Have you ever thought about the wisdom in giving your child a credit card? When the nation is struggling with billions of credit card debt, do you really think it is a good idea to give your college student a credit card to use while they are away from home?
As a parent, it is your responsibility to teach them the values and equip them with the skills that will help them be mature and responsible adults. Regardless of your own financial mistakes, you need to impart the right ones to your children.
It pays to start them young. Teach them how to properly manage their allowance and to never give in to every want that they have. Encourage them to earn their keep and guide them in making the right financial decision – even if it is only in choosing between toys or candies in their purchases. Under the circumstances, there is no such thing as being too young to learn the value of money and how it should be spent.
Despite all of its havoc that it gave the average consumer, credit cards can teach your children the right skills that will help them build their credit history. We all need a good credit – especially your children. It will help build up the financial investments that they will make in the future. If they want to buy a car or a home, they need a good credit for that. Even employers look into the credit score of applicants. But of course, you need to guide them every step of the way to make sure that they will not fall into the debt pit.
The key lies in education. You may not have that type of relationship with your child but you may have to put that aside and talk to your kid about responsibility and money management. Before they go to college, talk to them about the financial responsibilities that moving out will entail. Let them know that credit cards can be very tempting and make sure that you are giving full responsibility over the payments to them.
If you want to use credit cards to teach your kids the right debt lessons, make sure you wait until it is their name on the card. When they are 18, they are qualified to get their own card but under one condition: they should have the means to pay it off. It is not ideal that you co-sign the card of your child because that will make them depend on you for payments. Tell them that they can get their own card if they get a part time job or they wait until they are 21.
Discuss with them credit card details like interest rates, late payments and credit limits. Explain how sticking to minimum payments can stretch to forever before you can completely pay it off. More importantly, convince them that they only need one card.
Instruct your child about the benefits of credit cards and why it is very important that they keep it from spiraling out of control. These cards can help build a credit history but they have to display the right behavior for that to reflect. Make sure they understand this before you entrust them with their own credit card.
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