For many families in the United States, money is tight and using credit has become somewhat of a norm. The practice of using credit for everyday purchases has also raised the question: should teens have credit cards? Here are some pros and cons.
A Brief Look
There are several reasons why someone might choose to give a credit card to their teenager. First of all, single parents sometimes cannot get to the grocery store or take their child shopping when they need something. In this case, giving a teenager a credit card can be very helpful, especially if they have to look over younger children too.
Indeed, there are always emergencies for which you must plan. You never know when you might need some extra cash; and with more and more families surviving without a savings account, access to credit is important to everyone. This includes teenagers who might be home alone or need to drive long distances.
Speaking of driving, many teens own their own cars and have their own jobs. This is a responsible way to teach the proper handling of money and ownership of property. If a teenager holds a job like an adult, does this mean that they should be able to enjoy at least some of the benefits of being a responsible adult? For some parents, the answer to this question is yes, which is why they might co-sign a credit card application, give them a card from a joint account or look for a special teens debit card.
A Few Cancers
Of course, while there are many reasons why a teenager might benefit from having a credit card, you must also carefully examine the many pitfalls that could await them. Some teenagers simply are not ready for the responsibility of using credit properly. Some have trouble thinking long term and have difficulty with planning ahead. This can lead to big problems down the road, especially when they get out on their own, including applying for a home or auto loan, or even an apartment.
However, there are options that parents can consider which might be helpful if they want to provide their teenage child access to credit benefits but are concerned about their level of responsibility. For example, prepaid cards are a great way to limit the amount of money being spent but without having to dole out cash every time your teenager needs or wants something. You could even think of it as a way of handling allowance.
Secured Cards: An Alternative
Secured credit cards are very similar to credit cards but offer a wider range of benefits. While pre-paid cards typically limit the amount of money available on the line of credit, secured cards can have bigger credit limits.
What makes them different from traditional cards is that you have to put down a security deposit before you are able to use the card, hence the name "secured." This is particularly helpful with teens because you can have them make the deposit with money that they have earned from a job or allowance. If the card is used improperly or irresponsibly, the security deposit is lost along with the credit privileges.
Credit is Privilege
Indeed, the key word here is "privilege." Allowing a responsible teenager to have access credit helps them to understand that responsibility has privileges that must be earned. It also teaches that this relationship, like most, is based on trust and conscious effort. The better you are at maintaining your payments, the more privileges you will enjoy. Of course, it should go without saying that as soon as you shirk responsibility, the privileges begin to disappear.
It is very common for many parents to consider giving their teenage child a credit card. They could use it in emergencies or to help take care of some of the household bills. Many teenagers have side jobs, so parents sometimes allow moderate use of credit to help teach responsibility.
However, teenage credit use must be monitored closely. This is because it can be very difficult to recover from credit that is used improperly.
Many parents have found that credit cards are a good way to reward and teach responsibility to their teenagers. There are many benefits that teenagers appreciate, like freedom and dependability, but there are also many dangers that some parents might figure are not worth the trouble.