Teach your kids about credit cards

You can’t teach kids to swim without getting them into the water. The same thing could be said of kids and credit cards. Until they have one, you might never be sure they’re really ready to handle it. The only way to find out is to dive in!

But, consider all the facts:

Add your teen as an authorized user on your credit card.
Pro: You’ll be able to keep track of how much your child is spending, and have peace of mind knowing he or she has access to credit, if needed, in an emergency.
Con: “User” status on your card won’t teach your child money management skills or help build a credit history.

Co-sign for an under-21 child without enough income to qualify independently.
Pro: Teens who will be driving or headed off to college should probably be carrying a credit card in their name, but only if they can resist the urge to overspend and are financially responsible. Not sure? Don’t take a chance. Apply for a card with a low credit limit.
Con: In the wrong young hands, a credit card can result in overdue payments, late fees, and damaged credit.

Get a prepaid card.
Pro: A reloadable prepaid card is great for a youngster to have “just in case,” and the set dollar amount on the card can prevent overspending.
Con: The card may come with monthly charges and fees for ordinary everyday use, such as cash transactions. Plus, it doesn’t offer any financial skills training or credit-building benefits.

Does your youngster have a credit card?

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