A Case for Teens Having Credit Cards



“To contract new debts is not the way to pay old ones.” - George Washington

In the age of virtual currency, rising inflation, and online shopping, helping your teenager get their feet under them when it comes to money seems like an absolute necessity. 

So, wouldn’t it be great if you could pry your teen from perma-scrolling TikTok and Snapchat long enough to teach them a few things about money? However, you might be surprised to find that one great money education tool for them (or anyone) is having a credit card.

Yep, you heard that right. Giving your teen a credit card could really help them learn a few things about money and managing it.

Think about it: You have to handle paying the balance and watch your spending when it seems effortless (at least until the bill arrives). You learn the ins and outs of interest, credit scores, and paying off a tab over time. It’d be tough to find a better money teacher than that. 

Obviously, this is going to mean some hard work and lots of one-on-one time to keep them from going off the deep end, but it might just be worth it. 

So, let’s jump a little deeper into why you should give your teen a credit card.

They grow up so fast

You may think they’re still a baby (as a parent, it’s hard to let go), but your teen is one step away from adulthood and is likely no stranger to credit cards already (note: 18 is still the minimum age to get a credit card). Recent surveys have shown that nearly one-third of high school grads had at least one credit card, and a lot of them had two (the percentage is even higher for undergrad students)..

It’s a sure bet that even if your teen doesn’t have a card, some of their friends do. One in four of those surveyed kids had also already racked up $1,000 in debt. 

A thousand dollars – why on earth would I want to give my teenager a chance to do that? A valid question. There’s always the danger they’ll run up a big bill, and you’ll have to decide whether or not you will pay it off for them. 

But a credit card can come in handy in an emergency, like a car breakdown (think automatic warranties or roadside assistance). Aside from the lessons we mentioned earlier, a card can help your teen establish a credit score – which they’re absolutely going to need as a grown-up. 

And the only way to really learn how to handle money and credit is to have money and credit to handle, right?

Uneasy money

Some credit card companies restrict the ages when teens can be cardholders – even those that are connected to your account and for which your kid is an authorized user. So, set a few restrictions of your own and do a little planning before you hand over the plastic. 

- First, let your teen cut their teeth on a savings or checking account. These are a good starting point because they usually come with debit cards, meaning your teen has access to convenient spending – a good test to see how they’ll handle that temptation. And you’ll be able to monitor the account. Be warned: Debit cards don’t always come with the same fraud protection as credit cards. 

- Before you try a card with a high credit limit, use a secured credit card. This links the credit limit to whatever’s in your teen’s bank account, which acts as “frozen” collateral to pay off whatever debt they rack up. 

- A prepaid credit card can be another option. You limit the spending by funding the card with money from one of your other accounts, such as checking (or the teen’s own money). Be warned again: These cards can have sneaky and stiff fees. 

- Add your teen to one of your credit cards as an authorized or joint owner. Some credit card companies have age limitations on this, so check with your credit card company first.

Trust but verify

Nobody likes the notion of spying on their kid, but one of your most important jobs after your teen gets a credit card is to monitor the spending, at least for a little while. Check those balances as often as you can. Have your teen keep a record, too – and discuss right up-front what purchases are off-limits. 

Many credit card monitoring apps can ‘ping’ you with a warning about purchases – and sorry to say it, but kids have historically been a cause of millions of dollars of unauthorized purchases on places like Amazon. Getting a refund on these purchases can also be tricky even if you do have zero liability and fraud protection. The buyers were your own teens, after all. 

Here’s every parent’s favorite question: Should I bail them out of a big bill? It’s up to you. Everybody makes mistakes – but remember that riding to their rescue over and over won’t teach your kid the right lesson when it comes to handling money. 

Just to be safe, get ready for the first month of sticker shock. It never hurts to be prepared ...

BE THE ROAR not the echo®

Janet Behm
Utah Real Estate Accountants

(801) 278-2700


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