Kids & Credit Cards
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Kids & Credit Cards

Updated: December 26, 2012

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If older adults can’t figure out how to use credit cards properly, then children have a long way to go. Children absorb knowledge well, so by keeping a couple tips in mind, children can advance their finances and credit card knowledge to a level that surpasses adults. Since children don’t get this type of financial information at school, parents should pass down financial literacy information to their children about the responsible use of credit cards. Parents should coach their children at a young age about importance of on-time bill payments and handling their own money. Parents can do this for children as young as kindergarten age by playing cashier games with the children and progressing to giving them a small weekly allowance. This will teach these children the basics of how money works. Once children get older, begin increasing the amount of weekly allowance. Once the child is in elementary school, or begins to show the need for expensive toys or recreational electronic items such as gaming systems, begin incorporating monthly meetings. At these meetings discuss the family budget and how much the item they want costs. Continue discuss how much the family can contribute, and how much the child should contribute, within reason. Set up a definite payment plan with specific payment goal. This will show the child the basics of budgeting, and how saving can get them the luxury items they desire. When the child is establishes a good report with contributing to the items that they desire, you can include the option of interest when they don’t meet their payment deadline or miss a payment. Introduce your child to the banking system by opening a checking account by the age of 18. By this time they may have a job, and they can use their checking account for direct deposit of their paychecks. Debit cards also give them more flexibility in regards to cash management. There are also rewards debit cards that help your children save money and give them cash-back on gas and grocery purchases. Before the Credit CARD Act of 2009, students were allowed to get credit cards as long as they were 18 and over. But a string of student debt and financial mismanagement forced the government to pass legislation that required students to be 21 years of age in order to have a credit card. But the Act allows for students under 21 to have a parent co-sign on the credit card, unless the student can provide proof of income. This gives the parent more flexibility as to when they want they want to introduce their child about credit cards. When introducing a child to a credit card it’s important to set a very low spending limit, and to explain to the child what credit cards should be used for. For example, explain to your child/student that the credit card should not be used for daily purchases such as food and social experiences, but rather that the card should be used in emergencies such as the case in travel and roadside emergencies.

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