1 year, 10 months ago
Do you think children should carry credit cards?
Some financial experts believe that the best way to teach our kids about credit cards is to give them a credit card. And now, in the midst of this financial crisis, is the best time for them to learn about money management, hopefully avoiding some of the mistakes they see being made all around them.
I’ve seen all the news stories that show people who have lost their homes from too much debt or are incurring substantial interest charges or who have bad credit and can’t get an apartment or job. Do you think allowing our children to carry credit cards is a good way for parents to teach their kids about credit or debt?
I’ve seen all the news stories that show people who have lost their homes from too much debt or are incurring substantial interest charges or who have bad credit and can’t get an apartment or job. Do you think allowing our children to carry credit cards is a good way for parents to teach their kids about credit or debt?
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M$19 Answers
I think that if you were to give a child a credit card you'd unquestionably want it to be a secured card from a bank. However I don't think credit cards in general are the best way to teach kids about credit. Rather make yourself the bank. Many kids get allowance and understand the concept of earning money but few understand borrowing money. So for an example..
You're at the store and your kid is OMG mom/dad PLEAAASE-ing over the newest cool toy. He/she does not have enough to buy it on his/her own. Tell him/her they can borrow the rest on "credit" explaining that they will have to pay it back, with interest. This presents a way to begin explaining how credit works and how it can be trouble. You could have them pay it back in cash but what's the fun in that since in most cases its your money to begin with, no I'd call my debt in extra chores. It won't take long for the idea that you should not spend more than you have.. to settle in.
As a side note, adding your child to your credit cards as an authorized user at birth is actually an awesome thing to do for your child, just not giving them the card. This way all of your positive credit history becomes their credit, meaning when they are older they could have a 20 year credit history and never had credit in their life. be careful though, if that card were to go "bad" it would destroy their credit as well.
You're at the store and your kid is OMG mom/dad PLEAAASE-ing over the newest cool toy. He/she does not have enough to buy it on his/her own. Tell him/her they can borrow the rest on "credit" explaining that they will have to pay it back, with interest. This presents a way to begin explaining how credit works and how it can be trouble. You could have them pay it back in cash but what's the fun in that since in most cases its your money to begin with, no I'd call my debt in extra chores. It won't take long for the idea that you should not spend more than you have.. to settle in.
As a side note, adding your child to your credit cards as an authorized user at birth is actually an awesome thing to do for your child, just not giving them the card. This way all of your positive credit history becomes their credit, meaning when they are older they could have a 20 year credit history and never had credit in their life. be careful though, if that card were to go "bad" it would destroy their credit as well.
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M$Report Abuse
Not credit cards as they are. But if they are old enough, say at 16, a prepaid debit card, that the parent sets as a limit every week or month, will teach them the value of a dollar.
Connecting money with work, no matter how little or much it teaches even users ages 13 and up that money does not just come to you. Even parents have to earn it, and if they don’t earn it, it’s not available.
Today many kids think that money just arrives. The have no connection between earning and spending and saving. They just know go to mom or dad and they give you more.
Teaching them about responsible use is a good way to start. Just a simple Buxx card to get tem started but do not load it. Assign chores, like weeding, mowing, laundry, etc. And at the end of the week when their chores are all done and you are happy with the work they have done, set an amount to pay them. Apply it to their card and let them manage their money.
Soon they will see working to get what they want is not so bad, and while it is not a credit card purse’, it is a way to teach them that their credit card as it were is not a toy.
Then progress to pre loading it with a certain amount, and have them work to “ pay it back”. You can still use payment chores and pay them, but they have to make small payments from their chore money. Do not do this for long. Parents will often confuse a lesson with harsh treatment and go too far. But for a summer, it would be a good way for kids to appreciate
“ credit” and work.
Des it work?
Yes. And we backfired by finding job our daughter likes and she chose not to use credit cards, but debit cards from her own bank account. As she says, when the money is gone, it is gone. With credit I can get into trouble. And extra payments are just not worth it. A lesson that was done when she was sixteen and now she is 22. Credit debt free and happy living on cash prepaid card.
Connecting money with work, no matter how little or much it teaches even users ages 13 and up that money does not just come to you. Even parents have to earn it, and if they don’t earn it, it’s not available.
Today many kids think that money just arrives. The have no connection between earning and spending and saving. They just know go to mom or dad and they give you more.
Teaching them about responsible use is a good way to start. Just a simple Buxx card to get tem started but do not load it. Assign chores, like weeding, mowing, laundry, etc. And at the end of the week when their chores are all done and you are happy with the work they have done, set an amount to pay them. Apply it to their card and let them manage their money.
Soon they will see working to get what they want is not so bad, and while it is not a credit card purse’, it is a way to teach them that their credit card as it were is not a toy.
Then progress to pre loading it with a certain amount, and have them work to “ pay it back”. You can still use payment chores and pay them, but they have to make small payments from their chore money. Do not do this for long. Parents will often confuse a lesson with harsh treatment and go too far. But for a summer, it would be a good way for kids to appreciate
“ credit” and work.
Des it work?
Yes. And we backfired by finding job our daughter likes and she chose not to use credit cards, but debit cards from her own bank account. As she says, when the money is gone, it is gone. With credit I can get into trouble. And extra payments are just not worth it. A lesson that was done when she was sixteen and now she is 22. Credit debt free and happy living on cash prepaid card.
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M$
I don’t think giving a child a credit card is the best way to teach them about money. Here are several ways you can help them understand money from a young age.
The first is the three jars method. Each time you give your child an allowance, have them split the amount three times. In one jar put the amount they can spend. In the next jar put the amount to save and in the final jar put the amount to give away to charity. This teaches your child to save money and be charitable as well.
This of course only works if you show them that you also save and give to charity. While you don’t have to go through all of the family’s finances with them getting them involved gives them a sense of responsibility and can be a good way to bond. This will help them understand how money works and by doing this at a young age, it will engrain in them healthy money habits that could last a lifetime.
The first is the three jars method. Each time you give your child an allowance, have them split the amount three times. In one jar put the amount they can spend. In the next jar put the amount to save and in the final jar put the amount to give away to charity. This teaches your child to save money and be charitable as well.
This of course only works if you show them that you also save and give to charity. While you don’t have to go through all of the family’s finances with them getting them involved gives them a sense of responsibility and can be a good way to bond. This will help them understand how money works and by doing this at a young age, it will engrain in them healthy money habits that could last a lifetime.
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M$
I think credit cards can get you in a world of hurt if you are not careful. My husband and I often take openly about money and finance with the kids. I would like to think if you teach your children you, they may be responsible enough for a credit card by the age of 18.
We have never handed things to our kids. We have built our life from nothing and had no help from family. We wanted to teach the kids the same. Nothing in life is ever handed to you, and we should get what we need and not worry so much about "wants."
We have never given our kids allowance. They live here with us and have a chore to be done everyday. Beyond that, there are many extra chores that can do to earn extra money. They can choose to make us much or as little as they would like.
We sell on Ebay, so I also let the kids know if they want to make even more money, they can help with that. They save their money and put half in their savings and the rest they can choose to save up for anything they want.
I feel like I taught them well and they would be responsible with a credit card. However, there are cards you can get and use that YOU put money in and that amount is available to you. For example, Paypal. My son is going on 18 years old and I allow him to list on Ebay and all of that money is his. That money goes into his Paypal account. His Paypal card can be used just like a debit or credit card but it is HIS money.
In answer to your question. I think if parents teach their children the value of a dollar and prepare the kids for a credit card, they should be able to get one, once they feel ready.
Going into debt from it or not depends on each child. Hopefully they learned enough at home prior to have outstanding results.
http://www.flickr.com/photos/discovercard/3287240599/
We have never handed things to our kids. We have built our life from nothing and had no help from family. We wanted to teach the kids the same. Nothing in life is ever handed to you, and we should get what we need and not worry so much about "wants."
We have never given our kids allowance. They live here with us and have a chore to be done everyday. Beyond that, there are many extra chores that can do to earn extra money. They can choose to make us much or as little as they would like.
We sell on Ebay, so I also let the kids know if they want to make even more money, they can help with that. They save their money and put half in their savings and the rest they can choose to save up for anything they want.
I feel like I taught them well and they would be responsible with a credit card. However, there are cards you can get and use that YOU put money in and that amount is available to you. For example, Paypal. My son is going on 18 years old and I allow him to list on Ebay and all of that money is his. That money goes into his Paypal account. His Paypal card can be used just like a debit or credit card but it is HIS money.
In answer to your question. I think if parents teach their children the value of a dollar and prepare the kids for a credit card, they should be able to get one, once they feel ready.
Going into debt from it or not depends on each child. Hopefully they learned enough at home prior to have outstanding results.
source(s):
Personal thoughts
Personal thoughts
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M$
I have heard those reports also and it is disturbing. I have to say I think it is better to use cash then you see it disappearing and are more careful.
However having said that, my use of the debit card far outweighs my cash use. I always have the card on me and don’t always carry cash. I do keep careful track on what I have used my card on and subtract that on getting home.
I think the use of cards for many of seems like “free money” which, of course, it is not. If it helps the next generation to use the cards early then I say it is a good thing. I would think a limit would be good so the parents don’t get some unexpected surprises. Maybe parents can teach the kids how to use them in a better way. In any case, I think a close eye should be used to make sure they are really learning and not just spending.
However having said that, my use of the debit card far outweighs my cash use. I always have the card on me and don’t always carry cash. I do keep careful track on what I have used my card on and subtract that on getting home.
I think the use of cards for many of seems like “free money” which, of course, it is not. If it helps the next generation to use the cards early then I say it is a good thing. I would think a limit would be good so the parents don’t get some unexpected surprises. Maybe parents can teach the kids how to use them in a better way. In any case, I think a close eye should be used to make sure they are really learning and not just spending.
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M$
In my opinion, I think children should not carry credit cards because it is not proper and at the same time inappropriate to let children practice spending money that is not yet earned. The best thing the kids should be thought in the first place is the right way to save money by having their own savings account and witness their money grow as they keep on adding money on their account.
As a parent, one should not bequeath their children with attitude of a spending binge, as what has been practiced by some parents as far as credit cards is concerned. Starting children the art of saving money will surely redound to the benefit of the future generation, free from the shackles of a trillion debt.
Finally, children is not authorized by law to contract debt because they have not yet reached the age of majority.
As a parent, one should not bequeath their children with attitude of a spending binge, as what has been practiced by some parents as far as credit cards is concerned. Starting children the art of saving money will surely redound to the benefit of the future generation, free from the shackles of a trillion debt.
Finally, children is not authorized by law to contract debt because they have not yet reached the age of majority.
source(s):
Personal opinion.
Personal opinion.
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M$
I do not think children should carry credit cards. A lot of people feel that given a child a credit card would help the child understand how money works, but it does not help the child in the long run.
On several occasions I have met people who had found themselves in a big fix just because they had a credit card. A Friend of mine (a single parent) used to give her young daughter a credit card to do some online shopping whenever she was not around. But what started as a good money relationship between mother and child ended up as a big disaster when the girl told her friend about the card.
Now my friend is in a big financial mess for being stupid and the mother and daughter relationship has been shattered. I think parents should teach their kids about the value of money and also the risks involved in using a credit card. Anybody could get careless and misplace a credit card or even take some security rules for granted, but with younger children the case is worse.
A gift card will be a good ''money card'' for a child.
http://www.creditcarddeposit.com/guide/wp-content/uploads/2009/05/teencard.jpg
On several occasions I have met people who had found themselves in a big fix just because they had a credit card. A Friend of mine (a single parent) used to give her young daughter a credit card to do some online shopping whenever she was not around. But what started as a good money relationship between mother and child ended up as a big disaster when the girl told her friend about the card.
Now my friend is in a big financial mess for being stupid and the mother and daughter relationship has been shattered. I think parents should teach their kids about the value of money and also the risks involved in using a credit card. Anybody could get careless and misplace a credit card or even take some security rules for granted, but with younger children the case is worse.
A gift card will be a good ''money card'' for a child.
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M$
This is obviously a hot topic and people have plenty of opinions on the subject. Personally, I don't think that children should carry credit cards. Most adults shouldn't carry credit cards either.
I can understand the desire to use credit cards to teach children responsibility. Unfortunately, giving credit cards to minors can very easily result in a situation where the bill gets out of hand. Since minors cannot enter into a legal contract, it appears that it would be difficult or impossible for creditors to collect on the debt.
When a minor enters a contract, he or she may void the contract for any reason at any time without having to suffer the consequences of their actions. The only possible exception may be with emancipated minors who have been legally freed from their parents' guardianship.
A better option may be to teach children financial responsibility by granting them credits they can earn from performing chores around the house. They can then exchange these credits for things they want (video games, cell phone minutes, etc.). It would basically be the same as getting paid an allowance in exchange for services. It wouldn’t help the child establish credit, but it should teach that things have to be earned.
I can understand the desire to use credit cards to teach children responsibility. Unfortunately, giving credit cards to minors can very easily result in a situation where the bill gets out of hand. Since minors cannot enter into a legal contract, it appears that it would be difficult or impossible for creditors to collect on the debt.
When a minor enters a contract, he or she may void the contract for any reason at any time without having to suffer the consequences of their actions. The only possible exception may be with emancipated minors who have been legally freed from their parents' guardianship.
A better option may be to teach children financial responsibility by granting them credits they can earn from performing chores around the house. They can then exchange these credits for things they want (video games, cell phone minutes, etc.). It would basically be the same as getting paid an allowance in exchange for services. It wouldn’t help the child establish credit, but it should teach that things have to be earned.
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M$
I guess one answer to this question is, what do you consider a child? I got a credit card when I was 17 because my parents wanted me to be able to build up my credit. It was a tiny credit card, with something like a $100 limit and they got the statements so they knew exactly what I was buying with the cards. I was given a $50 a month allowance to use on the card but if I went over in one month, I could spend more than what was left over the next month. If I had continued to overspend or anything like that they would have cut the card up.
As far as whether or not YOUNG kids should get the card, I don’t think that’s something they need to learn just yet. I know some 9 and 10 year old kids who wouldn’t understand what to use the card for, let alone how to really work with a credit rating.
As far as whether or not YOUNG kids should get the card, I don’t think that’s something they need to learn just yet. I know some 9 and 10 year old kids who wouldn’t understand what to use the card for, let alone how to really work with a credit rating.
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M$
To be honest I don't think I would have a huge problem with this. Teaching children at an early age how credit works and how it can work for you would be a great advantage. The feeling you get when you get a credit card for the first time, feeling like you have more money than you have is something that could be taught away much earlier when there is less risk. If a child learns what happens if they spend more than they can pay back early, when the stakes are low, might be better prepared for managing their credit in the future.
There would need to be restrictions of course, a very low credit limit such as $100 (is that possible?) and it would want to be secure. There would need to be joint control of the card by a parent. They would need to have access to an Internet banking service to keep an eye on their balance, and see how much they need to put back, and what interest they are paying. The world is slowly moving away from hard cash and into these kinds of electronic systems. If a child isn't taught the value of these things early on it can lead to bigger mistakes being made in the future.
There would need to be restrictions of course, a very low credit limit such as $100 (is that possible?) and it would want to be secure. There would need to be joint control of the card by a parent. They would need to have access to an Internet banking service to keep an eye on their balance, and see how much they need to put back, and what interest they are paying. The world is slowly moving away from hard cash and into these kinds of electronic systems. If a child isn't taught the value of these things early on it can lead to bigger mistakes being made in the future.
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M$
I believe that parents could provide teenagers 13-19 with credit cards by posting money earned from chores to teach their teens how to budget wisely. I would keep the amounts realistic. Teach the child that if they "max out" the card then they will suffer the consequences of not having any money until "allowance payday" rolls around again. Also I would set this card up so that it does not have overdraft protection. This would help to teach the child to live within their means.
I was in one of the upper end department stores one day shopping with my daughter. As I was waiting on her to try on clothes I saw this little girl (about 3 years old) walk up to the cash register counter and lay a pair on sunglasses down. The clerk asked her if she wanted to buy them, and the little girl said "Just charge it." Obviously she had lots of experience watching mommy shop! I thought this was a bit funny but also a bit sad.
I was in one of the upper end department stores one day shopping with my daughter. As I was waiting on her to try on clothes I saw this little girl (about 3 years old) walk up to the cash register counter and lay a pair on sunglasses down. The clerk asked her if she wanted to buy them, and the little girl said "Just charge it." Obviously she had lots of experience watching mommy shop! I thought this was a bit funny but also a bit sad.
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M$
No, I don't think that it is wise to give children their own credit card. It would be good though to teach them the value of money and how credit cards work. One of the reasons why I oppose to this is that children are very young to handle credit cards. There is a tendency that they will abuse this because they can buy anything they like by using it. And since they are not mature enough they tend to buy things that they like instead of things that they need.
There is also a risk that this card might get lost and find its way into some scrupulous individuals so this is very risky to financial security of the family too.
I think there are other good ways to teach children bout credit or debt. When out shopping, you can show them how a credit card works and make them understand about this and how it works. It is also very important to emphasize to them that one should be responsible enough when using credit cards because unwise use of it can make one be overwhelmed with debt.
There is also a risk that this card might get lost and find its way into some scrupulous individuals so this is very risky to financial security of the family too.
I think there are other good ways to teach children bout credit or debt. When out shopping, you can show them how a credit card works and make them understand about this and how it works. It is also very important to emphasize to them that one should be responsible enough when using credit cards because unwise use of it can make one be overwhelmed with debt.
source(s):
Own opinion and ideas.
Own opinion and ideas.
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M$
I don't think that giving a child a secured credit card is any worse than giving them a debit card or cash. I think the idea of them getting used to the branding of Visa or MasterCard is healthy enough and no one really gets hurt.
However, giving them actual credit is bad for two reasons. Kids who don't have much financial experience shouldn't be given something like credit right away. Credit can be a powerful tool, but it can also create a lot of damage if not used correctly. The second reason, which might be rather obvious, is that giving a child credit is really giving them *your* credit! When the kid maxes out the card, you're on the hook for it. Something tells me most parents wouldn't want to take that risk.
However, giving them actual credit is bad for two reasons. Kids who don't have much financial experience shouldn't be given something like credit right away. Credit can be a powerful tool, but it can also create a lot of damage if not used correctly. The second reason, which might be rather obvious, is that giving a child credit is really giving them *your* credit! When the kid maxes out the card, you're on the hook for it. Something tells me most parents wouldn't want to take that risk.
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M$
I think by giving a child or teenager a credit card, you are saying to them "look it's okay to buy stuff now and pay later". My grandmother thought she was helping me as a teenager, by letting me borrow money and pay her back later. This was a huge mistake. It taught me to buy things I couldn't afford.
I am trying to install the value of saving money up for future purchases with my son. He is only 6 but I make him save up money to help on unnecessary things he wants to buy, such as games. It's not that I want him to actually pay for the item, it's that I want him to see the true value of money. I want him to know that you save your money up to buy things you really can live without. Not buy now, pay later.
Long story short, this is not a good idea.
I am trying to install the value of saving money up for future purchases with my son. He is only 6 but I make him save up money to help on unnecessary things he wants to buy, such as games. It's not that I want him to actually pay for the item, it's that I want him to see the true value of money. I want him to know that you save your money up to buy things you really can live without. Not buy now, pay later.
Long story short, this is not a good idea.
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M$
From a personal standpoint, I am not certain that it would be a good idea if my child had a credit card at a young age. My step-son sees my wife and I using out debit cards a lot and his response is why don’t use your debit cards when he wants something that costs a little bit more than what we care to pay for it.
If I was going to give my child a credit card, it would have to be one with either a very low credit limit or a secured credit card where funds need to be loaded on the card in order to be able to use it. I would also make sure that they had a way of paying off whatever charges they incurred if the credit card wasn’t secured. The worst thing to teach that child is that someone else will pick up the slack if they spend more than they can afford.
Once they had a basic understanding how credit cards actually work as well as any potential finance charges, only then would I consider giving my child a credit card, and only if they were at least 18-19 years of age.
If I was going to give my child a credit card, it would have to be one with either a very low credit limit or a secured credit card where funds need to be loaded on the card in order to be able to use it. I would also make sure that they had a way of paying off whatever charges they incurred if the credit card wasn’t secured. The worst thing to teach that child is that someone else will pick up the slack if they spend more than they can afford.
Once they had a basic understanding how credit cards actually work as well as any potential finance charges, only then would I consider giving my child a credit card, and only if they were at least 18-19 years of age.
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M$
What is the end goal of giving a child a credit card? It isn't to practice money management Credit cards create consumers. They do not teach self restraint or the value of a dollar. They teach you how to get what you want before you have the ability to actually pay for it.
If the goal is to create producers or even managers of money start small with chores like one of the other commenter's said. As the child learns to manage those small things and that if they work harder and produce more, more will be given to them. They learn how to handle credit by leveraging risk or by being a lender and not a borrower.
In the end its not about money management its about self management. If a teen is wise they can produce great things with just a small lawn mowing business or a computer. If a 50 year old guy has no self control and goes through a mid-life crisis his life can be ruined.
If the goal is to create producers or even managers of money start small with chores like one of the other commenter's said. As the child learns to manage those small things and that if they work harder and produce more, more will be given to them. They learn how to handle credit by leveraging risk or by being a lender and not a borrower.
In the end its not about money management its about self management. If a teen is wise they can produce great things with just a small lawn mowing business or a computer. If a 50 year old guy has no self control and goes through a mid-life crisis his life can be ruined.
source(s):
words from a wise man, and I don't mean me.
words from a wise man, and I don't mean me.
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M$
No, I think in most cases children aren't responsible enough to have a credit card. Many adults aren't responsible enough either, for that matter with their finances. But a parent should try to teach their children monetary responsibility first before allowing them to have credit cards. It could be like a time bomb. Some children could financially ruin their parents if not responsible in using them.
I would first want to see how responsible my child would be with just managing his or her allowance. If I see that children do not spend their allowance beyond their means and end up saving much more than spending, perhaps when they get a bit olders, into their middle teens close to legal adult age, I would let them begin using a credit card that has a low credit limit with no interest.
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I would first want to see how responsible my child would be with just managing his or her allowance. If I see that children do not spend their allowance beyond their means and end up saving much more than spending, perhaps when they get a bit olders, into their middle teens close to legal adult age, I would let them begin using a credit card that has a low credit limit with no interest.
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No they should learn how to budget with the allowance they get per week. Giving a credit card to a child may not even work because children don't understand the value of money yet and there's no chance they'll understand interest rates and credit reports. Maybe once a child reaches teenage years when they have experience with money and more maturity so they won't spontaneously buy a toy or something should they be allowed to have a credit card.
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Personally, I don’t feel that children should get a credit card at all. Should they learn about credit cards and what they can do to you? Definitely, yes! Through my life, I’ve had to claim bankruptcy twice, and I’m sure not proud of it. However, now I don’t even have a credit card. I have a debit card with a Visa logo on it and it is accepted at places like a credit card, but instead of building up credit debt, it is just deducted from my checking account.
The best thing for kids is for them to open a savings account and after they get their first job, open a checking account. Be sure to teach them how to work a checking account or the first thing you’ll know, they’ll be overdrawing the account. Credit does need to be built in order for people to obtain credit on such items as mortgages, but I think it is better for that to start no earlier than 18 years old. Then it should be one credit card and one credit card only.
The best thing for kids is for them to open a savings account and after they get their first job, open a checking account. Be sure to teach them how to work a checking account or the first thing you’ll know, they’ll be overdrawing the account. Credit does need to be built in order for people to obtain credit on such items as mortgages, but I think it is better for that to start no earlier than 18 years old. Then it should be one credit card and one credit card only.
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