Money Talks: Giving Credit to Teens
Fri, 31 Aug 2012 11:30:00 GMT —
18-year old Alex Gobin carries his own credit card. It's something his parents encourage.
"It does give you a life lesson because if you abuse it, it TMs a very painful lesson. And if you manage it, it can be a useful tool," said Gobin TMs father.
But credit is a tool that needs practice to perfect. So if you're thinking about preparing your teens for plastic, here's how to go about it.
Start with the credit version of a learner TMs permit: A prepaid card. That gives them plastic experience with no credit risk.
Next step? A checking account, followed by a debit card.
When it's time for a credit card, you have choices: either a joint card, so both you and your kid are liable. Or making them a signer on your card, which makes you fully liable.
If you want to help your kids build a credit history, you can TMt do it by authorizing them on your card: you might with a joint or secured card. But remember: opening that credit history is a double-edged sword. Want more information? Go to MoneyTalksNews.com and do a search for "credit."