Author: Holly Johnson / Source: Wise Bread
This post contains references to products from our advertisers. We may receive compensation when you click on links to those products. The content is not provided by the advertiser and any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and have not been reviewed, approved or otherwise endorsed by any bank, card issuer, airline or hotel chain.
Please visit our Advertiser Disclosure to view our partners, and for additional details.Giving your teenager a credit card may seem like a scary proposition, but it could be the safest way to teach them about credit. Credit expert John Ulzheimer says it’s just like teaching your teenager how to operate a car, but in a controlled environment. “Nobody would just let a teen hop in a car and drive,” says Ulzheimer, who formerly worked with Equifax and FICO. “And nobody should just let their kid get a card on their own someday without some teaching by the parents.”
Yet, that is exactly what many people do. The problem is, for a teen, a credit card may seem “no different from using a gift card or some other stored-value card,” says Ulzheimer. And that can be dangerous. If they charge more than they can afford to repay, they might wind up dealing with years of debt and regret.
The reality is that your child will need credit to borrow money one day. If they don’t build a solid credit history during high school or college, they may start their adult lives at a disadvantage. “Helping your teenager build their credit can make their life easier in the future when they go to purchase a big-ticket item on a line of credit, like a vehicle or home,” says Gina McKague, president and CEO of retirement planning firm McKague Financial.
And while some financial experts like Dave Ramsey insist that nobody needs a credit score to get by in life, many argue that thinking is outdated. The reality is, good credit improves your life significantly. “Not only is establishing credit vital for obtaining something significant like a loan, but as more and more vendors exclusively accept payments via credit cards or even smartphones, it can be necessary just for buying lunch,” says Jeff Motske, financial planner and CEO of Trilogy Financial in Huntington Beach, California.
Besides lenders, everyone from car insurance companies, to landlords, to employers can ask for modified versions of your credit report. They can influence your ability to get a job, an apartment, or good car insurance rates. If those aren’t reasons enough to get your teen on the right track with responsible credit use, what is?
How to get your teenager a credit card
Ulzheimer says there are several ways to know if your child is ready to learn about credit. If they’re already using debit cards, prepaid…
The post Does Your Teenager Really Need a Credit Card? appeared first on FeedBox.