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Credit Cards For TeensTeaching your teens the importance of good credit rating |
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Credit card nightmares. Who hasn't had them? We need (usually
just want) to buy something that we can't afford, so what do we do?
Charge it! When the bills start rolling in every month, we make
the minimal payments when we can. Sometimes we are late on those
minimal payments, sometimes we don't make them all. A few years
down the road, when we have "grown up", we realize that the
fancy T.V. that we bought some twenty years ago ended up costing us
three times the list price because of our credit ignorance.
We swear to ourselves that if we only understood credit card traps
when we were young, we would be rich!
As our children become teens, we have a few choices to make about teaching them to use credit properly. Choice 1- let them go through the same nightmare that we went through, and maybe they will "grow up" eventually. Choice 2- teach them the right way to use credit cards now, before they learn it the way we did. Since most of us would rather follow choice number two, here are a few useful tips to get you started. Set a good example for them to follow. How can they learn the right way to use credit if you are doing it the wrong way (ie. minimal payments, etc.)? When they turn 15, get them a credit card that is tied to yours. If you have a good credit score, your child will inherit that rating. As long as it is managed properly, your child will have an excellent credit rating when they are an adult. Also, you can set limits on this card, and the two of you can schedule meetings to review the charges when the bill comes in. If you are concerned with getting them a credit card that is tied to your account (understandable in some cases), why not start them with a secured credit card? Secured credit cards work just like any other credit card, but you must load the cards with funds in advance and you cannot spend more than the reserve. These are not easy to obtain in the UK, but prepaid credit cards, that you can load with funds when needed, are an alternative. A huge benefit of going this route is that you have complete control over setting a monthly spending limit on your child's purchases. With any of these cards, shop around to make sure you are not paying over the odds. While you are teaching them how to properly use a credit card, go ahead and explain how credit reporting agencies work. Let them know that their credit scores will be used to evaluate them for the rest of their lives, and that a person's credit rating can either open or close many doors in their near future.
George Tull is a father of three children (ages 10, 12, and 15).
He has written numerous articles for various publishers on
parenting issues, and he is the current webmaster of
Kids Are Expensive
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Pre-paid Credit Cards
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