I am sure you have seen ads, where Credit Card
offer you FREE credit cards for other family members.
How about this one, we got this one attached to one of our statements.
What is this teaching our children?
That it is OK to spend mom and dad's money, because they will bail us
Imagine having a credit card with a limit of $10.000
or $15.000, some people may have a limit up to $25.000. With
cards like these you will give your children that amount of money to
play with, they can spend your credit quite easily if they have no idea
about money. It is almost like giving them a blank, signed check (book).
This is not teaching our children anything about money, financial
responsibility or good money habits, it is all about the credit card
You as a parent may end up losing the good credit score you have built
up over the years.
A better idea would be to give your children a credit card of their
own, with their own bank account and have a small limit of say $500 or
$1.000, depending on how responsible they are. This way, when they keep
up with payments, they will start building up a credit score of their
An even better idea is to have your children have a "secured" credit
card on their own bank account. This means that they need a certain
amount in their account, which they can't use, as a security against
the credit of the credit card. This way they will never over-spend and
they still build up their credit score. They will still need to make
sure they pay the card in time, every month.
Building up a good credit score is important later in life when your
children are buying a house or other bigger purchases. The mortgage
rates and conditions are far better for people with good credit scores
than the ones with poor credit scores.
The reason for this is that people with good credit scores have always
paid their cards on time and have a skill called, money management.
This makes it a lower risk for companies that lend money, therefore the
conditions are more favourable.
I believe that having a credit card is not a bad thing, as long as you
start off with a small limit to teach responsibility with
pay it off each month.
On some TV shows people are advised to cut up
their credit cards. This does not solve the problem, the next credit
card offer will be in the mail the next week.
It all comes down to learning financial responsibility.
are just a few of my thoughts on this matter. I'd love to
hear some of your ideas, suggestions or questions on the
subject. You can post them on my blog.
Cheers.....Amanda van der Gulik.....Excited
as serious about Teaching Your Child About Money and money
habits as we are, make sure you sign up for our course.