When, and how, to give your teen a credit card

Is your teenager ready for a credit card? If so, how can you keep the spending from spiraling out of control? Take this advice from the National Foundation for Credit Counseling:

Consider giving your child a credit card linked to yours. “Not only will your teen inherit your good credit rating, but it will also allow you to see how much they are spending,” the foundation said. A good plan is to tell teens at first to use the card only for emergencies. If they show they can handle that limitation, allow spending that they can fully pay off with the first bill.

Review spending each month. “When the bill arrives, sit down and review your statement with them so that you can make sure they understand how to read them,” the foundation said. Point out how interest can accrue if the bill is not paid off every month. Explain the importance of building and maintaining good credit.

Use an online payoff calculator to show your child how long it will take to pay off a credit card debt. “Since credit cards have very high interest rates, teach your teen that paying the minimum payment will keep the debt growing — even if no other purchases are made,” the foundation said.

Teach your child about the dangers of credit card fraud and identity theft. Be sure to tell teenagers never to lend their credit cards to someone else, leave receipts lying out in the open or give their card number over the phone to questionable callers.

Resist the urge to bail out teenagers who spend too much. Go over their options with them — getting a job, working more hours, cutting back on spending. Consider setting up an appointment with a credit counselor. You can find counselors through the NFCC by calling 800-388-2227.

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