I told my sons they can each get their own credit cards if they can qualify, but I'm not co-signing. I have nothing against young people having credit cards. I think it allows them to build credit so they can buy a home at an early age. It also teaches them responsibility. I like the fact that my older son's credit card has a limit of about $600, which is extremely reasonable for a college student. My sons know they have to prove they are responsible enough to have their own credit cards. According to a recent article by NBC News, experts say high school graduates shouldn't view credit cards as a ticket to spend more.
Having a job
My sons know I won't co-sign for their credit cards, which means they need jobs to qualify. My older son was able to get his first credit card through his bank where he keeps a checking and savings account. He is able to make payments on his credit card easily by transferring money from checking or savings.
Avoiding interest charges
Since most young people are charged higher interest rates than older people with better credit scores, my son follows another rule. He makes sure to have a zero balance by the end of the billing cycle. If he didn't pay off the entire balance every month, he'd owe a lot in interest charges. When he gets older, he will have a better credit score. He will qualify for low-interest rate credit cards. I also encourage my sons to avoid credit cards that charge annual fees.
Adding them as users
Some experts recommend that parents add their teenagers as authorized users on their credit cards. They say it's like a credit card with training wheels. However, I don't like the idea. I think no one should have a credit card unless he or she has the ability to repay the debt. By making my sons authorized users, I'm sending them the message that they can spend as much as they want and someone else will be responsible to pay the bill. Ultimately, even experts admit, the primary cardholder is still responsible to pay the debt. I rather my sons build up their credit history by paying their own bills.
Teaching credit lessons
My older son took a personal finance class to learn all about credit scores. He knows how to build his credit score and avoid negative marks on his credit history. He knows a lot of his older peers got into trouble with too much credit card debt and student loans. According to the NBC News article, college students are exercising more caution with credit card debt. In fact, one third of the students keep a zero balance. Forty-two percent have a balance of $500 or less.
Although my older son is well on his way to establishing a good credit history, my younger son has some catching up to do. After he finishes one more semester of college, he plans to volunteer until he can get hired for his first job. Once he has a job, he will apply for a credit card through his bank just as his older brother did.
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