Teenagers Having Credit Cards – The Trend That Deserves More Insight

At first glance, we might be a little alarmed at the idea of teenagers having credit cards. After all, we remember being teenagers ourselves and our lives didn’t seem to end prematurely because we didn’t have a credit card. However, it’s safe to say that times are changing, and not everyone is living in a two parent household. If your children are being shuffled from one parent to another, there might be cases where a credit card definitely comes in handy.

When it comes to the world of travel, credit cards definitely knock down a lot of barriers. If you’re stuck somewhere, they can get you into a hotel, rental car, or even just out to the store to pick up some supplies while you’re stuck. Plane tickets are naturally easier with credit cards to cover them. Sure, you can get a prepaid debit card, but some rental car companies don’t even take them. That means that you’re putting a lot of faith in a card that someone might not take — even though they’re technically supposed to. Yet it’s hard to be technical when they know that you need them, not the other way around. By the time you get done raising the issue, you’re still going to be in the wrong on some counts.

So this means that if you do have a need for your teenager to get a credit card, there are a few things that you need to understand and consider first. First and foremost, you will want to have your teenager added to your credit card as an authorized user. You can have a credit card created for them and sent to them. However, keep in mind that you two will share the same limit in most cases. Can you get your limit lowered? Sure, you can make the request but it’s not a smart idea. For starters, that’s going to change your utilization percentage, which directly affects your credit.

This is usually not a good idea to lower your score at a time where you’ll need your score to be as high as possible.

Giving your teenager responsibility is something that might not be as dangerous as you might expect. It’s just a matter of knowing your teenager’s behavior. Do they already have responsibility? Maybe they’re taking good care of the car that you gave them. Maybe they area already working at a job. Either way, you will definitely want to make sure that you’re being as cautious as possible, while still being realistic. Sure, it’s easy to want to shelter them from just about everything possible, but that’s not a good idea either. For one, it’s going to make them feel like you don’t trust them, and that can cause a lot of problems — certainly more problems that you might expect.

Sit down with your teenager and present them with all of the information on your credit card. Talk openly about all of the terms that they need to know — like the finance charge, which is the amount that the credit card company is charging both of you to give you the privilege of borrowing their money.

If that sounds harsh, we definitely aren’t trying to be that way. But trying to paint a rosy picture of credit cards is part of the reason why we got into such a credit mess to begin with. Don’t send your children to the same fate — let them know the honest truth about credit cards without demonizing them. If you can do that, then you’re going to be a step ahead when your teenager makes better financial habits.

Of course, you don’t want to just hand them the card and have no way of actually monitoring them. Make sure that you actually look at your statements carefully and ask questions. If there’s a purchase you don’t recognize, ask. When your teen realizes that you’re looking over their shoulder, they’re a lot more likely to make better decisions.

Overall, it can be tricky, but the trend of giving teenagers credit cards isn’t something that we think is inherently bad. On the contrary, it can definitely have some benefits as people realize that they really can teach their teenagers sound personal finance benefits that can make life a lot easier in the long run. After all, it’s not like schools are really teaching personal finance skills in a way that’s going to have lasting effects, right?

The time is right to start talking to your teen today — what will you start with first?