debt.
They will probably have a co signer or an adult that will be responsible for the payment, if the minor can't pay.
Sit down with her and explain the concept of a credit card and what implications she may face that way she will enter into it with an open mind or will decide its not for her.
There is no doubt that the thought of issuing your teenagers credit cards worries you. However, giving them one will give them the chance to understand financial matters better and will give you the chance to discuss them the financial virtues that they should learn. If you are worried that they might not handle a credit card appropriately yet, arrange for a prepaid card for your teens. In this way, you will not be concerned about whether or not they will go beyond their limit. Make them understand that the amount on their card is sufficient for, lse, and if they use it up before the week ends; they are not entitled for added allowance. This will teach your teens how to budget and use their money wisely. Once they know how to save and manage their money, you can up an account for them and teach them how to deposit their savings. Once you see that they are responsible enough and have learned the importance of managing finances, then you can finally give them a credit card.