You Make the Call

The JumpStart Coalition for Personal Financial Literacy reports that a third of high-school seniors either have their own credit card or a card that has been co-signed by a parent. Since a teenager under the age of 18 can’t get a credit card without parental consent, you’ll have to decide whether your child is ready for this type of financial responsibility.

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Of course, there are both pros and cons to offering teens credit, so you’ll have to weigh your choice carefully. When used properly, credit cards offer teens a hands-on method for learning budgeting and financial Mom Discusses Finances with Daughterresponsibility, and provide an easy way to shop online. They also allow parents to easily track purchases and spending habits. However, the convenience factor of credit cards can sometimes run a little too high, making teens overly comfortable with the idea of purchasing with plastic. It’s crucial to emphasize to your teenager that credit cards are an obligation, not free money, and that any debt they incur must be repaid. You can find more information about teens and credit cards here.

If you decide to get a credit card for your teen then you have to decide what type of card is best – remembering that different cards mean different levels of responsibility both for you and your child. If your teen is the sole authorized user on the card, he or she is responsible for the debt. If you have a joint credit card with your child, both you and your teen are on the hook for the debt. Finally, if you get a secured credit card, it’s tied to a specific savings account.

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Secured or Unsecured?

Teen Credit CardsWhile an unsecured credit card requires no up-front deposit or down payment, secured cards do. An application for a secured card requires the deposit of a certain amount, which then becomes your credit line. You can either pay this deposit in one lump sum or in installments, but keep in mind that if you choose the latter, your lender will require you to pay a percentage of the balance, plus the interest rate, before issuing the card. Secured cards offer the same convenience as their unsecured counterparts, but also provide a predetermined spending limit as well as optional overdraft protection. If you choose not to opt for the overdraft, a fee may be assessed if your teen spends beyond his or her credit limit. The Consumer Counseling Credit Service of San Francisco has more information about secured cards, and about teens’ use of credit, here. These are a few credit cards you might consider for your teen:

  1. Teen Credit Card Use1. Capital One Platinum for Students: 1-800-955-7070.
  2. 2. Discover Student Card: 1-800-347-2683.
  3. 3. Citi mtvU Platinum Select Visa Card for Students: 1-800-950-5114
  4. 4. Chase +1SM Student MasterCard: 1-877-682-4273

5. Citi Driver’s Edge Card for College Students: 1-800-950-5114

Remember to research each offer carefully to make sure it’s right for you and your teen before signing on the dotted line. Finally, after your teenager gets his or her credit card, continue to have open communication about spending habits and prompt debt repayment. Used properly, a credit card can provide a valuable financial lesson for your teenage son or daughter.