How to Teach Teens About the Dangers of Credit Cards

Credit card companies are increasing their marketing to teenagers. Many teens don't know much about credit card debt, but issuers sure do know a lot about them, and they want their business. As a result, teens are in serious financial danger. If you'd like to teach teenagers about the dangers of credit cards, then read on...

Steps

1. Do your research. Read up on credit card companies, the national debt average, and interest rates. Did you know credit card companies are allowed to visit many high schools and colleges? You may want to warn your teen. They will probably ask questions, so be prepared to answer them.
   
2. Talk to them sooner, rather than later. It's not unusual for parents to begin talking about credit cards to children as young as nine years of age. Why? Because kids these days are exposed to much more, and they may have questions for you already.
   
3. Share a personal story. So, you're $50,000 in debt, huh? Instead of being embarrassed, tell your teen the truth. Let them know how scary it is to be so close to losing everything. A personal story told from the heart works better than stories about strangers they don't know or care about.
   
4. Show them the figures. Let your teen know just how much money companies are making. Also show them the national debt average; millions of people are losing their hard-earned money to these companies. It's simply not fair, especially when it's so easy to be smart about your choices.
   
5. Use visual aids. A giant chart would be effective, yes, but also use literal aids. Let them check out a real credit card, and explain what all the numbers mean. Tell them what interest rates are best, perhaps on a sliding scale. Show them how interest charges can make a balance of $400 balloon to $2,000.
   
6. Give them a real-life lesson. Part of teaching teens the dangers of credit cards is also showing them how to use credit properly. Once you've thoroughly discussed credit cards, why not let your teen test drive one of their own? Credit cards can be a great learning tool before your teen enters the real world. You can co-sign on a secured credit card, and keep track of every cent your teen spends with the help of online banking. Work up to that final step with these stepping stones:
   
   • First, make sure your teen has a job! In the real world, you must work to pay off your debts.
     
   • Second, get them a checking or savings account. They first need to learn the basics about money management.
     
   • Next let them use a debit card. Tied to the checking or savings account, this works just like a credit card--without the actual credit. Your teen will be spending their own money, so they'll be less likely to blow it all at once.
     
   • Then set up a credit card under both of your names. Teach them how important it is to keep their card safe. Review the paperwork for the card with your teen, going over the interest rates, payments, and charges. Set a limit and monitor what they spend.
     
   • If and when you feel they are ready for their own card, help them look for the best card possible. Be sure to stress the importance of good credit history--if they mess up too much, they may not be able to rent an apartment or get a vehicle. Also show your teen how to get their credit report, and teach them how to avoid identity theft.
     
   
   

Tips

• Keep them in the conversation. Teens aren't willing to sit and listen to an hour lecture if they're not involved in the conversation.
  
• Ask for their viewpoint. Do any of their friends have credit cards? How about checking accounts or savings accounts? Using their personal touchstones of experience is a great way to teach your teen about, well, anything!
  
• This conversation will probably need to be repeated more than once. In fact, you should definitely keep the lines of communication open when it comes to credit. Use any opportunity you can to educate your teen. Did you get your monthly statement yet? Sit down with your teen and show them how it all works.
  

Warnings

• Don't overload your teen with too much info! Keep it light and interesting, more of a conversation than a straight lecture.
  
• Never let your teenager borrow or use your credit card without discussing credit with them. Would you give your teen the keys to your brand new Porsche and let them go joyriding with their friends? Didn't think so. The same goes for your credit card.
  

Related wikiHows

• How to Choose Your First Credit Card
  
• How to Cut Credit Card Debt
  
• How to Build Good Credit
  
• How to Repair Your Credit
  
• How to Cut up and Throw Away a Credit Card
  

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