Credit Card Applications through the Better Business Bureau
The next generation is the "generation of plastic money" as they call it. If some years ago, a credit card was first obtained not earlier than at the age of majority, then today a plastic is available to schoolchildren already. Evidently, it has become the major concern for parents to guard their children from all those numerous mistakes and bad credit habits that they themselves were exposed to when young and inexperienced.
The question is what is the quickest and most effective way to teach a child efficient credit management?
How can a parent without the proper qualification give his/her child a fast start to a credit file and the right guide to successful plastic business? There is good news for parents with children drawn to credit, and it comes from the Better Business Bureau.
Better Business Bureau is a non-profit organization in Mississippi working at improving the relationship between businesses and the public through information. Educating on credit cards has become one of the most burning missions of the bureau in the light of the current credit crisis and ever growing credit insolvency and debt.
If you are a parent whose child is about crazy to seize that popular virtual and "never ending", as many think, plastic money, turn to the Better Business Bureau to see their advice on the parent's smart strategy.
Before you let your child get absorbed in the world of plastic money, the Better Business Bureau suggests you do the following:
- Your child must be dreaming about getting instant approval for a plastic and going credit card shopping right now. Don't admit a thought of it even. The fist thing is to establish a saving or a checking account in the child's name and to teach them to manage finances and learn the importance of money and saving it.
- Step two is to apply for a debit card in your child's name. It looks just like a plastic credit card but in comparison with it, the debit card is like a plaything. It trains the teen to understand and manage account balances and polish their spending patterns.
- Step three. If your child doesn't qualify for a regular bank account to get a debit card, get him/her a pre-paid credit card. It is in essence a debit card but doesn't require a PIN to access funds. Just like with a debit card, you are only able to spend as much as you have "loaded" onto the card and it protects youngsters from falling into debt. One more advantage of a prepaid credit card is the protection from overdrafts (see article on using credit for overdrafts) that is a common case with all debit plastics. No hassle of cashing a check is a convenience for a teen, isn't it?
- However, as a prepaid credit card doesn't have a line of credit, it does not report to credit bureaus and so, does not build credit history. This card is just for the convenience of carrying money in electronic form. To let your child establish credit file, have him/her apply for a secured credit card. It is an essentially a credit card but requires a beforehand cash deposit to collateralize the credit line.
A secured credit card is the last point of preparation and the first step for the real credit card application and full-blown credit career. As a parent, you must be seriously concerned with your child's financial wellbeing. If so, make use of the Better Business Bureau advice and help your teen be a success on the hard way of managing credit and finances.