Should Teenagers Have a Credit Card?

This is a question I have been thinking about for some time now. I have also done a lot of reading to find out what other people think. Wow. It’s a huge issue out there and quite controversial. I have been amazed to read the things that people think about teens. How we are irresponsible and out of control, even how our brains are incapable of making a distinction between spending real money and ‘plastic’ money.

Really? It makes me wonder how much of the trillion dollars in consumer debt now owed in this country is due to teenage spending on credit cards. Not to be rude but I’m pretty sure most of that is adult spending. Perhaps teenagers aren’t the only ones who can be irresponsible with money…ahem. 🙂

So, should teenagers have a credit card? Let’s take a look at the pros and cons and I will tell you what I think at the end. I also want to point out I’m pretty sure that a teenager can’t have a credit card in just their name before they are 18. They could really only get a card as an ‘authorized user’ on a parents card, so that’s really what I’m talking about here.

Pros

Helps a young adult learn how to manage debt:

Even though I am only 18 I have already learned that just sliding a card is so much easier than pulling cash out of my wallet. And yes, I have slid my debit card at a store and been declined (SO EMBARRASING) because I had forgotten about something I had gotten and didn’t have enough money to cover today’s purchase.

A credit card is different because the money doesn’t come out of the account right then. Getting the bill at the end of the month can be a huge problem if you don’t keep track of your spending. Having a credit card as a young teen can help you learn to keep good track of your purchases and make sure you have enough money to pay everything off at the end of every month.

Helps establish a credit history:

Some people say that having a good credit score doesn’t matter but I don’t think that’s true. If you are right out of high school or college you are probably going to need to rent an apartment, purchase a car, or qualify for a home loan. Having a good credit score will matter when you try to do these things.  I have also read that more and more employers look at your credit score before hiring so it definitely matters!

Cons

Some teens will get into trouble with a credit card:

There will be some teens who will not handle the card responsibly and will get themselves or their parents into debt. However there are a few easy ways to make sure this doesn’t happen. Parents should educate their children from a very young age about how to handle their money. This will really help a teen make good choices with a credit card. Additionally the teen could have a credit card with a very low spending limit of just a couple hundred dollars. This will make it impossible to make any huge mistakes.

Could create a bad credit score:

If a teen went into serious debt it could affect their parents credit score as well as their own. A bad credit score could affect a person for years. One way that parents could help avoid this problem is to go over the credit card bill each month with their teen and make sure that the spending is appropriate and under control.

There was a time that I would have said that teens should never have a credit card, but in the last year or so my perspective has changed a little bit. The big issue is education. If parents and schools would step up and teach kids and teens how to handle their money responsibly, how credit cards work, and how to avoid credit card debt many teens wouldn’t have a problem in the first place.

Here are some things I think teens should be able to do before being given a credit card:

1 – Show how they are able to budget their own money using a cash system. I use the envelope system and it works really well!

2 – Manage their own checking account and write their own checks and use their debit card responsibly.

3 – Be willing to sit down with parents every month and go over their budget carefully to make sure they are on track.

When I turned 18 earlier this year my dad helped me get my first credit card. I was already an authorized user on several of my moms accounts. I am allowed to use the card from my dad for all of my school expenses. It hasn’t been difficult to manage because I am committed to respect my dad and use the card only for those purchases because he is being kind enough to pay the bill every month.

Teens can use credit cards wisely especially if their parents have helped them understand how to manage money wisely from a very young age. It does take a commitment from both the teen and the parent but it will make such a difference for a young person who knows how to handle their money. And it’s a difference that will last for their entire life.

What do you think? Should teenagers be given a credit card? I would love to hear what you think!