Should The Parent Give The Teen A Credit Card
Teenagers as young as 16 can already get a student's permit thus allowing the person to drive a car. This is just one of the signs of truly becoming an adult as other challenges will come along the away.
Studies show that some parents start giving allowance even at the age of 8 or 10. As this person goes into the teenage years, some think this may not be enough which brings the issue of whether or not a credit card should be given.
Every adult knows that credit cards are very convenient when the shopper is low in cash. Those who pay on time will have a good credit history, which makes it easy for the customer to apply for loans and get a job.
Those who are in favor of giving a credit card to a teen point out the same argument. Of course, this can only happen if the teenager is responsible enough to know when this should be used and well aware of the low credit limit. Some will even tell the teenager to pay for the purchases reflected on the bill.
Banks can give a low credit limit of up to $200 or $300 a month. But before the parent decides to give a credit card, it is best to also give a teen a checking account. This is part of learning how to budget as a check will be used to pay the outstanding balance and making sure there is still money left in the account.
The parents should also teach the teens when the credit card should be used. Items such as food, drinks and clothes are not that expensive and can be paid using cash. This means it can be used on anything else that does not fall in this category
It is possible to issue the same credit like the one being used by the adults but since the credit limit is quite high, another option will be to get prepaid credit cards. This also allows the parents to monitor the purchases.
The value of the prepaid credit depends on how much the teen has. Money is first put into the account and this will only continue to work as long as there is a balance. Since some institutions have hidden fees, parents should compare the rates and look at the fine print against hidden charges.
There is always the issue wherein some teens tend to overspend or may not have enough money to pay off the bill when it is mailed to the door. Should parents help? In most cases, they will because this is better than getting a bad credit rating.
But the teen has to remember that this should not happen often. One or two blunders should teach the person to be careful about the money being spent because there will come a time that mom or dad won't always be around to bail them out.
Getting a student's permit or a driver's license is a privilege and the same goes when parents decide to get a credit card for the teen. This is not done because mom or dad want to share the wealth but simply to teach the kid about budgeting which is imporntat for the future.