Can your high school student have a credit card?
Most credit cards designed for students are designed for students – but can a high school student get a credit card? The short answer is: YES. A long answer would cause a lot of discussion!
As teenagers, many go out and get their first job or otherwise earn income from benefits or childcare. This is the perfect time for parents to help them learn the basics of money management; which is something many families skip; leaving high school graduates to move on to college or the “real world” with very little real-world knowledge of finance.
Just a few years ago, it was not only almost impossible to give a teenager a credit card, but you would be considered a bit crazy if you did! Times have changed, however, and there are a variety of teen credit cards on the market that parents can use to help them learn the basics of financial responsibility.
Credit cards for teens include features like parental controls and digital “permissions.” It may be a sweat to give your teen a credit card, but it’s a good educational financial experience for your child — before it’s too late to help them become financially responsible:
Teach them about good credit. With so many adults currently struggling to rebuild their credit or increase their income to make it easier to keep up with their monthly payments, it’s never too early to teach teens how to manage money. Educating them at an earlier age can keep them from overspending once they are on their own. Nellie Mae claims that the average college freshman has over $1,500 in credit card debt; and once the student realizes how easy it is to “get what they want, now,” it becomes a habit to use them to buy the things they want while in college. If a teen enters the adult world with solid money management skills, they are less likely to go into debt.
Your options. If you’re not worried about your teen building a credit history at this point and just want a way to learn the basics of money management, you can look for a prepaid debit card with a Visa or MasterCard logo. Some of these cards may have annual fees or transaction fees — which just gives you another opportunity to show how using a credit card isn’t the same as buying with cash. You can also sign your teen up for a checking account with a debit card; either set them up as an authorized user on an account you already have – or open a new account with a low-limit credit card and set up your teen as a cardholder.
Gives teenagers access to emergency cash. As your children become teenagers, chances are they will start spending more time away from you and alone or with their friends. Sometimes they may need money – if a car breaks down and needs to be towed off the motorway or for long distance phone calls for example. Having a credit card in their pocket will allow them to handle an emergency that requires access to cash and can give you a little more peace of mind.
If you decide you’re ready to teach your teen the basics of money and credit management, make sure you spend some time researching the different options available before choosing an option. Regardless of which option you choose, you’ll want to make sure you spend enough time with your teen and don’t expect him to know what to do with himself! Try using a service like Citibank’s Credit-Ed program: http://www.citi.com/us/cards/cm/student/index.htm
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