9 tips to make your Teenage kid Responsible-Credit-Card-User

Teenage with a credit card

Should I give Credit Card accessibility to my teenage kid?

This is a highly controversial question. You’ll get many points both against and in favour of the question. A recent study has shown that over 80% of the colleges graduating students have credit card debt even before they have got a job.

So, apparently of-course, it seems like it is a disaster a teenage with a credit card. But think on practical point of life. One day your teenage kid will be adult and will have to manage his/her family without your help. In the era of plastic money, he/she will be mentally forced to use credit card and what will happen then? Without any guidance or lack of experience may lead their financial status of the family in danger.

Hence, it is always better to start early like at the age of 16 years under the proper guidance of parents. Remember one thing, you cannot learn swim if you continuously avoid water but learning swimming is essential in life.
At my point of view, make an add-on credit card for your kid when he/she becomes 16 years of age. But before delivered the card to his/her hand, check the following details:-

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1.Tell him to use this card only on right reasons:

Clearly tell him that you are providing this card to him because it is not always possible for carry hard cash all the time. Like- if he misses the train while on an excursion from college/high school may buy train tickets using this card or may use this card on medical emergencies.

2.Don’t pay bills on behalf of him:

Instruct him that his parents/guardians are not going to pay a single penny of the bill. He has to pay his credit card bill every month before the due date.He has to use his monthly allowance or monthly income from his part time jobs to pay this bill money. So, don’t overspent using the credit card.

3.Make due time payment to avoid interest rates:

As you know credit card interest rates are very high but your kid may be unaware of it. He may be attracted on the scheme that he can spent $1000 per month with a minimum amount payment. Clearly explain this catchy but dangerous credit card plans to your kids by writing.

Tell him that heavy interest will be charged on the unpaid amount, may be 12% p.a. and this may resulted in a huge amount. Explain this concept with the numerical figures and charts. Because charts and numerical figures have longer effect on one’s mind than words of mouth.

4.Minimum limit on credit card:

Keep the limit of the credit card as per your kid’s monthly allowance or his income from part time jobs. This technique will help him not to overspend on cards.

5.Credit Scores:

Explain him how credit scores may impact his later life and clearly tell him how it is calculated. Tell him that good credit scores will help him while taking loan or buying house in future.

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6.Not to share the details of credit card:

Tell him not to share any information of credit cards with others. It may be dangerous for him to share any credit card information online. Teach him that lending credit card to anybody even to the best friend is strictly no-no.

7.Keep a close watch on the credit card statement

and encourage him to review the bills with you so that chances of unauthorized uses are waived off.

8.Keep the credit card receipts:

Encourage him to keep receipts of whatever purchases he makes and match them against the statements.

9.Loss of card:

In case of loss of card, report the concerned authority on urgent basis and block/cancel that credit card immediately.

Even after all of these precautions, be prepared to face some teenage drama and be ready to handle the situation. Keeping the account limit minimum will help you to avoid any unpleasant situation. Deal with your teenage kid with proper care but strongly. Shouting at him will not work. Handle the situation with a tricky way and asks him the reasons behind the misuse of credit cards. Advise him how he can handle the worst situations in future.

These experiences and advises will prepare your kid for his/her future and will make him/her a good manager in his/her personal finance.

Have a secure and happy Life

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About Moonmoon Biswas

Moonmoon Biswas is an Equity research analyst . She has more than 10 years of experience in this field. She has proven track record in the field of Technical analysis and the Fundamental analysis. From the educational background, She is an MBA-Finance with CFA (India). She has work experience in the leading broking houses in India and has also in hand experience in Australian Security Market. She has her own equity research firm and currently also engaged in digital marketing.

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