Every year, we get closer to being a cashless society. This implies that more youngsters are becoming acquainted with digital wallets, money apps, and credit card. While digital wallets and apps may be beneficial learning tools for older children who understand money, credit cards can be dangerous at any age.
The Dangers of Having a Credit Card
Many financial advisers advise against obtaining youngsters their own cards. This is a more common situation now that overall credit card debt is at an all-time high. It has already reached $1 trillion, according to the Federal Reserve. Many Americans are unable to pay their obligations on time, resulting in extra interest fees.
Numbers can scare off a lot of people, thus many see this opportunity as a potential threat to their financial stability. Is it any wonder? Not being able to repay the debt can pose a serious inconvenience to your finances and credit score.
When it comes to children, they need to learn the value of money first. Not using the card appropriately can lead to spending too much on daily expenses. The clue is to ensure your child’s safety and protection, for example by setting a limit.
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The Benefits of Getting Your Child a Plastic
If your kid is under the age of 18, they cannot get an individual credit card, since they are not considered a legal adult. You can set them as authorized users of your own cards. Hence, they will be able to use a card while not being legally responsible for it.
Introducing credit cards to your children is a good idea to teach them the basic economy. You will have the opportunity to share some knowledge they might appreciate when growing up. If your child uses the card properly, they will become responsible young adults.
However, if you are unsure whether this is the right option, try debit cards first. Having a bank account with a debit card is very similar. The main advantage is that its user cannot overspend and be in debt.
Overall, sharing your experiences regarding finances and the economy with your children is a great idea. The main factor you need to consider is how to do it in the right manner.