A dad is talking to their kid about credit

How to Teach Teens About Credit Cards

Milad Hassibi June 18, 2018


If you want to set your teenager up for financial success, they must have an understanding of how credit and credit cards work. Teenagers that understand the concepts behind credit are far less likely to fall into debt and face poor credit.

In some cases, it can take years to establish credit, so the sooner you start the better. If you want to teach your teenagers about credit, here are some steps you can take:

Authorized User

If you want to teach your teen about credit but are nervous about getting them their own creditA teen is on the phone in a blue background with credit cards card, an authorized user account is a great middle ground.

When you add your teen as an authorized user, the credit card company will mail them their own card.

That card will be linked to your main credit account. You will be responsible for paying their bills but it can help your teen build strong credit for when they apply for their own cards down the road. If you want to learn more about authorized users, read this article.

Secured Credit Card

If you are worried about your teen drawing up a massive credit card bill, a secured credit card is a great bet. You will leave an initial deposit with the card issuer who will then mail you a credit card with a credit limit that matches that deposit.

That way, your teen can only use what they deposited. This helps to avoid the risk of having your teen rack up a massive credit card bill. Secured credit cards also help to build credit.

Sign a Contract

When they are fully grown, your children will be entering a world filled with contracts and legal paperwork. As a teenager, it may even be tempting to go ahead and purchase a flat screen TV you can’t afford on credit.

Having a contract between you and your teen can help prevent future frustration while teaching them the importance of honoring an agreement.

In your contract, you should include sections about when the bill gets paid, who pays what portion, and what will happen if a bill goes unpaid. There should be consequences for violations of the agreement.

Teach Them

Understand that credit cards aren’t the only thing relating to credit. Take some time to teach your teen about how certain things can affect their credit report and credit scores. A majority of people under the age of 18 do not understand what a credit score is and how it works.

Get a Car Loan with Any Credit Along with a Happy Couple and a New Black SUV next to them

A great way to do this is to show them your score and report so they can understand how their spending can affect their credit.

Final Note

Dealing with teenagers can be hard, but teaching them lessons for life is a part of parenting. By taking the time to educate your children on the importance of good credit, you could be saving them a lifetime of headache and hassle. If you haven’t already, talk to your teen about credit today.



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