A blog called Frugal Dad has an interesting post today about the pros and cons of giving teenagers a credit card. “One could make the argument that normalizing the use of plastic too early could be dangerous,” he writes.
“Call me old-fashioned. I just don’t think kids are able to fully grasp the transactional differences in swiping plastic and watching that $20 leave their hand and receiving $0.70 in change back.”
On the other hand, if your teenager first encounters credit under your eye you are more able to teach them how to use it properly. Frugal Dad resolved the situation by giving his kids a credit card only to be used for fueling up the car.
If my teenager were mature enough, I would let them apply for their own credit card their senior year in high school. They probably would not qualify if they did not have a job. But if they were earning their own wages and paying the credit card bill themselves, the relationship between earning and spending would be mighty clear. I know I watched every penny I earned in high school very carefully to save up for the things I wanted.
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March 25th, 2009 at 10:27 am
I think an effective argument can be made that NOT giving kids credit cards in an environment where a parent can monitor activity is irresponsible. My parents were totally against credit cards, therefor I did not have one in college. I paid for everything in cash. When I left college, I was unable to get a cell phone, ect ect, because of no credit history. A major impediment.
My husband’s parents got him ( and later his brother) their first credit cards when they were in high school. They were co-signers on the card, and made sure it was used for responsible purchasing. My husband has EXCELLENT credit now, and a credit history that is 5-6 years longer than mine. He had no trouble getting a cell phone, and apt, ect.
And let us not forget that once that kid turns 18, the credit card industry has them in the cross-hairs. They can get several (along with the free T-shirt) while walking across campus during orientation. So for a precious years delay, you have given up the chance to teach them responsible credit use, and now they are on their own.
March 25th, 2009 at 12:08 pm
My dad co-signed for me to have a credit card when I was in college, under the condition that I pay the balance in full every month; if I didn’t already have the money in the bank, I shouldn’t be using it. To this day, I still use my credit cards that way.
March 25th, 2009 at 12:28 pm
I think that the issue of credit cards and kids is no different from all the other situations where parents have a responsibility to teach their children to act responsibily. It begins at about age 4, when kids start to learn to share and take some care of their clothes and toys. Cash allowances are all about teaching responsible use of money. A credit card, supervised and limited by parents, is just another form of allowance.
Children don’t become responsible adults in a day, but they can be helped and guided to become more repsonsible every day.
March 25th, 2009 at 1:05 pm
I got a card on my account for each of my children when they started driving- for gas and emergencies. Before starting college, my daughter got a college account card which has a low limit on it. She has been very responsible about it and is very careful how she spends her money.
March 25th, 2009 at 4:39 pm
Credit cards were not available when I was a kid, and I never learned to use one wisely until well into adulthood. Therefore, I did not pass along needed info and smarts to the 2 older of my sons. The youngest was required (by my husband and me) to work part-time starting when he was in HS, and continuing to do so during college. He had to buy his own car, pay for the upkeep and insurance, etc., and get his own credit cards. For the most part, he’s done well with his finances.
March 31st, 2009 at 11:19 am
Unfortunately in this day and age, teenagers will be bombarded by credit card offers. They are better off learning how to handle this responsibility by their parents rather than just being thrown to the “wolves”. Not all parents handle credit responsiblity though. I know some high schools now offer a class on managing money. Great post!