Just like learning to save, teaching your child to use a credit card will be like teaching them to drive—maybe with a little less adrenaline for both of you.
After all, in a teenager’s hands, a credit card is like a car: shiny, powerful, and potentially dangerous if not handled responsibly. The key is to not let them get distracted behind the wheel.
A great way to help kids learn the basics behind credit card use is by starting them out with a debit card. Debit cards give you almost all the flexibility of a credit card, with more immediate understanding of extra penalties or costs. Most banks will allow a child over 15 to have their own bank account, but, it may be best to open this one jointly so that you can help them manage it.
Before you do anything, sit down and decide with your child how the account should be funded – maybe they want all of their allowance to go in there, or maybe just their birthday or holiday money goes in there. Either way, he should be aware how much money is in the account, and how he can monitor it. With online banking, checking account balances is easier than ever – you can even do so on your phone!
The key to handing your kid a credit card is making sure they have the experience to know what sensible spending looks like; once they understand that, and have tried their hand at it under supervision, you can let them take the wheel.