Teens and Credit Cards

April - posted on 03/09/2010 ( 21 moms have responded )

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I was watching GOOD MORNING AMERICA this morning and they had a segment about teens and credit cards. The expert speaker recommended allowing your child to have his or her own credit card by 16 years of age. She claimed that the reason Americans are in so much debt is because no one taught us how to use credit cards wisely. She also said that allowing your teen to have a credit card was like "Driver's Ed" or Training Wheels on a bike. Do you agree with this so-called expert? Also how young is too young for a credit card?

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Amanda - posted on 03/09/2010

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Teen and credit card should never be in the same sentence! How about we teach our teens that credit isnt an opition, if you can not buy something with cash you can not have it!! People live without credit cards all the time, you can only get into debt if you take up unneeded credit. My preteens have bank accounts, but they will never have a credit card (prepaid or not), they are taught that the only thing credit cards do for you is put you into debt. They are also taught that the only acceptible loans to receive are school loans, mortgages and a possible car loan (if its a used car no new cars or leases). Giving a teenager a credit card does not teach a child responsiblity for their spending, when a person is froced to pay for things in cash only, they truely understand what is a NEED and what is a WANT. Also while saving up for that very thing you want, you may learn it isnt a need or even a want.

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NO NO NO NO NO NO NO NO NO NO and last of all NO!!!!

It is proven that we spend more money when using a credit card vs. cash or debit. How many "responsible" people who paid their card off every month fell into the trap of using their card for an "emergency" (Christmas) and then end up paying it off for a year or more with 28% interest? (ME)

We should teach teens about money, yes. Let them have a job and checking account and teach them how to budget. Save up and pay for major purchases with cash to avoid interest (and have a leg up on bargaining). Have an emergency savings account that you can fall back on for real emergencies. Teach them about insurance and help them buy it once they are no longer on your policy. TEACH THEM but DON'T GIVE THEM A CREDIT CARD!!!!!!!

Credit cards are not a necessity for anyone. We make online purchases and reserve hotel rooms on VISA debit (which has the same protection as VISA credit). But it is way too easy to get in trouble with a credit card.

Rosie - posted on 03/09/2010

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i agree with her. i thought that i was taught the responsibility of money, and working hard. i got a job at 14, paid for half of my first car (with good grades my parents paid the other half), i paid for gas, insurance etc. i thought i was great with money and budgeting, but when i was 19 i got a credit card, didn't hav any problems with it so i got more and more department store credit cards to get good deals on things or to be able to free up more money on my others. none of them had a limit higher than $700, but i got in trouble quickly. it took me years to pay them off. i even get things in the mail still saying i still owed on a certain card that i thought i paid off. i don't know how to prove that i did since it was 9 years ago and i can't hardly remember what i did yesterday let alone 9 years ago. credit afffects everything. i got a loan for a car once, after getting my father to cosign on 2 of my other cars i decided i didn't want his help this time, and i ended up with a 23% interest rate. how much money i wasted on interest i don't know, but i think i don't want to know either cause i'm sure i'd faint. i do not want my kids to go through anything that i';ve had to, things that took me a while to pay off stayed on my record as unpaid, and then when we went to get a house our credit wasn't good enough. we had to go through each thing that took me forever to pay off and prove to them that it got paid off and get it cleared off my record. if i was responsible in the first place none of that would've happened.

Alison - posted on 03/09/2010

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My initial reaction: forget about it! The more I think about it, the more I think it really depends on the child. If my child is responsible with money, I may choose to teach them how to use a credit card wisely and effectively. If my teenager is immature, I am not sure I would consider it.

I dunno. I never had one as a teenager and I never got into any trouble with my credit cards.

What we do need to do is educate our children on credit (how to get good and bad credit), budgeting, savings, investments... I would have benefitted greatly had I known more about these things earlier. Not that I got into a bad situation, but I would definitely be in a better situation.

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LaCi - posted on 04/09/2010

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Well, since I will probably never be able to get a credit card again, because I got one at 18 and went into debt and killed my credit, I suppose that will be up to his father lol.

What I think is that there should be a class in high school specifically targeting personal finances. Supermicroeconomics. I'm pretty anti debt, and am now devoting my life to never accumulating more debt. If it's worth having it's worth saving for.

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I don't have a credit card and would never consider having one. I'm 19 and over here in the UK you can get one when you're 18 but they check your credit rating and usually you have to be working to get one.

Emma - posted on 04/09/2010

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Well as @ age 30 i don't have one and never have had one so my kids will never be getting one.
I will teach them what my parent's tough me you pay cash if you don't have the cash save in till you do. there are only 2 exceptions and that is you bond for your house and the credit for your car. And you pay these off as fast as you can.
This has served me very well as at age 30 i have no debt at all and my house and car are 100% mine.

Melissa - posted on 03/10/2010

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I would rather teach my child the importance of the money earned then what the banks give to you. I hate credit cards, i got into trouble and honestly i think everyone has at one point. If my son feels he needs one when he is older then he'll have to get approved on his own.

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I agree to a point. I think 15 or 16 yrs of age would be appropriate, depending on the child. I also think ONLY a pre-paid credit card should be allowed. That way there is some control. I think if the child got out of control with it, it should be taken away. I don't think the child should be let-loose with it. There must be rules to follow, parents must constantly supervise..

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The difference between a car and credit card is that credit cards are not a necessity. For most people, cars are.

Jane - posted on 03/10/2010

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My daughter had her first credit card, which was a gas card at 16, once she was able to drive. This way I knew she could always get gas when she needed it. She's also had an Amex since she's gone off to college and has never used it but has it in the event she needs it. I think it's no different then a car...you learn how to drive responsibly...no different then a credit card...you learn how to use it responsibly.

Amanda - posted on 03/10/2010

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I think Credit cards are for most people, forget teens a bad idea. They give people the false security of money that they don't have. People just run around spending money that isn't there, then spend much more money in the long run paying off the stuff they couldn't afford in the first place. BAD, BAD IDEA!

Unless you can use credit card and pay off the ENTIRE balance every month before you have to pay even a single percentage of interest, then it's not a good idea. Teens with credit cards turn into adults with terrible credit ratings.

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Credit cards are bad for even some adults never mind a teenager. I think it's great to teach kids about money and budgeting but putting a credit card in their hand does not teach them that. Teenagers are very impulsive and that's not a good thing when it comes down to racking up debt. There is a reason why there are multiple credit card stands in collages and universities and that's because they are making a killing off of young people racking up debt that will take them until the age of 30 to pay off. By the time I was done collage it took me years to pay off my credit card and dept. store card debts. Kids should have to learn about budgeting with actual money first. After you can manage paying all your bills on time and still have money left over then might be able to handle a credit card. I mean if you can't pay your bills then how can you pay at least 21% interest? I teach my kids to save up and buy things and not impulsively spend money. If they want something then they have to save for it. I know that you can get pre-paid credit cards in Canada but I don't know if that's the case in the States. I would start my kids off with that one before i got them a card with a credit line.

[deleted account]

I see her point. I hope she also advised to give them a card with a VERY small limit. My brother and my husband both went crazy with the credit cards when they were young. My husband has worked very hard to pay off his debt and my brother is still learning. I also think you could teach teens to manage money without credit cards. Using my poor brother as an example again he had no idea how to write a check when he opened his first checking account. My mom had to sit down with him and teach him. I also think it depends on the person. I hate spending money. I love to save. It makes me so happy to transfer money over to our savings...haha. When I got my first credit card I was told to carry a small balance on it to help build credit and that's what I did. I guess I don't think it's a bad thing to get a teen a credit card as long as you monitor them closely and make sure the limit is really small.

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Teenagers definitely do not need credit cards. They need to be taught to manage finances responsibly w/out using credit and observe us using our credit responsibly.

Lyndsay - posted on 03/09/2010

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LOL! That's horrible. I'm 21 and I can barely handle my credit card. I still have that impulsive urge to go shopping and buy nice things, but I kick myself at the end of the month when I have to pay the bill. Which I do right away, so I have credit free to spend more... :) )

Jocelyn - posted on 03/09/2010

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I actually thing that it is a good idea. As soon as I turned 18 I went out and got a credit card. A $1000 limit and it was maxed within 2 months. It's been 5 years and I still haven't paid it off entirely. I think if I had been taught about them and how they charge interest I would have reconsidered such a high limit.

Amy - posted on 03/09/2010

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it depends on the maturity of the child and i don't think the limit should be over 300 bucks if under 18. but my kids aren't that old. i think i'll cross the age when i determine how responsible they are.I had one with a 1500.00 limit when i was 18 because i was travelling abroad. i handed it back to parents when i came back because "i didn't need it". I'd like to say i won't allow my kids to have one, but recently there was a case where a gas station was being robbed and the ppl getting gas didn't know because they used hteir cards. now, bad that no one knew, but good if it were my daughter who kept out of a shooter's way. although cards have their place, people still need to know how to manage and use real money. we went to old navy and used cash and the teller was like ???what, how do i do this? are you serious!?

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Well, I kind of agree with her. There are a lot of benefits to using credit cards if you use them responsibly. I use my credit card to pay for EVERYTHING, then we pay the balance each month. This is for 3 reasons:1) it is virtually impossible to obtain a mortgage if you have no credit history. 2) the rewards--Our bill is usually around $4500 (for everything except mortgage, car payments, and savings deposits) for the month, so that puts about $800/year in my son's 529. Doesn't sound like much, but it's $800 completely free, we don't have to come up with. We never carry the balance, it is ALWAYS paid in full so we never pay interest to the credit card company. 3) Cash is DANGEROUS. It's not traceable, so it is a good target for muggers and robbers. Plus, If you loose cash, it's gone, there is no insurance, but with a credit card, if it is lost or stolen, you don't loose anything. Even with debit cards, you usually have to purchase the insurance, or you are responsible for the first $200-300 in unauthorized purchases.



My son is 5 years old, and he is already learning how to use a debit card so that he will be prepared for credit cards when he is older. It is linked to the little checking account that we set up for his allowance, and it has overdraft protection in case he makes a mistake, but so far, he's done well with it. He also has a savings account that he uses to save for bigger purchases which earns interest. He will also use that money when he is older to learn about different investments and their risk factors, tax benefits and growth rates. I would rather him learn young with money he doesn't need to live on than to make a poor investment as an adult and ruin his finances.

Shelby - posted on 03/09/2010

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However I do agree that no teen (most adults also) do not need credit cards.

Now with that being said, My son is going to get a prepaid card on his 16th birthday. Its just an easier way for both of us to manage his allowance. I myself don't carry cash, I use nothing but my check card. I do think there is a HUGE problem with credit. I was just thinking about this, this morning. Like every other commercial on t.v. is about credit counseling, lowering the interest rates on your cards, and cutting the balance by almost in half!!! WHAT??? I don't understand how those people can not be responsible for their purchases!!!! I think its a crock. If you are dumb enough to run up over 10's of thousands of dollars in credit card debt, then you should be responsible for paying every bit of it back!!!
I will hopefully talk my kids out of ever obtaining more than one credit card (if that) We have one incase of emergency reasons. I don't believe in throwing money away for stuff that you think you must have...Its ridiculous. I hope and pray that it rubs off on my kids.

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