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Ah credit cards, that ubiquitous accompaniment that goes along with any person of status. Might as well start early on building credit, eh?

While some can handle the responsibility that comes with a credit card, the vast majority of people whether adult or teenagers do not pay off their balance each month. Studies have estimated that 90% of people carry some kind of balance from month to month. At an average interest rate of 18%, it's a steep price to pay for spending more than one makes. This is just an average though, if the universal default provision kicks in, interest rates can go as high as 33%.

It is a tragedy that many, many teenagers graduate high school without a basic grasp on personal finances. Something as simple as doing a budget and balancing a checkbook should be pre-requisites for graduating high school amongst other basic financial concepts.

A credit card is not necessary for a teenager and can introduce them to financially irresponsible practices. What happens when junior goes out and buys that brand new Play Station, Xbox, or fancy stereo system for his car and then can't pay off the balance. Will he come to mommy and daddy to pay off the card? What responsibility is this teaching him; not to mention lessons about patience, delayed gratification, and saving up for purchases?

By introducing credit cards to teenagers, they are essentially given fireworks, a book of matches, gasoline, and the instructions to not be irresponsible. With the dangers of high interest rates and the temptation to buy now and pay later, these young adults are basically playing with fire.

Even if the teenager is an exception to the rule of not carrying a balance, a study published by the research firm Dunn & Bradstreet showed that people spend 12-18% more when using credit cards versus cash. A cash based system helps to manage expenditures and cause one to think before forking over that hard earned cash. There is an emotional effect when handing over the physical dollar bills.

Debit cards are a good alternative to credit cards which still allows the ability to make purchases online with the safety of not spending more than is in the account is debit cards. These are tied to a bank account and do not run the risk of incurring late fees, or high interest rates. They also provide the teenager with the opportunity to learn about balancing a checking account and keeping track of purchases so as not to spend more than is in the account and incur overdraft

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