What a parent should know and do to guide their underage children with credit card usage.
Parents are the first frontier when it come to Teaching their children about safe credit cards usage. Credit cards amongst youngsters are more common with college students rather than teenagers in high school. However researchers estimated that almost 2% of high school seniors don’t have credit cards.
The recent credit card laws and regulations have restrictions on anyone under the age of 21 having a credit card without having a cosigner on the account as well. This cosigner is usually the parent or someone who can prove to be a stable guarantee for making payment on the credit card.
Nevertheless, it is a fact that high school students are supposed to spend more than $200 billion annually. More and more teenagers and youngsters hanker for their own credit card because it has become a part of the paraphernalia that a teenager is supposed to have one in order to be cool and to fit in. And in many circumstances, parents to give in.
Sometimes patients give their children a credit card as an emergency resource.
About half of the students have a credit card in their own names while the others use cards issued in the parent’s name.
It is a fact that college students get bombarded with credit card offers as they make really good potential customers. Not only do youngsters and students have parents standing behind them to back up their debt but they also have the potential of becoming loyal customers.
All this makes it extremely important that parents take an active role in the credit management and credit spending of the children. The approach that the parent needs to take will probably be very different for a teenager who was in high school and for a child who has gone to college. A parent can control the credit usage of the children in high school more strictly than an offspring who has gone to an out of town college to study. Children who are still in high school should be told clearly that they can only use the credit card for a transaction that has been preapproval by the parent.
Educating Young Teenagers on Credit Card Usage
- Careful thought should be given to giving a card to a teenager in the 1st place. There is no need to give in to the demand for credit card prior child simply because he or she feels the peer pressure. The basic need to give your teenager charged the credit card stem from providing an emergency resource and a safeguard.
- Even if you are giving your teenage child credit card in hope of building credit history and allowing him or her to use a credit card for some regular purchase and shopping transactions need to be pre-approved and limited by you.
Handling Credit Card Usage For College Going Children
When it comes to helping a child who has gone to college and let credit card, a different approach may be required. You cannot exert as much trouble over the direct spending of the child who has gone to an out-of-town college. However, since you are likely to be a cosigner on the credit card account, you can keep a check on the credit card usage. Any sign of your college going child overextending credit usage should be discussed at the earliest. You should encourage your child to discuss any financial need or requirement with you 1st. You should also encourage him or her to come to you immediately in case they do happen to get in of that that situation with their student credit card without you being aware of it.
At the end of the day, you have to expect that you may not be able to control or dictate how your child in college uses the credit card. Specially, if he or she happens to be over the age of 21 and does not have the as the course of the credit card account. The best that you can do in this situation is to be aware of the repercussions of a responsible uses of credit.
You need to educate and inform your child about the best ways to use credit card which are:
- Restrict credit card usage to essential order emergency need.
- Not to revolve a large balance on the student credit card.
- Charge the credit card only with the amounts that they can afford to be back in full every month.
- Do not encourage friends use the student credit card, specially if the reason is that they cannot afford the purchase.
- Restrict credit card usage till they have an income of their own.
- Do not subscribe to more than one or maximum 2 credit cards when still in college. A couple of student credit cards are more than enough to suffice their needs.
- Tell them about the importance of staying debt-free in life, or at least not undertake debt they do not have the money to pay back.
- Benefits of using credit only as a financial tool to make your assets and financial worth grow.
- Choose a student credit card carefully choose the features that best suit a student such as the wine will be, low interest rate, reward points, low credit limit, e-mail and SMS notification for timely payment, credit card balance and reminders of credit limit.
At the end of the day maintain a clear and open line of communication with your children. It will off set and fore guard against any future financial problems. It is important to get yourself educated on credit matters, when your children cannot be relied on to do it themselves, so that you can guide them effectively. They can learn from your mistakes and you can make sure that they do repeat them.