There is a window of opportunity in which to teach your children about using credit responsibly before they set out on their own. It’s likely they will be exposed to credit cards when they’re in college or after they leave home. You should explore the concept of credit with your children way before then so that you empower your children to make the right choices when they’re on their own.
Before introducing credit cards, be sure your child understands basic banking concepts and how to manage his money with savings and checking accounts. Credit cards will be a secondary tool to assist him with money management, but he should understand they don’t replace bank accounts.
Before you allow your child to get a credit card, be sure he understands the pros and cons of it. Discuss late payments, interest and the impact of credit reports. Make sure your child understand that his future housing, insurance premiums and job offers will be impacted by his credit history.
Set ground rules for your teen to use his card, whether it’s a prepaid card, a lower limit card or your own with your child added as a user. Determine what purchases are allowed. Teach your child to make the payment in full each month, explaining the effect that minimum payments and interest will have on his bill.
You will also need to monitor the card’s use, helping your child to follow the guidelines and payments you established. But remember to let your teen make small mistakes, from which he can learn. If he forgets to pay his bill, and has to pay the additional late fee, he hopefully won’t repeat the mistake again.
You should also determine consequences for spending too much, making a late payment or being irresponsible with the card. You should also carefully consider the message you are sending if your teen gets in over his head and you pay the bill for him.
By setting boundaries with a small amount of flexibility, you can help your teen understand the limits of credit cards and how they can help or hinder him now and in the future.
The above guest post was by provided by AmericaOneUnsecured.com. They help consumers obtain financing nationwide.
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