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  How to Prepare Your Kids For Responsible Credit Card Use

March 20, 2020

BY LISA SITWELL

Using a credit card is typical in today's world. That's why it's important for your children to know how to use one before they set out into the real world. Here is some information you can pass on to make sure your kids are prepared to take on this financial responsibility.

Responsible Spending

The first thing kids should understand is that money charged on a credit card creates a real debt that has to be paid off. A credit card is not a free pass to spend irresponsibly. Teach your kids to use a credit card for necessary purchases. It's also imperative to teach them to pay it off each statement period instead of carrying a balance. Making bi-weekly payments is also a good idea. Interest can cause credit card purchases to cost much more than they would have if they had been bought with cash. Make sure kids understand that making the minimum payment instead of paying off balances is only going to lead them into a hole of debt.

Credit Monitoring

Even if your child uses a credit card responsibly, they still need to monitor their credit. You can get up to three free credit reports annually from each of the three major credit reporting agencies. It's important to monitor credit reporting so that your child ensures they're not a victim of identity theft. A credit report can give your child their credit score. They can also dig deeper into what is affecting their score if it's lower than expected. This is how many people find out someone has taken out a credit card in their name and used it to run up debt. Your child has to know this has happened to ensure it is dealt with properly.

Explain the Fine Print

The language used to explain the terms of credit cards can be intentionally confusing. Make sure your child knows how to read and interpret any type of credit card contract so that they know what they are getting into from the start. Explain how the interest rate is calculated, and make sure your child knows that a cash advance is not the same as a regular purchase. Don't let your child get pulled into a deal that sounds too good to be true. Help them understand that 0 percent interest cards eventually do charge interest if there is still a balance on the account.


Using a credit card is an important thing for every kid to know how to do before reaching adulthood. You can teach your child how to do this the right way. This will help them to succeed later on their own when they need a good credit history to get loans for important things like a car and a house.


If you’re looking for a good opportunity to teach your kids about finances or business, sign them up for our Teen Biz Camp!