"Does your teenager need a credit card?"
says blogger Sheryl Smolkin. On October 25, 2011, she wrote a blog describing
some guidelines of how parents should carefully monitor their children's credit
cards, if they have one. She claims that "When
each of my children got their Ontario G2 driver’s licence and were able to
drive alone, my husband and I decided they were old enough to have a credit
card." Some parents may seem
very skeptical about giving their children credit cards when they grow to
a responsible age, but that's mainly just the parent's
personal preference. Smolkin does a good job explaining how to monitor
your kids if you decide to give them a card. I personally agree with what she
has to say, specifically with three main topics in her article; how to monitor
your childs card activity, how to deal with bills and pricing, and the proper
time and place for your child to use his/her card.
If you choose to give your child a credit card, it's
important to monitor how and when they spend it. Smolkin use her children as an
example: "We never
worried that they would abuse our trust because we check our accounts very
frequently online, and if a problem did arise, we knew we could nip it in the
bud pretty quickly." Smolkin
also offers several alternatives to the standard credit card; A reloadable
prepaid card is another option. It's important to check the monthly fees for
this type of account. I agree with her suggestions, because if I was a parent
and I gave my child a credit card, I would want to make sure
that nothing serious would happen to it if, for example, my child
ever gave into peer pressure when in a store with friends to buy
something, among other scenarios.
It's also very important to know how to pay the bills
and set spending limits. Smolkin recommends not worrying about the
credit limit. "Just
because a card has a credit limit of $1 000 or $20 000 doesn't mean a
cardholder should charge to the max." Instead,
she recommends setting personal spending limits. "Unless your child is
spending for budgeted items and will have cash on the due
date, tell him to forget it until he has saved up the
money." When paying
bills, you should be a good example by avoiding paying interest. I highly
agree with this information, because setting a good example for your child when
paying bills will help them grow more knowledgeable in their
financial education.
Lastly, you need to be clear with your child on where and
when to spend the card. Smolkin uses her kids as an example: The cards were meant to be used
only in an emergency, and on the rare occasion where one of the kids used them
for something else they asked first and promptly paid us back if they had
agreed to do so." The decision comes down to personal preference,
so if you let your child buy whatever they want with it, you need to make a
deal that your child will eventually pay you back. This, to me, is the most important
aspect of a child's financial education because if your child does not know how
to effectively spend his/her money with a credit card, that child
will not be prepared properly for later years in life.
"Understanding
how credit cards work and learning to use them properly is an important part of
your children's financial education." says
Smolkin. By helping them understand how credit cards work, it can save you a
lot of trouble down the road when your child leaves the house
to live on his/her own. Monitoring the card's activity, dealing with
bills, and when to spend the card are all extremely useful
to your child, and can help them build a strong, healthy lifestyle
once they move out.
