Posted Aug 2 2010 by Marc Chase
It’s a common problem: kids getting their first plastic, wrack up the credit card debt and wind up needing debt relief before they’re even 20. Now you’ve got a teenager dealing with the harassment of collection calls and desperate for credit repair just because no one explained the dangers of credit.
Credit cards and teenagers can be a potentially dangerous thing when mixed together. Usually because teenagers see the limit on their credit cards as actual cash they’re getting. They might also think there are no penalties down the road. Educating your children on credit cards, and how they work might be beneficial, but that doesn’t mean that they’re guaranteed to listen.
Building Credit vs. Ruining Credit
Having a credit card can be great for college, or other financial duties that they might have but they should know that sometimes the interest on the cards is not worth it. Paying it back might also become difficult, and they might end up ruining their credit instead of building it. This is something that is happening to a lot of teenagers. ‘Mom, can I get a credit card for college, and to build my credit score?’ Mom says, ‘you have to be responsible with it, get a job, and pay it back when it is due.’ The kid gets a card, spends the money on it on a lot of electronics and games and fun stuff then come time to pay does not have the money.
Now their credit’s ruined and they’ve learned nothing. This is not true of all teenagers, but the ones who might think it’s free money, are the people that end up needing mired in debt. You need to make sure that your kids are safeguarding their credit score. You want to make sure they’re getting the information and the facts prior to getting that credit card.
Tips to Keep Kids Out of Debt
• Get them only one credit card with a low limit.
• Never miss a monthly payment, but make sure you’re holding the kids accountable for their debt. Simply bailing them out doesn’t teach them anything.
• Charge only one thing to the card, and pay it off before charging another thing to it.
• Only purchase items that you know you can afford in the future using the credit card. This will ensure that you can cover what you purchased, pay off the credit card, and booster your credit up in the process.
• If you’re in doubt about getting your kids a credit card, think about the consequences first. You should feel secure in how they’ll use that credit card.
• Remember that borrowing money from a credit card means that someone, be it your kids or ultimately you, is going to pay the amount back with interest.
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