Mommy Katie: Teaching Your Kids How to Use Credit Cards

Wednesday, June 25, 2014

Teaching Your Kids How to Use Credit Cards

This is a guest post.

Even if you kids are still young, every child should be developing an understanding of credit. That way, they will be able to responsibly use it in the future to gain wealth and good financial standing. They might also be able to avoid some of the financial mistakes you made when you were their age by teaching them about what you did wrong and what you had to do to fix it.

Teaching kids about credit is not commonly discussed in the school system, which means that parents have a lot of responsibility if they want their kids to become financially responsible. When you are ready to start teaching your children about credit cards, here are some tips to help you explain to them the best ways to use credit cards.

Explain to them what credit means

It is important that your children understand how credit in general works. They need to know that credit is not free money, and they do have to pay it back in a timely fashion. You can also give them examples of when credit cards are necessary to build the life you want, such as paying for student loans, so they can get a better idea of when it is appropriate to use it.

Stress the importance of credit card information safety

“Helping your kids choose a safe and secure credit card is simple now, but they still need to be aware of the precautions they need to take to avoid identity theft,” says Chris Mettler of
Just as you have taught them to protect their identity when using the internet, they also need to know how to use their credit card safely. Give them a list of don’t and explain the consequences of each one.

Help them understand how payments work

Give them the tools to understand why on-time payments are important and how to make payments to keep their spending on track. Explain how interest is earned and how it will affect them if they do not make their payments on time. Show them how to make their payments online so they can responsibly take care of it themselves. This will give your child a good financial start and get them on the right track towards financial responsibility.

Show them the consequences of misusing a credit card

However much to explain to your child the dangers of misusing a credit card, many children will still be tempted to overcharge or otherwise misuse their credit card at first. It is important that you explain to them specific consequences that they could suffer from if they choose to do this. Many parents have also found it effective to have their children use their own money to pay off their credit cards without help from either parent. That way, they will see how quickly payments add up.

Help them devise a plan for using their credit card

Help you child create his or her first budget that includes credit card payments. Once they lay out all their income and their expenses, you can help them decide what the best ways are to use that money and how they can keep up with their credit card payments.


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Kristen said...

Kids need this information before they go off to college and end up in debt!