For many parents the question of should their teenager have a credit card or not becomes more and more a reality. While a few years ago teenagers having credit cards was rare today it is easier for teenager to obtain one and having one becomes more and more common.
So should a teenager have a credit card or not? there is no correct answer to that question. We will try to look at some pros and cons of providing your teenager with a credit card. Lets start with the positive first. Credit cards are a reality of life and eventually your teenager son or daughter will grow up and have a credit card. For that reason providing the teenager with a credit card at an earlier time when they are still under their parents supervision has a positive educational effect. Being able to explain to your teenager what is the correct way to use a credit card and being able to monitor the credit card usage is a good way to educate your teenager to grow into a financially responsible adult. Providing your teenager with a credit card should be a privilege the teenager needs to earn. For example you can start with providing the teenager with a very low limit credit card. If the teenager proves responsible you can raise that limit as time goes.
Credit cards allow better supervision of your teenager expenses. Cash given to teenagers can be spent on anything and is impossible to track. If your teenager is not given cash anymore as pocket money but instead uses a credit card you can look at the monthly statement to find out what your teenager was doing. This side effect of having a credit card provides better supervision and monitoring of your teenager behavior and provides another way to educate your teenager and prevent them from bad behavior.
The risks of providing your teenager with a credit card are obvious. Overcharges on the card are one as teenager usually act on impulse and are less likely to be responsible understanding that every charge on the card is a charge that would have to end up paying. Credit cards also open up the teenager to knew markets that were not available before. The most obvious one is purchases over the Internet for tangible or intangible products. Cash does not allow teenagers to go on an online shopping spree but with a credit card the teenager can go online and shop. The Internet is full of temptations and having readily available payment methods might result in teenagers giving up to those temptations.
Teenagers usually need their parents consent in order to get a credit card. In most cases the parents would have to be a co signer on the card meaning the parents are liable for making payments on the card in case the teenager defaults. The implications could be severe if the credit card given to the teenager has a too high credit threshold. Credit threshold can be increased or decreased by the credit card company at any time. In other words even if you provided your teenager with a low limit credit card you might find out a year or two later that the threshold was increased by the credit card company exposing the teenager and yourself to higher liability.
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