Most parents are hesitant to provide or allow their teens to have their own credit cards. They are afraid that this freedom will just lead to a more serious problem – bad debt. However, it is important to note that allowing our children to have a first-hand experience on managing finances is better that just telling them about it.
Importance of Having a Credit Card for Students
Getting student credit cards for your teens is a great start for them to build their own credit while in high school or college. Remember, credit history is important when applying for a job or loan. Good credit can impress a potential lender or employer. At young age, teens can learn basic finance skills that they can use in the future.
A credit card is convenient for college students since they won’t have to ask for cash from their parents each time they need to pay for something or buy materials for their projects.
College students who are working during summer breaks, on the other hand, can use their student credit cards to pay their tuition fees or purchase items. They simply charge it to their credit cards and pay them off with their own earnings from their part time jobs.
Tips On How To Teach Your Child About Credit
- Be sure to keep the credit limit to $250 0r $500. Students with part-time jobs might ask you to let them for a higher credit limit since they are already working but make them understand that they should just stick to that credit limit to avoid spending too much on purchases.
- Make your child understand that they can use the card for personal expenses but they must pay these bills from their own allowances.
- Teach them the importance of budgeting and expense tracking.
- Set rules on how they should use their student credit card. Make them understand the difference between what they need and what they want.
- Explain how a student credit card works – its fees, interest, grace period, etc.
- Let them know the importance of paying off their credit card balance on time.
How To Find The Best Student Credit Card For Your Teens
- Check if the student credit card has no annual fee.
- Find a credit card for students that has 0% Intro period.
- Check if it offers rewards programs that are just right for your children.
It is important to let your children understand the dangers of having too much credit. Some of the most common results of being incorrect credit card use are, debt accumulation, bad credit history and debt problems.
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