Should teens have credit cards?

Yes

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by Keen Johns

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Firstly, let's take a minute to look at the advantages of owning a credit card.

1. Credit cards can be the Saviour in times of dire need, as an aid to securing instant financial assistance.

2. The credit card, to a large extent, eliminates the need to carry cash around.

3. Some card providers will give cash-back on purchases.

4. Purchase protection, if goods or services are defective the card provider will assist in rectifying problems.

5. A sensible user will be establishing, or enhancing their credit rating.

So, should teens have credit cards?

Should we place our teens on the first step on the ladder of fiscal responsibility?

Well, it's not really for me to answer those questions for you; this is a matter for you, the reader, to decide. My purpose in this article is to render advice from the positive perspective, because I believe that teens should be allowed to have credit cards albeit under positive guidance from someone who takes their best interests at heart, the parent(s).

Let me breakdown the five points above in parable form.

1. Sally borrows the car so that she can go to see an old school chum who moved way out into the countryside. In the middle of nowhere the car splutters to a halt. The parents are away on vacation and she now finds herself isolated and vulnerable in this deserted spot. Fortunately she has her flexible friend, the credit card, and her mobile. With just these two tools, she can get assistance quickly out of this nightmare situation. If the vehicle cannot be repaired at the roadside, she can use her credit card to get back home from the repair center.

2. Sally is on a mission to purchase an expensive entertainment system, but is worried about having the necessary cash on her person due to the amount of money involved, she doesn't even want to carry her credit card either. The alternative for Sally is to purchase the item over the phone, using her card to make the payment, because of this she may leave her card safely at home. All of Sally's problems are solved.

3. Sally and her entertainment system are safely back at home, and she realizes that she has saved $50 on her $1000 purchase because she has a card that has earned her a 5% cash-back on the deal.

4. After a week, the entertainment system develops a fault, the establishment she bought it from says that it is not prepared to do anything because it is over a week since the purchase was made. A quick call to the credit card company will soon sort out such a trader, and bring them to heel.

5. The time has come for Sally to look for her own accommodation, because she has built up a good credit rating with her sensible use of the credit card, she is seen by the housing agency as a good risk liability, and finds herself in a position to pick and choose just the property that suits her best.

Of course there are pitfalls involved with the use of credit cards, but nothing that can't be overcome with a little common sense, but just a moment, where does one get common sense from?

Common sense is the culmination of learning and experience, this is why I would choose to allow my teenage children to have credit cards. In my view the most effective way to learn is through combined teaching and experience, under controlled circumstances. Whether or not the child is taught to achieve a common sense attitude towards financial matters in school, the parent should take it upon himself or herself to secure this knowledge within their children.

Schools neither have, nor should have, the ability to give a child a credit card, so it is up to the parent to provide the real 'live' credit environment, along with the education that is required to install a realistic common sense value to the topic of financial management.

The most effective time to educate youngsters is at the point of need, even if that need is only perceived as such by the youngster. Let's look at an example scenario.

Young Frankie is itching to get a Nintendo Wii, it's playing on his mind constantly, so he goes to mum with his dilemma. Mother, whilst looking for a pen and paper, says, "let's weigh up the situation. How much money do you get each month", she writes this down, and asks, "what do you spend this money on", then she itemizes these outgoings on her piece of paper.

Mother says, "now what can you do without on this list", together they dissect this list and whittle it down to the bare essentials. Both mother and son have arrived at an agreed balance. Here mother has taught financial management in a realistic manner, and Frankie has interacted with this exercise, and in so doing has gained a realistic insight towards effective financial management.

Now, let's assume that the outcome of this exercise will allow for a credit facility to solve Frankie's problem, and that he is entitled to apply for a credit card, albeit with a consenting parent's willingness to act as guarantor.

Together with their child, the parent should undergo a research exercise, in order to find the facility that suits the need, and provides the best financial option over the period of the loan required. Some credit card providers will offer gifts or money to sign up with them, which both parent and child can consider also.

A good place to start your research is on this very page. A click on the adverts here will provide an ideal starting block for this exercise.

By securing a credit card Frankie can now get a foothold on the ladder, which leads to financial management, security and responsibility, an effective first step towards the great adventure of adulthood and life beyond the security of the bosom of the family'.

In this instance the acquisition of a credit card has been an invaluable learning aid. Some times in life everyone has a need, whether that is to set up a housing situation, to obtain a necessity with immediate effect or to get relief from an emergency situation. With a credit card life can be more enjoyable, providing of course, that you have been taught to respect these, and therefore use them in a sensible manner.

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