You will need to teach your teen the different types of credit cards available today. Most credit cards provide "unsecured" credit, which is a fancy way of saying they lend money based on a promise to pay back the debt. A basic credit card allows your teen to pay for things up to a certain credit limit (a fixed dollar amount set by the credit card issuer).

Credit cards come in several varieties –

Travel And Entertainment Cards. These are cards such as American Express or Diner's Club–primarily used by businesses and consumers for travel and entertainment expenses. They have an annual fee and may require payment in full of the outstanding balance each month.

Credit Union or Bank Cards. We all know these–MasterCard, Visa, and Discover. They are credit cards sponsored by individual credit unions or banks and can be used to pay for any type of goods and services. Each credit union or bank decides credit limits, annual fees, and terms and conditions.

Company or Retail Store Cards. These credit cards are offered by department stores and gas stations, and can only be used at the issuing retailer. These cards have no annual fee, but may have a higher interest rate than credit union or bank cards.

Co-Maker/Co-Signer Card. You may decide to help your young adult obtain their first credit card. You can co-sign a card for them and enable them to build a credit history. After a period of time, assuming a good payment record has been achieved, the card issuer will then issue a card in their name only.

Secured Card. An amount equal to the credit limit is placed in a deposit account at the financial institution until a good payment record is achieved. Then the card can be changed over to an unsecured card.

Authorized User Card. You can designate your teen to be a user of your credit card. The card will be in your name but this type of card does not help them establish a credit history.

Better Deals. Credit unions almost always charge lower rates and have fewer fees than the major banks. Click here to find a credit union near you and check their credit card rates.