Does Your Teenager Need a Credit Card?

            "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.