Credit Card for Teenagers: When is the Right Time?

credit-card-teenagersThere are many pro’s and cons about credit cards for teenagers that many parents don’t know whether they should get their teen a credit card or not. Everybody is entitled to their own opinion, especially through experience. The following article merely suggests ways in which you can check to see if your teenager would cope with a credit card and not overspend.


Firstly your teenager should at least have been making use of a bank account of some sort. There are savings accounts and then check accounts where you have a debit card. Some banks will issue teenagers check accounts easily while others won’t. You will have to check out the different options available. With a check account your teenager can learn how to write checks, balance his/her check book each month, and keep his/her check register up to date.

Before opening a regular credit card for your teenager, it would be advisable to open a prepaid credit card first. This card works a little differently to a credit card in that it does not have revolving credit. You deposit money into the account and then purchases can be made with the card, where the money comes off the balance in the account. You do not have to worry about your teenager overspending. The good thing about this type of card is that unlike the a debit card, it actually does help your teenager’s credit history. Make sure to choose the card that has a credit-builder program linked to it. You pay a little fee at the end of the month, which is reported to the credit bureau, thus raising your teenager’s credit score.

If you make an agreement with your teenager and tell him/her that the money in that account is for emergencies only, you can check in a few weeks if there is any money left. If your child has spent all the money, then you know that he/she is not ready for any type of credit. However, if there is still a fair amount of money available on the card, then your child may be ready for another test.

Some say you could add your teenager on one of your existing credit cards that has low or even no revolving credit to see how he/she would manage spending on it. The nice thing about both of these options is that your child actually has no real credit to work with, and won’t damage your credit history either. One of the problems with adding your teenager on one of your credit cards is that he/she may be irresponsible can cause a lot of debt that you have to pay off and it will definitely damage your credit score. If your teenager has shown that he/she can manage finances, then there is the possibility of you giving them their own credit card.

If your child is of the working-age, you can look into a student credit card or possibly, a secured credit card. The latest credit cards aimed specifically at teenagers have no annual card fee, but have a fairly high APR (annual percent rate) of 19,8% that is fixed. With these cards, the credit limit can be as low as $300 or as high as $1000. For teenagers it would be preferable for a low credit limit, in case problems do arise. As a parent, you will have to co-sign for the card. Your child will receive the monthly statement, but it will ultimately be you that is responsible for the payments.

You could also get your child to write a check to deposit into the account, instead of you. In this way, your child will learn more and benefit more from the credit system. Be aware of your child’s spending habits. Not everyone can manage a credit card. If the credit limit on your teenager’s credit card is relatively low and something goes wrong, a learning experience should emanate. Your teenager can see learn overspending affects minimum payments and paying off interest. Rather let your child make a mistake when it won’t affect their credit score as you’ll be sorting out the account, rather than have problems occur when your child is an adult and sit with bad debt.

Teach your child how to manage his/her money effectively, but showing him/her the ropes. Your financial habits will affect your child’s financial habits. Make the right choice for your child.


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