Teach your teens about credit

As children become teenagers and young adults, they need to build good credit. Lack of proper guidance can lead young people to accumulate debt and mismanage money. Starting at home with some principles for sound financial management is a great way for parents to help their children become responsible adults.

Start by teaching your children to compare their bank statements with debit cards or checks.

Let your kids take care of car insurance or other bills directly related to your finances. To help them when they’re just starting, link your bank account to theirs to avoid extra charges if they struggle with their lessons. Remind them to save their receipts and always remember only to spend what they have. Giving kids this money management experience, keeping in mind that they have bills to pay, is a great starting point for making sound financial decisions.

Remind kids to be safe when using a debit card and ask them to practice checking their bank accounts for fraudulent charges. Encourage them to use old-fashioned writing and write down each purchase, so they understand the monetary power of touch. Use of your card should not be based on an “Accepted” notification after the transaction is complete. It’s much easier these days to get carried away with using cards for small expenses that add up quickly.

Once you’re comfortable that your kids are paying attention to your spending habits and staying within your limits, it’s time to start building credit. A credit card is more than a simple and secure way to pay for goods. It will create a credit score to protect your child’s future. Teach your teens about credit card habits to give a child a head start to larger purchases later in life.

You may be uncomfortable letting your child start with a debit card. The potential for fraud and overdraft is serious. It can also be a problem if your child has access to a savings account for the future. Instead of letting you access a larger amount, get a prepaid card. The card will act as cash that parents load in a predetermined amount.


Many credit card companies offer prepaid cards that include parental controls, mobile features, and discounts on certain brands. You may face charges when using prepaid cards, which is a significant disadvantage of this form of payment. From activation fees to balance request fees to service fees, you may end up spending more than you need to on this type of card.