Is Credit Cards For Teens Really A Good Idea?

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credit cards for teens

While a lot of people think it is best to get credit cards for teens, others may protest against it. The main reason why some people feel like it is not the best option to get their teenage kids a credit card is because of the debts.

It is no news that teenagers are impulsive spenders. At times, they know no limit to how much they need to spend. Credit cards are one of the reasons why people end up with debts worth millions of dollars. Hence, there is an increase in the interest rates, people miss out on their payments, and finally, end up with a tremendously bad credit score.

This is one of the biggest reasons why parents generally refrain from getting their teens a credit card.

However, credit cards for teens have many benefits that you may not have been aware of. While the drawbacks are a little too many, the benefits can take over the drawbacks any day.

In this article, we shall discuss everything about credit cards and why you should get your kid a credit card as soon as you can.

Contents

Key Takeaways

  • Giving credit cards to teens is one of the most effective ways to teach them to manage their finances effectively.
  • A credit card is also beneficial to help teens start building their credit history.
  • It is important for parents to train their teens on how much they should be spending, how to pay back on time, and whether they should be choosing a good credit card.
  • Initiating good habits when they are still young is a good start for the teens to get financial success in the future.

Effects That Credit Cards for Teens Have

Effects That Credit Cards for Teens Have

As per the reports of AIG Retirement Services and a survey by EVERFI, approximately one in three high school graduates owns at least one credit card. And among the ones that have cards, which is almost a quarter, already have credit card debt which is more than $1,000.

When an individual turns 18, they may independently qualify for a credit card or a loan, they become one of the prime targets for the lenders. Credit card agencies tend to target young adults right when they step foot in college.

These agencies approach these individuals with gifts for signing up, and other benefits which appear very tempting to the eyes of anyone in general. Eventually, these people fall for such tricks.

However, if parents get credit cards for teens, this entire thing becomes much easier for them to handle. Even if they prefer getting a credit card independently, they can manage their finances pretty smoothly without landing up in debt.

When parents keep discussing credit cards, loans, debts, and bad credit with their teenage kids, they become accustomed to the unsaid rules that they need to follow while they individually own a credit card.

Why Should Parents Go For Credit Cards For Teens?

Why Should Parents Go For Credit Cards For Teens

While there are numerous negative reviews on it, I personally feel that teens must start using a credit card as soon as possible, at least when they have the idea of it. The best part of using a credit card as a teen is the credit score that you get to build. The more time you get, the better opportunity you get to build your credit score.

Also, there is yet another important factor within your FICO score, which is your credit history. The earlier you establish your credit history, the longer credit history you will have.

Credit cards give you a lot of conveniences. However, the main purpose of it should be establishing a healthy credit history. This way, when the time arrives, the teen would be more likely to:

  • Be able to rent an apartment.
  • Qualify for mortgages and car loans.
  • Obtain lower homeowners and auto insurance premiums.
  • Qualify for a favorable rate of interest on every type of loan.
  • Qualify easily for a job. This is because employers these days heavily rely on credit scores when they evaluate candidates.

How To Know If Giving A Credit Card To The Teen Is The Best Idea?

How To Know If Giving A Credit Card To The Teen Is The Best Idea

Well, this is where the task gets complicated. There are no solid ways in which you may find out if your teen is responsible enough to handle a credit card. Things may even go down south once they get the card in hand. Teenage temptations are terrible. Therefore, it depends a lot on your kid if they are going to be responsible enough to handle all the trouble that comes with using a credit card.

Here are some of the considerations you may think about before getting a credit card for teens:

  • Is your child responsible?
  • Make sure you are giving them a card that has a low credit limit.
  • Make it a habit to monitor their payments and spending monthly.
  • Discuss with them the reasons for their choices. Further, it makes them understand the implications of those choices and the hidden costs.
  • Suggest to them the things that could bring about a positive change.

“Credit cards can also be a great tool for emergencies. Most teens and students won’t have a significant emergency fund of cash sitting at the bank, so having the ability to come up with money in an emergency is important, and a credit card can act as a good safety net.”

Frequently Asked Questions!!! [FAQs]:

Q1. Why Is It Good To Have A Credit Card At A Young Age?

Ans: It is preferable to have a credit card at a young age as that helps in building a good credit score and a long credit history for the kid. Also, owning a credit card makes the kid responsible and aware of all their financial obligations from a very young age and saves them from bad debts.

Q2. Why Credit Cards Are Bad For College Students?

Ans: Credit cards are not necessarily bad for college students. It is more like college students are more likely to fall into the trap where they end up spending more than they require. The credit card agencies deliberately approach these students by offering them gifts and such for availing their services. Kids who are already accustomed to using credit cards generally do not fall for these.

Q3. Is It A Good Idea For College Students To Have A Credit Card?

Ans: Yes, it is not really a bad idea for a college student to have a credit card. However, this is only applicable when you are financially responsible.

Bad Things About Credit Cards

The bad thing about credit cards is the temptation. People feel like they have unlimited access to money and, therefore, make unnecessary purchases. Later, it becomes difficult for them to pay back for those, which results in huge debts and a horrible credit score.

The Bottom Line

Credit cards for teens are not such a bad idea if the parents are responsible enough. Before the kid turns 18, they remain under the surveillance of their parents. Therefore, the parents may get to monetize how much their kid is spending monthly.

Also, setting low limits for the card is a good thing to do. It makes sure that the child knows how to remain on a budget.

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Upasana is a budding journalist who has a keen interest in writing. She considers writing as therapeutic and is most confident when she writes. She is passionate about music, movies and fashion. She writes in a way that connects with the audience in a personal level. She is optimistic, fun loving and opinionated.

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