4 Things You Should Know Before Giving Your Child a Credit Card
Giving your child a credit card signifies that you are putting your trust on your kid. Although there's no minimum age you should entrust this kind of big responsibility to your child, it's all up to you. If you think that they're mature and responsible enough to be given a credit card, just make sure to help them learn how to use credit and debit cards for kids.
Here are other things you should know:
1. Choose the right credit or debit card for your child.
Several banks have junior savings credit or debit card which you can give your child. These aren't full blown "adult" cards, but it's a starting point. There are banks which offer withdrawal or spending amounts on the card. Although this would mean that you're not fully giving the responsibility to your child since he or she knows that there's still a spending limit. But this is a great start if you're still testing the waters.
2. Pre-paid cards are an option.
This is also one of the baby steps you can take when it comes to giving your child a credit card. You can use this as a way of introducing the concept of credit cards to your child. At the same time, you're not exactly limiting their spending, but pre-paid cards will give them the mindset that there's a supply they're working with and that they shouldn't blow it off in just one trip.
3. Educate your child about the use of credit cards.
Admit it, when you were just starting out, you've had some troubles figuring out about how credit cards work, too. But now, you can teach your child every basic thing they need to know about using it. This covers how the interest rate works, or how the credit card billings are charged and done. Although these are relatively technical terms and that they don't need to know the whole complexity of it, you can, at least, teach them how it works.
4. Make sure your child knows how to handle money.
If it's your kid's first time to handle money, then it's probably not the best time to give him a credit card. You should be able to teach your child first on how to manage cash before giving him the responsibility of having a credit card. You can't expect your child to be able to handle his card correctly if he doesn't even know how to budget his own cash.
Giving your child this kind of financial responsibility may be overwhelming for them at first. There may even be times when you feel like they can't handle it yet. But, if you're not going to teach them now, then who will? For as long as you think that your kid is already capable enough to handle his finances and that he's also responsible for the consequences that he might face once everything goes wrong, then there's nothing wrong with guiding your child towards financial literacy.