I am not sure if you are aware of this or not. In the recently introduced law of Credit Card Accountability Responsibility and Disclosure Act of 2009 or CARD, one of the important points is that no one below the age of 21 will be provided with the credit cards until and unless his/her parents, guardian, spouse is the primary holder of the card. This provision was decided without even considering its pros and cons.
Let me throw some light on the facts why you should sign off from your kids having the credit cards as early in life as possible.
You have to be Proactive while teaching the credit card use to your children
According to the credit card survey in 2009 by Sallie Mae, 85% of all the under grads students have at least one credit card and the average number of cards each one of them have 3-4. This clearly indicates that at your child will be having a credit card at some point of life, maybe today or tomorrow. There are possibilities that your child will either forge the credit card spending habits, maybe on their own or maybe they will be able to develop their spending habits under your guidance.
It should be sole responsibility of the parents to teach their children how to use credit cards; they should teach them how the credit works, how to manage credit responsibly. Not only this but also parents should teach their children how the credit works for them rather against them. This will help your child in gaining knowledge about the pros and cons of credit cards.
Parents should also teach their children how to manage their money properly. Your child should know how to become a responsible credit card user. You should sit with your child at their early ages and teach them how to apply for a credit card and how to properly use it. You can also take your child to a local bank and show them how to open a savings account, teach them the value of saving money, and show them how they can utilize their saved money in future.
As per the study of Sallie Mae, only 15% of the students are successful in paying their balance in full in the very first month. And also, 84% of the students carry their balance in the next months and the remaining 1% takes help from their parents in paying off the balance.
This is a clear indication of the parental guide. Teach children to learn the credit card habits on their own will always land them in trouble. It is advisable here that you teach your children about the credit card habits in the school itself but give them freedom to have their own credit card only after the age of 21.
You can provide them with a credit card as soon as they cross the age of 13 only if you promise to yourself that you will guide them in each and every step and take full responsible of their credit card using habits.
One of the reasons why you can provide your children with a credit card at a young age is that he/she will be able to learn the credit card using habits under your guidance on a small scale as well as in a controlled environment. Under your supervision your child will learn all the pros and cons of a credit card. What can be better than this?
Not only this guide your children with an idea of budgeting, saving, planning, positive and negatives of saving money for future use. There are some credit cards like Teen Prepaid Credit Card which allows a child to have a credit card at any age but put restrictions against some things like alcohol, tobacco, hotels, night clubs, etc.
You can provide your children with a credit card at any age, but the thing is you have to be full confident on your children spending behaviour.