How do you pay your child’s allowance? Do you give them a little cash they can spend the next time you go to the store? While this is great for little ones, once your child starts to get older, breaking into the teenage years, you may want to consider changing your payment method and getting your child a student credit card.
If you are thinking this is too young for children to have credit cards, you should be thinking about the repercussions of your child not having one.
In many cases, parents wait until their children are going off to college before introducing them to credit cards. They get them a student credit card and send them on their way, hoping they figure it all out. Student credit cards are great for students, but many of them don’t have the financial grounding they need on the use of credit cards. Before they know it, they have maxed out the card, buying all sorts of things, are getting more and more credit bills, deeper and deeper in credit card debt, and eventually find they have bad credit and an upward struggle ahead to get out of debt and get their good credit back. Their good credit could have been saved and the fight to get out of debt could have been avoided if they were just taught how to properly use their student credit cards before they were out on their own.
This is why it is a good idea to get your child a student credit card while they are still at home. You will be able to teach them the importance of using a credit card correctly and how to maintain their good credit name.
Many student credit cards can be selected with a low limit, of $200 or so. This is what you should look for, for a teen. Talk to your child about responsibility over charging habits with the card.
Next, you will likely have to do a little tough love. Most teens ignore the parental lecture about careful spending. After a few purchases here and a few more there, they suddenly realize the card is maxed out. They will come to you for help. Instead of bailing them out, they need to understand that there are consequences to their actions.
Instead of giving them a little extra cash to go out with their friends, tell them they have to figure a way how to pay off what they owe. Their allowance for following weeks will have to go to that card, until it’s paid down.
It’s also a good time to sit down with your child and the credit card bill and show them just how it all got out of control, and how all those small charges add up. Not being able to go out with their friends in their teenage years may be painful, but learning how to properly use a credit card, and keep an eye on where the money is going is a lesson that will be priceless for their future.