Teens and Credit Cards: How to Teach Responsibility

There are two schools of thought when it comes to teens and credit cards. The first is that teens have no business with one, even if they are bringing in their own income. Why? Well, if you give a teen a credit card, they're automatically going to ruin their lives by overspending.

The second school of thought says that teens need a credit card to learn financial responsibility. Through a credit card they can learn how to budget their money. In the process they are building a credit score, something that is invaluable when it comes to buying a house, a car or securing a loan, (which is especially helpful when they go to college).

So, which view is right? Going by my experiences with teens and credit cards, I would gravitate more towards the second school of thought. However, you must do things cautiously, especially if the child is still under 18. In this situation they need you as a co-signer anyway, so start them of with a low-limit credit card. I would say around $250, as this is an easy amount to pay off if the teen defaults.

From that point forward, keep a close eye on your child's bills and make them pay their balances with whatever income they might have. If they charge up the card irresponsibly, make them give you their income until the debt is paid off.

For 18 and over, you're going to need a different approach when it comes to teens and credit cards, since they are now adults. And, as much as I hate to say it, this approach should involve letting them make their own mistakes. If your kid charges up everything despite your warnings, don't be quick to bail them out. Let them figure out how to manage their own debt, even if they have to resort to bankruptcy.

As a parent doing such things might be difficult, because your first instinct is to help them out. But when your child is an adult, they have to face the consequences of bad choices. If they don't face these consequences, they may never learn that they need to modify their spending habits.

In conclusion, restricting credit cards from your teen is not the best way to teach them financial responsibility. At some point in their lives they're going to have to establish credit to make big purchases, so it's best to get them started right now. The process is easier when they're under your control. But if they're adults, you're just going to have to let nature take its course. Let them know the importance of managing credit card debt while giving them some room to make their own financial decisions. If they make the wrong decisions, give them additional room to fix their mistakes. Many people have different views when it comes to teens and credit cards. Overall, it is the parent's decision if they allow their teens to have a credit card. Which is more important to you? Avoiding financial problems all together by not allowing your teen to have a credit card or giving your teen the ability to learn to be responsible with one. That's the decision you are going to have to make for yourself.