Teenagers and Credit Cards

Teenagers and Credit Cards

by Garth Brady

As teenagers prepare to go off to school, many parents consider providing them with a credit card. This is most often done with the understanding that the card is to be used for emergencies. While many students are very responsible and use the credit card as intended, some students define an emergency differently than their parents.
Defining an Emergency

There are all types of emergency situations where a credit card would be needed. A medical or dental situation where payment is required upfront would definitely be too expensive to use pocket cash. Suppose the teen's automobile breaks down, or he is stranded somewhere with no way home, a credit card would come in quite handy. A neighbor could inadvertently start a fire and the teen is burned out of an apartment, needing to pay for a place to stay or to buy food. These situations may sound harsh, but that should be the tone around the use of a credit card.

Text books can be very expensive and may be considered an emergency purchase. But magazine subscriptions, adult chat lines, 1-900 horoscope phone numbers, and HBO on Demand are not. Theater or concert tickets and cell phone bills are not emergencies. Paying for a cell phone may be acceptable. However, putting all your friends expenses on your credit card because they promised to pay you back is absolutely not.

Don't Apply

Many stores or financial institutions offer enticements such as discounts or prizes when someone fills out an application. Many teens fill out a credit card application to "get 10% off all purchases that day" without completely reading the terms and conditions. The company must be contacted in writing and by phone if they don't plan to use the credit card in the future. Monthly charges may continue to accrue (including late payments for monthly charges) whether or not the card is used. This can cause credit hassles later on if they just ignore the notices of payments due.

What Good is a Credit Card?

Creating and maintaining a good credit record is important. It is not a status symbol and no longer a means of having more stuff than the next person. Having a high credit score affects everything from the amount of interest charged on the credit card and having the option to finance larger items to things as simple as being able to rent a car. Use a credit card wisely, and make sure you teach your teenagers the same.