For most parents the idea of their teenage son or daughter possessing a credit card can result in a lot of stress. Credit card debt is a major problem in this country and it is getting worse every day. If adults cannot manage their credit card debt then how can we expect a teenager to do it? Last year credit card companies made over 90 billion dollars in late fees and penalties on late or past due credit card payments. Failure to teach your children the pitfalls of credit card mismanagement can lead to serious financial problems in the future.
Bankruptcy credit card info shows that a major cause of divorce and bankruptcy stems from too much credit card debt. Possibly the best way to teach your children about credit card debt would be the use of prepaid credit cards for teens. One thing you do not want to do is just give them the card with money already on it and let them head to the mall.
The first thing you need to do is set up a budget with them. Let them understand that the money in the prepaid card will be used for clothes, transportation, entertainment and school supplies. Money will be placed on the prepaid credit card for teens each month and when the money is gone you will not be giving them any more funds. In addition you need to make sure that as part of any job they have a certain portion usually 10 percent must go into savings. Make them understand that these savings will be used for college or some other worthwhile endeavor.
A once a month budget meeting with your son or daughter is a great time to teach them about money and debt. The lessons learned at this time are essential for them to live a debt free life. Most of the teens that graduate from high school cannot balance a check book. There are very few schools that teach kids how to handle money. It is basically left up to the parents to teach their kids how to use money. Unfortunately very few parents take the time to teach this very important subject. It is just easier to give them a prepaid credit card for teens and let them learn for themselves.
When properly used, a prepaid credit card for teens is a good financial teaching tool. Learn how to handle money as a teenager may just keep them from becoming a slave to credit card companies Proverbs says that “the borrower is the slave to the lender”. Giving you child the gift of financial wisdom and independence is the right thing to do.