As if teenagers were not problematic enough, you are telling me to give a card to my son or daughter? YES! But do not jump to conclusions yet, there is an excellent reason why a loving parent should p…
As if teenagers were not problematic enough, you are telling me to give a card to my son or daughter? YES! But do not jump to conclusions yet, there is an excellent reason why a loving parent should provide their teens with a certain type of credit card and taking several precautions before doing so. Following is a brief explanation of the procedure you should take to make sure that the provision of a card to your son or daughter ends up being beneficial for his education and future.
Stand Alone or Additional Credit Card?
The issue as to whether one should help teenagers to get a stand alone product or an extension of your own is intricate. On one hand, a standalone product presents a greater danger as you cannot close the account at will if financial problems are foreseen due to misuse. An additional from your own account can always be annulled if you feel it was a mistake.
The decision will end up being a matter of qualification and trust. If the student or future college student is above age eighteen, then it is possible he or she may obtain an unsecured credit card. Otherwise, you will need to offer an extension of your own.
Additional cards are particularly useful for those who want to control the spending because you are allowed to set a maximum credit limit and thus, make sure that no overspending takes place at all and you will also receive by the end of the period a bill with all the expenses registered on the additional card.
Benefits Of Early Credit Building
At some point those who are now students will want to purchase a property. Having a long and stainless credit history will greatly contribute not only to a home loan approval but also to get better terms on the mortgage loan. Therefore, a line of credit such as these ones can be excellent tools for guaranteeing future loan approval by building a credit record from scratch.
Remember though that credit history needs to be free from delinquencies in order to provide them with a good credit score and therefore, it makes no sense to apply for a credit card unless you are completely sure that they will be able to afford the monthly payments and thus, keep the balances within reasonable levels of debt.
Advantages of Early Debt and Money Management
Many claim that youngsters are inexperienced with money and debt management but judging by the levels of consumer debt of the average American, no age category seems to be free from lack of money management training. Moreover, youth is the perfect time for learning the skills needed to manage finances successfully without having to resort to expensive and stressing lessons later (default, bankruptcy, etc.).
A credit card is a good opportunity to develop budgeting skills, money management techniques and many other aptitudes that will be later required in life to achieve financial success. Therefore, it is advisable to provide youngsters at least with a limited version of one of these products to promote those skills and techniques.
Article Tags: Credit Card