When Should Your Child Get a Credit Card?

Written by , September 7, 2011

When Should Your Child Get a Credit CardCredit cards are among the most beloved inventions of the twentieth century. They make purchasing items on credit a simple matter of swiping and signing. Unfortunately, many credit card users have found that they make it a little too easy. An alarming number of people, including a great many young adults, have found themselves over their heads in credit card debt.

Kids are often eager to get their first piece of plastic, but the Credit Card Act of 2009 has made it more difficult. Those under 21 must now prove that they have sufficient income to pay the bill or have an adult cosign for them. In most cases, this leaves parents to decide whether or not their children are creditworthy.

Here is some credit card advice to consider if you’re thinking about helping your child get a credit card.

  • Does your child have experience managing their own finances? If so, how has he or she done thus far? Those who had a job while in high school and were responsible for paying their own bills are better candidates for credit than those who have never worked and got all of their money from their parents.
  • Has your child used a debit card? While debit cards use money that you have in the bank rather than giving you access to money that you don’t have, they still require a certain amount of responsibility. When you don’t have to write a check or count out cash for purchases, there’s a higher risk of impulse buying and overdrawing your account. Kids who have showed responsibility when using a debit card are more likely to do the same with a credit card.
  • Have you been a good example? Take an honest look at your spending habits and handling of credit. Parents who spend wisely and avoid running up high credit card bills are likely to raise children who do the same. On the other hand, if you’ve found yourself in hot water due to credit card debt, your child is likely to behave similarly. He or she may learn from your mistakes, but don’t bank on it.
  • Are they a good student? Kids who take their studies seriously are more apt to take their finances seriously as well. There are intelligent people who are terrible with money, but for the most part good students are not high credit risks.
  • There is no magic age when children learn how to manage credit responsibly. As a parent, deciding when your child is mature enough to handle a credit card is a judgment call. Just remember that if you cosign and your child doesn’t pay the bill, you’ll be left holding the bag. That’s why it’s important to monitor credit usage even if you’ve decided that your child is ready for it.

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