5 Ways you can Protect your Teenager from Credit Card Debt
Posted June 27th, 2007 and last modified February 7th, 2012Teenagers and Credit Cards
Plastic is the currency of the world we live in today. Teenagers when growing up want to access their money faster and make more considered decisions.
A credit card is a serious step in a childs financial literacy development, they can be very effective financing tools or can be terrible burdens if used inappropriately. There are some key services where a credit card is required in order to consume the service such as purchasing online (Although there are other options for payment online, credit cards are still the most widely accepted form of currency by far), renting a hotel and other services which require a credit card imprint. In most cases the card is just a safety net for the service provider although critical for the teenager to use the service. Without a credit card they feel less independent and need to lean back on their parents.
Top 5 Tips for Teenager Credit Card Debt Protection
- Use a debit card instead of a credit card to restrict over spending
- Restrict card limit to $300, $400 or $500. Westpac provides a student credit card for this.
- Use a low interest card incase of over spending.
- Review card usage after 3 months or particularly around key spending times like christmas to determine if card is being used appropriately.
- Always read the terms and conditions in the credit card application carefully
Originally debit credit cards were designed for adults who could not obtain a traditional credit card due to having either no or poor credit history.
Some of the cards actually have credit rebuilding features that report to the credit bureaus regularly. These same cards can be a valuable asset to our youth. Chances are our children will never use a checkbook so why not teach them how to use and manage a credit card from the beginning.
They are like credit cards wrapped in a life preserver. Your teen cannot damage their credit history with a debit credit card.
The credit limit on the card is determined by the amount of money they have already loaded onto the card from their bank account. This gives them then chance to learn how a credit card it truly supposed to be used instead of falling into the trap many adults do, spending money that they don’t have.
So, Should my Teenager Get a Credit Card?
The issue of “should my teenager have their own credit card” can only be answered by those teens’ parents. If you have decided that you want your teen to have a credit card take the following into consideration.
Holding a credit card will give your teen more freedom. You’ll know if they’re responsible enough. If they are irresponsible with their credit card and become in debt, they’ll gain valuable lesson with debt and finance that is difficult to learn with other than experience. Review several credit card applications with your son or daughter. Ensure the credit card that you apply for has safety features such as allowing you to monitor spending.
Always read the terms and conditions in the credit card application carefully.
Low Fee Credit card
The CBA Low Fee Card is a great option for parent’s who want to give their teenager the freedom of owning their own credit card while ensuring they keep their spending under control. Parents can add themselves as an additional cardholder for free so they can monitor their teenagers spending on the card. Also includes a low annual fee, a low credit limit and 55 days interest
free.
- $24 ($0 for qualifying customers) annual fee
- 20.24% p.a. on purchases
- 5.99% p.a. for 5 months on balance transfers
- Cash Advance Rate of 21.74% p.a.
- 55 days interest free
- Teenagers can enjoy the convenience of secure internet shopping
Read the Commonwealth Bank Low Fee Credit Card terms and conditions.
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i think credit cards are the biggest trap for stupid people, the saying is ” don’t spend what you don’t have”. so therefore why get yourself in debt when you can buy something later if you work for it. im only 14 and i only spend what i have.