Ah, plastic. What would we do without it? But while they're so easy and convenient to use, credit cards are hardly all that simple. Without the right information, and if not used correctly, credit cards can get your teen into deep financial trouble.
So here's some quick Credit Card Basics to share with your teen or older college-age child:
Credit Cards: The Upside –
- Credit cards provide protection against theft of cash.
- Can purchase items and services you need, when you need them, even if you don't have enough cash.
- Can be lifesavers for paying for gas, car repairs, emergency phone calls, etc.
- When managed correctly, credit cards can build up a solid credit history for the future.
- When used responsibly, teens can end up a smarter money manager.
Credit Cards: The Downside –
- Make it easy to buy things out of a teen's price range ; can't pay the bill when it comes due.
- Tempting to buy on impulse and teens forget they are actually spending money, or that they're spending future income they don't (and may never) have.
- When only paying the minimum balance each month, takes years to pay off the balance.
- Accumulating interest on the balance can make what teens buy cost much, much more in the long run.
- When falling behind on paying the bills, it damages their credit history and makes it harder to get loans in the future.
Credit Card Alternative: Prepaid Reloadable Cards –
Click here for more information on the prepaid reloadable card.
- There's an alternative to traditional credit cards: Prepaid Reloadable Cards.
- Provides teens and college-age students financial independence and teaches responsibility.
- Your child has the privilege of carrying a card with their name on it.
- Keeps parents informed, involved and in control of part or all of the child's spending.
- Parents determine amount to be loaded onto the card.
Click here for more information on the prepaid reloadable card.
