When asked whether they would give credit cards to their teen children, a whopping 71% of parents polled by ABC firmly clenched their wallets tightly and voted, “Hell no!” Fears of rampant American Apparel and Urban Outfitter shopping sprees likely fueled that response, but is it necessarily the right one?
Mellody Hobson, Good Morning America’s financial guru, doesn’t think so. In her opinion, better for kids to screw up financially now–under close parental watch–rather than later when it may not be so easy to fix. Hobson believes that giving your child some kind of card at sixteen with a low, written-in-stone limit will help them learn to manage money early on. If you can link the card to your account, great. If not, consider getting them a debit or a charge card that has to be paid in full every month.
Any way you set it up, when the dreaded bill arrives, Hobson advises sitting down and discussing each charge with your big spender. What did he purchase? Was it necessary? More importantly, can he afford it?
Balances should be paid in full each month.. and if they don’t? It’s up to your daughter to decide whether she desperately needs the Beatles Rock Band now, or if she can hold out until she earns enough allowance to pay in full. If she chooses the former, mom and dad should make her responsible for any interest.
I agree with Hobson completely. Why? Because it works. My parents gave me a limited-dollar credit card at sixteen and I was one of the few kids that did not go hog-wild when I was able to secure my own card. My dad still held the purse strings; he just loosened them up. Just a little.