Teen Credit Cards: Teaching Tool or Pointless Plastic?

The school year’s just begun and you can almost see your teenager changing right before your eyes. There are new friends, new teachers, new activities and sometimes it seems like you don’t even know her anymore.

With all the other changes, you begin to wonder if your teen can handle more responsibility. And if so, what’s the best way to start? As always in this space, we think a good place to start is by teaching them to be responsible with their money.

In today’s world, parents have more control over their kids’ finances than ever before. You can put money on a card for your kid and go online to look and see where they’re spending it. You can monitor, redirect and seize the teachable moments while they’re still at home with you – and hopefully keep them from racking up credit card debts as soon as they move away.

A common objection to letting teens use credit cards has always been that they won’t grasp its relation to actual money. However, that objection is nearly moot in today’s world of online payment systems and virtual wallet services, where you pay for your purchase through your cell phone.

Secured and pre-paid credit cards are a safe way to teach a teenager how to manage credit in the future; safe because the teen can’t spend – or be charged double-digit interest on – money she doesn’t have.

Most credit unions (and banks) offer secured and pre-paid credit cards, and some cards provide a way to begin building a credit history for a teen. You’ll want to pay careful attention to the details to ensure the card you’re considering offers credit-building features for your child if that’s what you’re trying to do.

Practically everyone now carries plastic cards the same way we used to carry cash, and virtual wallets have removed us even further from our green. “Cold, hard cash” may become an obsolete expression in our lifetime, so raising children to understand its relationship to their financial health is becoming more and more difficult. Will your teen be capable of conceptualizing the ebb and flow of her bank balance? Well, she’s got to start sometime! Do you want it to be at home where you can keep an eye on her? Or away at college?

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