Too young to have a credit card?

Posted by Nick Niesen on October 29th, 2010

Now a credit card is something any American can't do without. Credit cards make your life easier, there's no need in carrying much cash in your wallet, using a credit card means having great opportunities. It's a well known fact.

And what a shame that young Americans under 18 can't indulge themselves in such a simple everyday pleasure as owing a credit card. Generally, consumers have to wait till they turn 18, only then they can apply for a credit card.

But children grow much faster than it seems. And some of them get quite mature by 16-17. They have a part-time job, they earn money and it's quite clear they have some needs by this age. Having a credit card could give them more extend their possibilities and teach them to manage money in a sensible way.

However, youngsters have some alternatives to getting their own credit card.

The first option they have is to be added to an adult's credit card account as an authorized user. If you want your son or daughter to have an access to your account, you are to contact the issuer and request to have an authorized user added.

In this case your child gets a separate plastic with the same access code as you have and can spend your money.

The second option for younger people is to ask an adult to become their co-signer, which means that the co-signer shares responsibility with a young consumer. By co-signing, the person agrees to pay back the money if the young one is unable to.

But both cases are fraught with danger. First, a young consumer, being financially immature and sometimes being unable to evaluate adequately their financial abilities, could damage the credit of the person that helps them with a card. Second, any financial misstep can hurt a young person's credit score.

In order to prevent such mistakes parents are the first people to teach their kids the basics of using credit cards. You should explain your children what an interest rate and a card's fees are, what happens if your kid goes over the limit or is late with a payment. You should help them to understand that what they charge with a credit card will have to be paid back and that they should always make more than the minimum monthly payments.

You could also tell your kids that a credit card is for some more serious expenses, than pocket money they have. Help them to sort out in the great variety of credit card deals.

It's good if you remind your children that they should be very careful with their credit. Tell them that they should try to spend as much money as they can pay back by the end of the month, with few exceptions. Vacations, for instance, should be paid back within 12 months.

So, if you devote some time to your kids' education in the sphere of money management, if you help them to understand the system of credit cards work, your off-springs will be well aware of everything that concerns credit cards. And under your watchful eye they will be able to escape the pitfalls that might wait them.

Experts assume that the best way for young people to learn how to deal with a credit card is getting a credit card with a low line of credit. In this case your guidance and maybe financial help will help your kids to become "grounded cardholders".