Decide If Your Teen Is Ready For A Credit Card!

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Although most consumers have access to both, it’s amazing how many Americans don’t know the different between a debit card and a credit card.  Credit card companies have set their sights on teenagers, and hope to lure your children into making bad decisions regarding their money in order to make money for the company.  Although the decision regarding a credit or debit card for teens for your children should be yours and yours alone, and based on each individual situation, you can come prepared to the discussion armed with the facts about why these cards are good, and how they can be bad.

Reasons Teens Should Use Credit Cards

The main purpose behind a credit card should be to help your teen to build a credit history.  Creating a credit history can help your teen to be able to borrow money for items like a home, a new vehicle, or even to rent an apartment.  The following are good reasons for your teenager to need a good credit history.

• Qualify for a mortgage
• Qualify for car loans
• Get a better interest rate on loans
• Qualify for certain jobs
• Rent an apartment

With so many people out of work and applying for the same jobs, it’s become important to have a good credit history in order to be considered for many jobs.  Your teen will have a leg up on the competition if they have already started to build credit when they leave your home.

 

Viable Alternatives To Credit Cards

If your teen is on their way to learning how to successfully manage their own money and balance their checking account, you may choose to open a credit card to help them establish credit for the future.  If this is done, you should keep the limit low, and encourage your teen to pay the balance off every month in order to keep their debts low.

If you are still concerned about how your teen spends money, try using a SpendSmartCard.com prepaid debit card to guarantee they stay within their spending limits.  With these cards, your child is only allowed to spend what they have, and they quickly learn how to balance their money rather than risking the embarrassment of having a card declined.

Reasons That Are Not Valid For Getting Your Teen A Credit Card

As an adult, you know all the negative things that can happen when debts become overwhelming and bills can’t be paid.  Although an offer for several thousand dollars that can be paid back later may seem tempting, the payments come due all too quickly, and the interest rates make paying them back next to impossible.  Your teen should never be allowed a credit card simply because they don’t make enough money.

You should also not get your teen a credit card as a way to bail them out of a tough financial situation.  It’s tough to watch your kids struggle to make ends meet, but they will learn how to manage their money better if they are required to get out of a jam on their own.  A credit card for emergencies is an okay thing, as long as it is used only for emergencies.  A shopping trip does not qualify as an emergency for your teenager, no matter how badly they want that new pair of shoes.