Teaching Your Teenager about Credit Cards

April 5, 2017

As our children get older, we are increasing put into situations where we need to teach them about much more complicated subjects. Teaching them about where water comes from, or why they can’t have a pet toad, were much simpler topics. If you’re on to more complicated topics, such as teaching your kids about credits cards, we’re here to help.

When Should my Teenager Get a Credit Card?

The “best” age for your child to have a credit card will be when they can responsibly use one. There are some age restrictions in place though, such as needing a co-signer for a credit card if you are under the age of 21, and simply not being able to get one if you’re under 18. Age-restrictions aside, it’s best to get a credit card only when someone is able to pay-off that card before any interest is calculated.

Which Credit Card Should I get my Teen?

If your children are at the age where they can obtain a credit card (over 18) but not of the age where a credit card company is willing to give them one, there are other options. The most common of which is a secured credit card, which basically requires a deposit of the card’s maximum credit amount as the bank’s security. NerdWallet.com does a great job of outlining some of the best secured credit cards of 2017 if you’d like to look through your options.

Other options to consider would be to get your child a pre-paid card and have them treat it as a credit card. Or add them as an authorized user of your credit card to help tech your teen about credit card usage.

How to Teach Teens About Credit Cards

Teaching the principles of credit cards themselves can be a tricky endeavor. We suggest first starting with the concept of borrowing. Talk about how your child borrowed something recently from a friend. Then, add in the aspect of interest: the longer you borrow something, the more you have to give back. If your child borrowed a video game for 6 months, they would have to give two video games in return. For this reason, it’s important they avoid using credit cards unless you know you can pay-off the balance before the month is over.

Here at Relate CPA we are a Mt. Dora, FL accountant who separates ourselves from other CPA firms by working to create meaningful and lasting relationships with our clients. We want to get to know you, your business, and your goals so that we can better help you. For more information on the services we offer, give us a call at 352-720-0321 or fill out the form on our website, today!