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Should You Give Your Kid a Credit Card?

AJ Smith

All parents want their kids to learn to manage money competently. There is clearly a benefit to learning financial responsibility from an early age.

But how young is too young to have the freedom (and temptation) to use a credit card? A decision requires that you think of your child specifically. If you decide the time is right, it will be important to maintain control over your child’s credit while letting him or her learn about borrowing and charging.

3 Qualities to Evaluate

No matter how much a kid may beg, there are certain qualities to consider before taking the plunge. Kids must be able to deal with peer pressure so their friends will not encourage and persuade them to go over their spending limit. Another great measuring tool is how they use gift money — do they spend it all right away or do they save and consider carefully what they should spend on?

Kids with a credit card must also have a sense of respect. If they follow household rules and take accurate consideration of parent’s roles and guardianship, they are probably capable of handling a card on your account.

Finally, a child with a credit card must have proven responsibility. Frequently losing their keys or missing appointments are signs that he or she is not ready for a credit card.

A great test for teens is giving them a prepaid debit card to see how they use the power of charging — but the downside is that these don’t build credit. When the times come, you can make your child an authorized user to your account and eventually your child should get their a credit card in his or her own name.

Benefits to Reap

The most obvious benefit of giving your child a credit card under your account, beyond the educational measures it allows, is that you can monitor and control their activity. It is like a credit card with training wheels. You get to set the rules and you can see every charge on the bill statements. This gives you a better chance of detecting any problematic habits. Your kid also won’t have to carry cash, which can be dangerous. Finally, should they get into any emergency situation, you can be confident they have the added safety that a credit card allows.

Though there is no magic number that works for every family, the average, responsible child will probably benefit from receiving a credit card between 15 and 17. This is before they are living on their own so they can be carefully monitored but not after they have established spending habits. The challenge is to teach young people to be financially literate and responsible, so be sure to explain how credit companies work as well as set boundaries and establish rules for a card’s use.

This story is an Op/Ed contribution to Credit.com and does not necessarily represent the views of the company or its affiliates.

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