Teens Credit Cards

Teens should keep a record of the credit card purchases they’ve made during the month, with a running total. When they’ve reached the amount they can afford to pay off at the end of the month, they should stop using the card until the next month rolls around. Parents and teens should discuss what types of purchases are appropriate with a credit card. For example, appropriate purchases do not include anything you can eat, drink, or wear.

Youngsters who already have a checking or savings account — and that should be the first step in a kid’s financial education — are ready for a standard debit card because they’re accustomed to keeping track of transactions, according to Marc Minker, a CPA and personal financial specialist at the New York City consulting firm Mahoney Cohen & Co. Parents can rest fairly easy in this situation, since even the most acquisitive teen will find it self-limiting: Once the account balance drops to zero, theoretically, he or she has to stop spending.

Prepaid cards like Visa Buxx or Citibanks Citi Cash Card allow parents to set spending limits and monitor where their children are spending money, both through monthly statements and through Internet accounts that show daily transactions. The parents transfer money from their own checking accounts to the card for a small transaction fee, and the card can be used like any other credit card to make purchases.

As my older teens have moved up to high school and have jobs of their own, I have encouraged them to get a credit card of their own to establish their credit. I have helped them fill out the forms and requested a credit card limit of no more than $300. I still keep a careful eye on how they are using the credit cards, but since the bill comes in their name, I give them more freedom on when and how they use it.

With continuing concerns about teens in credit trouble, it makes some sense to teach them the value of good spending habits with plastic. There are several opportunities to do this with some innovative products.Visa offers a card they call Visa Buxx which is a prepaid Visa card. A parent or teen loads the card with value via electronic funds transfer and then teen then uses the card until the limit is reached. VisaBuxx provides online web access to spending records and allows funds to be added to the card at the parents’ initiative.

One thing that parents do is they give them teen credit card as they do not involve the kids in the payment of the cards. The children mistook it for advantage and spend as much they like. One thing before you apply for your kids? credit card, make sure that they understand that the piece of card does not only buy them the goodies but mom and dad have to shell out the money afterwards. The card is an alternative of money but actually is a borrowing which sooner or later their parents have to pay back.