Getting a credit card is a sign of maturity, and must be handled in a mature way. Credit cards can help teenagers learn skills that will be useful later in life. They also run a risk of teaching poor financial management practices if the teenagers fail to make payments on time. Having a credit card when living at home allows teenagers the responsibility of owning the credit card, while still receiving guidance from their parents.
Sign of Maturity
Allowing teenagers to own a credit card is a way to show that as parents you feel they are mature enough to handle the responsibility. This is a way to help build a bond between parents and teenagers. The teenagers will realize that their parents no longer view them as children, but instead as young adults who are able to display money management skills.
Teaching Financial Management
Having a credit card when at home is a way for teenagers to learn financial management before going to college. Parents can work with them and emphasize the need to pay off bills in a timely manner. Parents can also encourage teenagers to determine the actual cost of an item after the monthly interest charges from a credit card company. This can help teenagers learn that purchases with credit cards sometimes cancel out the "sale price" the item is on sale for and end up paying more than the original price of the item before it was discounted. This skill can help teenagers avoid binge spending.
Security
Teenagers travel away from home and sometimes away form their parents. Having a credit card in their pocket can help them pay for any unexpected expenses, such as a car repair, or the need to get a hotel room for an extra night or two that was not planned for originally.
Ability to Shop Online
Teenagers can have difficulty shopping online over the Internet without a credit card. Sometimes debit cards do not have the same level of theft protection of credit cards. This can allow teenagers to purchase items online while living at home. By making these purchases while living at home a parent can monitor if the teenagers are managing their credit cards effectively, based on if any collection calls are received.
Developing Credit
As teenagers get older they need to purchase items on credit. These items include cars, loans, and renting apartments or homes. By getting a credit card and using it responsibility with parental assistance the teenagers can avoid having poor credit, or no credit when it is needed for these purchases or rental agreements later in life.
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