Credit Cards For Teens - Learning Tool Or Danger?

Credit cards for teens are becoming increasingly popular, which may or may not be a good trend. In theory, allowing teenagers to have credit cards has the potential to allow them to be more responsible with their money. By teaching teenagers about responsible credit card use early with a teen credit card, they may be smarter in their spending habits as they age. On the other hand, simply them a credit card for teenagers and letting them start spending without teaching them how to properly use it could be very dangerous. The average credit card debt in this country is testament to that.

As a parent, credit cards for teens present an important opportunity to teach their children about proper credit card usage, hopefully starting them on a lifetime of responsible financial management. Cards such as Visa Buxx and others are designed to teach teens how to be responsible with their credit card. Many credit cards for teens come with literature explaining what interest rates are, how fees are accrued, etc. Some teen credit cards are actual credit cards in the sense that they are not prepaid at all. As the the teenager is a minor, their legal guardian will also be on the account, allowing them to view the teen's transactions and monitor their activity.

Other credit cards for teens are not credit cards in the traditional sense. These credit cards for teens are basically prepaid cards, similar to debit cards, that are designed to teach the teenager how to manage their credit card use. When the card is "paid off" at the end of each period, the money spent is basically replaced. This cycle teaches the teenager how to make regular payments and not exceed their spending limit on their teenage credit card.

Alternatives to credit cards for teens include the use of debit cards tied to a joint checking account shared by the teen and a guardian. Similar to the prepaid cards mentioned above, this method allows a teenager to get used to using a card for making purchases while protecting them from the dangers and temptations of an actual credit card. Whatever method a parent chooses for their child, it is important to keep in mind the primary goal of credit cards for teens. That goal is to educate the teenager on how to use a credit card responsibly, understanding that they should only use it as a tool of convenience and not as a form of paycheck advance. The parent should emphasize that the teen should never pay for something on a credit card for which they do not have the cash in an account to cover. Credit cards for teens can be very valuable tools for establishing responsible spending habits, but should not be given to a teen without any instruction or education.