by Joanna Canning

Created on: January 03, 2009

The first credit card is a big leap towards adulthood and independence, or at least that's what a common teen usually thinks. In reality, credit card is a useful but dangerous gadget that if not used with common sense and cool head, might throw some serious trouble on an unexperienced youngster.

Dear Mom and Dad, nobody knows your child better than you do and it's you, the parents, who should decide whether it is the right time to give your teen a credit card. Before doing so, you should first keep observing how well a teen manages his or her financial matters, whether they tend to buy things on spur of the moment or would rather save some money and make reasonable and calculated financial decisions. If your child is generally sensible and not easily persuaded by luring advertisements, billboards and commercial promises, it's very likely that they might be just at the right age to handle their credit account, even if it's earlier than with other teens. If, however, you notice that they have problems with keeping the money in their wallets, a credit card will be a dangerous item for them.

Before you make this decision, you should also make sure that your child knows the meaning of all the terms associated with credit card accounts, that is i.e. daily balance, balance transfer, annual percentage rate, cash-advance fee, minimum payment, over-the-limit fee, variable interest rate, credit card limit, credit score, etc. A teen should know all the dangers that come with owning a credit card, they ought to be aware of the fact that credit card doesn't mean free money but rather it's a form of a loan which, if not being paid off on time, will lead to problems with acquiring a loan, mortgage or any other form of credit agreement in the future and will seriously damage their financial reputation when dealing with other parties on the money market.

However responsible you think your child is, you should always monitor his/her expenses in the first year of owning a credit card; it's extremely easy to fail to manage them at the beginning and a teen will be grateful for your help, if a bit irritated by your lack of trust in them. The other important thing is that you start with lower credit limits and increase them slowly and gradually if you see that your child doesn't fail to miss the monthly payments or doesn't overuse the limit.

Credit card is a very desirable product in our capitalist era of consumerism but remember that only people who know its traps and use it wisely, in conjunction with their material situation, can make a proper asset of it. Help your child become this sort of person.

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