Life moves very fast and it is quite evident when our little children who were running around us become teenagers and make their own demands. When we were young as teenagers, there were a lot of limitations – in the money we handled, the places we went, the people we met but life has drastically changed now. My niece who is a teenager is making demands that I hardly imagined when I was of that age. To this list of teen attractions, the latest additions are the credit cards. Credit cards come with a lot of attractive offers but hidden costs which a grown up adult needs to take care of. If it’s a teen, it needs a lot more attention. A survey conducted in 2007 reports that only 45% of teens know how to use a credit card, while just 26% understood credit-card interests and fees. So, before you gift a credit card to your teenage son/daughter, do take into consideration its boons and banes given below.
Boon
Definitely, credit cards are a boon to our teenage children but it depends on how they are educated about its usage. If your child is still naive, it is better you wait a year or two before he/she understands the world around. Credit cards can help your child when they are stuck in a place for transportation, when they run out of money in a food court, when they need to help a friend in emergency and much more. It also helps them to manage their expenses and budget out the money at an early age. Advantages such as these assure parents about the safety of their child when in terms of emergency and also helps build the child’s self confidence.
Bane
On the other hand, if your child is under peer pressure to get a costly jean from a mall, you need to watch out the way he/she uses the credit card. Also teenagers tend to become careless in the amount of money they own and start spending above their repaying limits. Such instances put us in a dilemma if the credit card is a real boon to our teenagers. Educating them about the guidelines in using a credit card and also disciplining their spending habits may help straightening their expenditure patterns. Apart from all that, below are few tips which could assist parents before you equip your child with the credit cards.
1. Tracking the responsibility level of your teenage child is very important before you decide about giving a credit card. Each child has different levels of understanding their responsibilities and parents must keep a keen watch over it. When you are confident that your child is wise enough to manage money on his/her own, you can give them their much yearned gift.
2. Every parent needs to monitor the teenager’s spending habits. Gifting them a credit card and not monitoring their whereabouts could cause a lot of problems. Have some trials before you hand over the credit cards to them. Also check the credit history in banks occasionally to watch what your child is spending on. By doing so, you can be sure of your money being spent purposefully.
3. Befriend them and talk about the areas where they could improve to maintain a steady balance between the income and expenditure. Help them with writing checks, updating their registry books and balancing the check books on a monthly basis.
4. In case your teenage child gets into a fiasco in money management; make him/her realize their folly before bailing them out from the problem itself. By doing so, you help them on the long run and make them responsible enough for their mistakes.
5. Deciding upon the right type of credit card for your teenage son/daughter is also crucial. There are lots of them available in the market with different limitations. Pre paid cards have the specified amount of money loaded in them which will prevent teens from going over their limits. Secured cards can be used by crediting the amount deposited in your bank thereby helping teenagers to maintain a credit history and managing money more effectively.
Conclusion
Credit cards for teenagers can either be an asset or a liability. It primarily relies on the fact how parents wish their teenager to spend their money. So, before educating the children, it is mandatory for every parent to realize the moral responsibilities that one needs to teach the child from early days. This would help the child in being careful while treading an unknown path and also would increase his/her self confidence in the future.
