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Your Teenagers and Their Credit

Help your high school and college-age children become responsible credit consumers.

You may have had your first experience with credit as a college student. You probably know about the incredible volume of credit card offers available to students. Did you wonder why banks and retail stores offer credit to students who are living on a fixed income, sometimes without a regular job? Banks and retailers are looking for new business, and students are prime targets. Creditors know two important things about offering credit to high school and college students:

  • The student will likely be a customer for life.

  • The student's parents will often pay the balance if the student falls behind.

A Great Opportunity

If your children are going to have their own credit cards, it's a good idea for them to establish a good credit history from the beginning. As the parents of a teenager, you have an opportunity to teach your child how to be a responsible credit consumer.

  • Discuss why it's important to establish and maintain good credit. Your children are setting the stage for their long-term financial well-being.

  • Explore the different types of credit cards. Bankcards are accepted wherever the VISA, MasterCard, American Express, or Discover logos are displayed, while department store cards can only be used in one place.

  • Explain how credit card interest is calculated. Your children may not realize that there is a charge to use a credit card. See the CareOne Credit Knowledge Library for related articles about credit card interest and fees.

  • Teach your children how to create and maintain a budget. Start by identifying total income and expenses:

    Income – Money from parents, part-time job, financial aid, etc.

    Expenses – Meals, clothing, entertainment, books, etc.

  • Stress the importance of paying bills on time. Late payments become part of their credit record.

  • Share your experience with using credit. Your children probably see you use credit cards to make purchases, but they may not know anything about paying the bill each month. Personal examples often help someone else learn. For a guide to obtaining credit that is aimed at young people, see the U.S. Federal Trade Commission booklet Getting Credit.

Remember that when your children reach the age of 18, they can apply for credit without your permission. Knowing they will be faced with important credit decisions when they get to college can help you focus on an important discussion with them now. Why not use this time to help them start off on the right foot?

The CommunityCorner.org website has an easy to understand explanation of basic credit concepts. For more information on any of these topics, read the related articles in our Knowledge Center Library.

Take control of your finances with our debt help tools. Use our calculators and budget planner to help you manage your money.


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