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How to Raise Teens to Use Credit Cards Responsibly

Posted In:  credit cards

Teaching your teens about the responsible use of credit and credit cards is vital in today’s world. It is nearly impossible to get through life without using credit in some form at one time or another. Unfortunately, many parents have the idea that if they just tell their teenagers that credit cards are evil, they have done their job. That is neither realistic nor true.

Some of the latest regulations on credit card companies are designed in such a way that they could help parents teach the responsible use of credit cards. One of those guidelines is likely going to reduce the number of teenagers who can get a credit card as soon as they turn 18 years old. The new rule states that anyone under 21 years of age now has to have a cosigner on their credit card application or they must prove that they can pay the monthly bills. As a result, these companies will have to change part of their marketing strategy. Rather than targeting college students, they will have to go for a slightly older crowd. But this also gives parents a chance for to teach their children about being financially responsible. Following are some tactics that parents have used and had decent results. Maybe you would like to use them, too.

Introduce Them to Debit Cards

A debit card is a great way to teach your teenager financial responsibility by keeping your purchases at a limit. Many parents send their kids away to college with a debit card rather than cosigning for them for a credit card. Your debit card can be linked to your account so you can monitor how much they are spending and what they are spending it on. Also, you can make them responsible for any overdraft charges that occur as a result of their overspending. After a few of these fees which can be as high as $35 per transaction, your teen will keep better track of their spending habits and limits.

Use a Monitored Credit Card

Helping your teen build their credit early can be a benefit to them later in life. Debit cards do not do much for building your credit history. However, you can give your teen a monitored credit card that they can use for emergencies. You will get the bill at the end of the month so you will see what your teen has charged on the card. The only problem with this idea is that you may not be able to remove your teenager’s name from your credit account unless you both agree in writing. If your teen overcharges, you could also be responsible for over limit fees and other charges.

Many parents use the hybrid method for teaching teenagers about responsible spending. This method involves putting your teenager on your credit card account as an authorized user. This can be a good thing because they will begin building their own credit history. Many card companies will also allow you to put a spending cap on authorized user accounts so your teen will only be able to charge so much before the card stops working. This way, you don’t have to worry about them charging too much stuff and ending up with a huge bill at the end of the month. 


Sit Down and Talk

In addition, the hybrid method involves sitting down with your teen and working on a written budget for their financial needs. You can then help them open a checking account along with some rules and guidelines for using the account. Let your teenager know what you expect from them when using the credit cards and the checking account and make sure the punishment for violating the rules is discussed. Don’t be afraid to confiscate their card or their checkbook if they break the rules because it may be the only way to teach them financial responsibility.

It may be difficult trying to teach your teenager about spending their money wisely. We always want the best for our kids and sometimes we go overboard by letting them buy things on a whim and using credit cards to satisfy their need for instant gratification. Unfortunately, we are not doing our teenagers a favor by letting them do that and think that it is acceptable. If we do not start teaching them about financial responsibility when they are young, they will grow up to be financially irresponsible and they will have to learn the lesson themselves. That lesson may only come after they find themselves under a mountain of debt, though. A little tough love now will certainly help them grow up to be financially responsible adults.


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