Should My Teenager Have a Credit Card?
According to an article in the Wall Street Journal, “plastic has become a fact of life in the U.S., even for teenagers, who made $169 billion of consumer purchases in 2005. 18% of youths ages 12 to 19 had debit cards, while 8% had credit cards.”
There is something inherently wrong with these statistics. Giving a 12-year old a debit or credit card is sending a message that could be interpreted in the exact opposite way in which it was intended.
While most financial planners and bank officials feel that is it perfectly okay to give teens credit cards, it seems that opponents of this argument should also have their day in court as well. In their defense, here are some thoughts.
Children learn from their parents. If parents have conversations with their children and involve them in household budgets and the like, it seems clear that as they grow up they are more likely to become financially responsible. Does this mean they should be given credit cards? Probably not at such a young age, but in the likelihood they are, they will be better equipped to handle the responsibility of owning one.
Some parents, on the other hand, feel justified in allowing their teens to own credit cards as long as boundaries are met and responsibility is shown by the holders of these cards.
One financial planner recommends that children should be taught at an early age about the basic principles of saving, budgeting, and being able to distinguish between things they need and things they want.
If parents believe their children are able to cope with responsibility of owning a credit card, they can choose either a debit card or a prepaid debit card.
However, there are disadvantages in allowing teenagers to have a credit card. Children and/or teens are not always aware of the consequences of using credit. They may overuse the card and expect it to have a balance no matter what they buy.