LIVING: Should Our Kids Carry Credit Cards?
SodaHead Living
2010/05/19 16:20:16
Some financial experts believe that the best way to teach our kids about credit cards is to give them a credit card. And now, in the midst of this financial crisis, is the best time for them to learn about money management, hopefully avoiding some of the mistakes they see being made all around them.
“Looking at all the news stories that show people who have lost their homes from too much debt or are incurring substantial interest charges or who have bad credit and can’t get an apartment or job, it’s a wonderful way for parents to teach their kids about credit or debt,” said Rick Edelman, author and financial adviser.
For younger children, credit and debit cards may be too abstract, says Jordan Amin, chair of the American Institute of Certified Public Accountants. Amin suggests using cash, “something that’s tangible and universal makes it easier to teach them.” But teenagers need to understand that credit cards are a reality of modern life. Financial experts suggest starting off with debit and prepaid cards.
“Give them an allowance on a prepaid card and talk with them at the end of the month about where they spend money,” said Jason Alderman, senior director of financial education at Visa. A prepaid card is the best way to teach teens about self-regulation.
Once they’ve learned how to regulate their own spending, parents should then feel more comfortable getting their teenage their own credit card. But the limit on the card should be set low. “Let kids start small so if they make mistakes it’s not catastrophic to them or you, and let them learn to manage credit but with keeping a tight watch on how much they can spend,” said Amin.
Would you trust your teen with a credit card? Or, if you’re a teen, do you already have a credit card? And have you been responsible with it?
“Looking at all the news stories that show people who have lost their homes from too much debt or are incurring substantial interest charges or who have bad credit and can’t get an apartment or job, it’s a wonderful way for parents to teach their kids about credit or debt,” said Rick Edelman, author and financial adviser.
For younger children, credit and debit cards may be too abstract, says Jordan Amin, chair of the American Institute of Certified Public Accountants. Amin suggests using cash, “something that’s tangible and universal makes it easier to teach them.” But teenagers need to understand that credit cards are a reality of modern life. Financial experts suggest starting off with debit and prepaid cards.
“Give them an allowance on a prepaid card and talk with them at the end of the month about where they spend money,” said Jason Alderman, senior director of financial education at Visa. A prepaid card is the best way to teach teens about self-regulation.
Once they’ve learned how to regulate their own spending, parents should then feel more comfortable getting their teenage their own credit card. But the limit on the card should be set low. “Let kids start small so if they make mistakes it’s not catastrophic to them or you, and let them learn to manage credit but with keeping a tight watch on how much they can spend,” said Amin.
Would you trust your teen with a credit card? Or, if you’re a teen, do you already have a credit card? And have you been responsible with it?
Top Opinion
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daydream - believer 2010/05/19 16:59:59
+5Credit cards give you the idea of having loads of money and paying the bill seems months away. So no I dont think its a very good idea - Im 15 and would love to have a credit card but i know I would spend to much.
Kids now will have the idea that they can buy whatever they want even if it is more expensive than the amount of money they already have (debt). They will get accustomed to using and abusing credit cards from an early age which can be disastrous in the long run. This isn't teaching kids about credit cards, its brainwashing them so that they could grow up while in debt. Population control from a young age...
I haven't had a credit card in 15 years, I can do everything from renting a car, to hotels, to airline tickets with my debit card.... the only thing I can't do with my debit card that you can do with a credit card is go into debt.
The more I think about it its ohhhhh freaking hell no!!!!!!!!!!!!!!
I thought it interesting that the "Financial experts" are the ones pushing this concept. Do they have a special "Kids" interest rate?
Poor Daddy. On the upside, I learned my hard lessons before I got out into the "real world" and had to deal with them on top of student loans and other new-grad debt. I guess Dad's just grateful I'm on my feet and being smart with money, so he doesn't have to support my fashion emergencies NOW. ;-)
Edit: I TOTALLY trust my 18 month old with a credit card. Hahahaha.
Edit: Oops. Forgot to answer question. NO.
What ever happened to checking and saving accounts for kids to teach them the value of money. .
a credit slave. A loan for a house or car is one thing.
If you can't pull the money out of your pocket, then you don't
need it. Saving your money is the key to a happy life.