Does it make sense to give your teenage child a credit card?

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If you have a teenage child at home, you would possibly be considering giving him a credit card. There is always a risk involved with a credit card as even adults are unable to control with the ‘buy first, pay later’ model. So, does it even make sense to give your child the plastic card?

Too many offerings in the market

By the time your child reaches his teenage years, he would most possibly know what a credit card is and why he should have one. If he hadn’t asked you for it yet, the banks would have got to them by now. There are many types of credit cards out there to choose from. As he reaches the older years, the requests would come more aggressively. You could consider:

Student credit cards – Banks offer this card as a stand-alone card for students. They will depend on the parent’s credentials for approval with their own credit limit.

Supplementary cards – You can get a card that rides on your credit limit (and credit standings) with the bank that issues your principal credit card.

How should you decide?

So, when would have a credit card make sense for your child? It would be feasible to give your child a credit card as late as possible. Once he reaches the later years of high school (around the age of 16 or 17), that is when he becomes more independent and a credit card (with limited funds) might be useful:

  • In emergencies – There could be an urgent purchase or medical treatment needed. A credit card would come in handy in those situations.
  • When traveling – If your child is going on a trip (with the school or with friends, the card would be useful as he might not be carrying too much physical cash.
  • Studying overseas – This is definitely a good option if your child is going to continue his education abroad. While he might be able to apply for a credit card in that country, issuing one for him would give you peace of mind.

On the flip side, you might also encounter other problems. It is vital that your child is aware of financial management and the consequences of overspending. You can set a limit to the card he is holding but it would still be a certain amount that he can use every month (since you are the one paying the credit card bill).

So, what is the verdict?

  • First, you need to ensure your child is aware of financial management.
  • Only issue a card to your teenage child if it is absolutely necessary. He should know that it is not a permanent arrangement and you would take it back whenever you need to.
  • Enable notifications that transactions made on the card be available to you.
  • He should be aware that any ‘unapproved’ transaction will be borne by him (through his allowances). You do not need to be overly strict with this though.
  • If it is difficult to get him to control his spendings, perhaps you should consider giving him a debit card instead where you can manage the amount better and more efficiently.

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