Why Teens Should Consider Getting a Credit Card Early

Josh recently got into the personal finance game when he decided to start up Family Faith Finance. His goal is to introduce a unique perspective on personal finance while offering solid, unbiased advice. Today he is sharing his personal struggle with credit cards when he was a college student and answering the question if credit cards for teens is a good idea or not.

Back in the day, I certainly struggled financially, and a large culprit behind this was misuse of credit cards. I wish I had known what I know now about credit cards because I’m sure I could have avoided a whole world of financial trouble.

When I first started college, I was broke. Many others can probably relate when they look back at college. I was by no means prepared for the cost of my wants and needs, so I got a credit card, overspent, and then underpaid my bill. Needless to say, I was indebted in no time (not just broke, but in the negative). I had mounting credit card debt, setting myself up for a nasty situation.

Fortunately, I learned a few lessons from accruing so much credit card debt. First, I learned how to pay back seemingly insurmountable debt. Second, I learned that starting earlier with credit cards could help anyone from making the same mistakes as I.

Credit Cards For Teens

While I just stated credit cards, in my case, were bad, I do not think they are bad overall. In fact, credit cards can be a lifesaver when you find yourself in an emergency situation. The trick is that you pay that amount back right away. If you do not, you will quickly become involved in the minimum payment cycle.

Teens should get a credit card. Of course, any teen under the age of 18 needs to have a parent on the card with them and this is not such a bad idea. If I had known about credit cards prior to my horrible spending habits, I could have curbed my spending. I would have known what to expect and I would have known how detrimental to my credit the card was.

If a teen has the opportunity to obtain and use a credit card, this is a wonderful chance for the parent or parents to teach him or her about the importance of the card, how it works, and how it affects their credit score. With early guidance, teens will be able to better understand credit and learn how to use it properly to ensure they do not place themselves in financial ruin before they head out into the world.

How to Help Your Teen Manage Their Credit Card

Of course, you should not let your teen have full control over a high limit credit card where they can spend as much as they want, as this may not teach them anything. What you should do is set a limit for them, let them spend it, and then make them repay it. Once they get into the habit, they will understand how the card works.

You want to make sure your teen knows that he or she should not spend any additional money on the card unless they have it available. Fortunately, since your teen is under 18, there is minimal risk involved for them. You will be able to monitor the card, ensure payments are made, and control the amount of money your teen has access to at any given time.

You and your teen should sit down and create a budget and spending limit that the both of you are happy with. If your teen does not have a job, but you want them to have access to the card, consider setting their limit at what they can earn from you as an allowance. This way, they still have a limit and they have to work to earn it.

Conclusion

All teens should start learning about credit cards early, and oftentimes, the best lessons are learned through experience. Managing a credit card should teach them financial responsibility before the stakes are greater out in the real world. With proper guidance, teens will quickly learn how easily a credit card can help or hinder their financial future.