The state of credit card debt in the United States is just mind-boggling. The average American is carrying $15,000 in revolving debt, and for many people, the number is much higher. All of that debt limits a person’s ability to make the best decisions for their present and handcuffs their future by impacting their choices when buying a car or taking on a mortgage. The sad truth is that most people aren’t taught how to handle their finances while in school, and we as their parents aren’t doing the best job of instilling them with strong discipline and careful decision-making skills at home. It takes a concerted effort by all the important adults in your teenager’s life to help him avoid future debt. Here are a few ways you can teach your teenager about credit cards that will arm him for success.
First off, we all know that we can say whatever we want, but our teenagers will always sniff out what we actually do as an example. Teens recognize bull; there’s just no getting around it. So if we as parents are irresponsible with credit cards, there’s no way they’re going to listen to our pleas towards responsibility. Do whatever you have to do to get your house in order. Even if it’s a major struggle, your teen will see what it’s costing you and learn from that. Sometimes it’s these sorts of situations that offer the best experience in the end. When they understand all the work you do to manage your credit cards and reverse past mistakes, they’ll get a real sense of what to avoid in their own lives.
With that covered, sit down with your teen and have a real discussion about the options. All teenagers want to be treated like adults, so instead of just telling them they’re not ready for the responsibility, have a conversation and ask them to prove to you that they are. Not all teens are the same, and some of them may well be ready for their own credit card. Role-play through some various credit situations, and ask them how they would handle it. Together you can determine what the best steps forward are. All young adults need to be building credit, but there are several different ways to go about it.
Now that they understand the ground rules pull out your credit card policies and go over each one in-depth. Your teenager needs to understand that there are more elements in play than just interest rates and spending limits. They need to see all the fees that are in play, the penalties for missing payments, the fine print about privacy, and how each card company deals with threats like credit fraud. Talk to them about how you determined which credit cards to pick up, and what the card companies look at when figuring out your eligibility. They will be going through the process themselves someday soon, and the more they understand about it, the better the chances they’ll make the correct, educated decision.
Finally, talk about the membership and points programs that make certain cards more of an asset than others. Every card you carry should offer the ability to gather points, accrue miles you can put towards airline travel, or even give you cash back on certain purchases. These are all the ways you put your purchasing to work for you, and your teenager needs to understand the importance of these programs before getting his own card.