Credit Card For Teenagers

These days, credit card companies are targeting teenagers to apply for credit cards aimed specifically at them. You might wonder why this is the case and how it can be possible. The reason for this is that in the USA a large portion of the population (around 11% that is estimated to grow until 2010) is made up of teenagers. These young people manage to spend large amounts of money every year, which is continually rising.

Another reason the credit card companies are looking at teens to take on credit cards is that they obviously do not have the experience of using such cards, and yes, it is a way of making money out of them. Think about, how many teenagers you know would be 100% responsible when using a credit card all the time? Wait a minute, how many adults are responsible when using their credit cards and managing their debt?

More and more teens are using the Internet everyday. In many cases if you wish to buy something via the Internet you need to use a credit card. As more young people are using the Internet, more of them would also like to buy items via the Internet. If you need a credit card to make Internet purchases and an adult with such card is not always around, how do you make the purchase? Some people would like to believe that teenagers should not be buying anything off the Internet, but in this day and age, you cannot stop technology from advancing, or choose who its users should be.

When it comes to credit cards for teenagers, not all credit card companies are offering them yet. Capital One however, is a bank that is targeting teens. With these types of credit cards, parents or guardians will have to co-sign the card and will be responsible if monthly payments are not made. The parent will be responsible for the card until the teenager turns 18, and then becomes fully responsible for his/her card.

Besides the obvious, negative possibilities of credit cards for teenagers (blowing money that they do not have) there are a number of positive aspects of these types of cards. If the card is managed responsibly, it helps to build a good credit history for the young person, which will allow for better interest rates, renting or buying a house, buying a car, applying for a loan etc, when the person is older. Another positive thing about these credit cards is that teenagers are exposed to revolving credit and can be taught early on how to manage their finances properly. There are definitely times in a person's life when a credit card is needed. For example, when booking accommodation, or for car rentals, or to make Internet purchases.

Parents don't like to talk to their children about money because these areas can be a sore point. If you have a credit card as a parent and you splurge on it all the time, then battle to pay off the outstanding amount, do you think your child will learn the correct way to use a credit card? Probably not!!

Another problem is that teenagers may use the credit card for the sole purpose of using the credit, and not for building good credit. If you have an agreement with your teenager as to what good credit card use is, and you monitor the card's usage, you may very well be helping your child manage their finances effectively in future.

The following may be seen as both positive and negative aspects of a credit card for teenagers. If your teenager spends too much money on his/her credit card and cannot pay the amount back, the onus falls on you to pay it back. However, you can have a method in place where you take money off his/her allowance until the money is paid back. This in itself would teach your child about credit and how to manage it. It would be advisable that the credit limit on the card be low, as little as $300, instead of $1000. It is much easier to pay off a smaller amount of money faster. This situation would be a great learning experience for your child, instead of when your child is an adult and makes a mistake. Who will bail your child out then?

There is a lot of controversy about credit cards for teenagers. Should you give your teen such a card or not? Remember look at your financial situation first, and each child is different too. Some people should never own a credit card, regardless of their age. The decision is yours!