Reasons Teens Should Not Be Allowed to Use Credit Cards

Overview

Credit card companies seem to target unsuspecting freshmen as they stroll through campus during their first weeks of school. If the credit card companies aren't there, they are at the malls. Or, they send pre-screened credit card offers in the mail. Teens may see credit cards as an opportunity to charge that pair of shoes they've been eyeing, or to upgrade their dorm rooms with plasma televisions. But, there are some reasons that teens should not be allowed to use credit cards.

Credit Card Debt

Over 80 percent of college seniors who are graduating have credit card debt (see Resources below). Because many of them don't have jobs, or they have jobs that pay minimum wage, college students often cannot afford to pay for the things that they charge on their credit cards. However, because credit card marketers make charging items rather than paying for them in cash seem like a dream, college students are racking up credit card debt at these astounding rates.

Destroy Credit Scores

Regardless if a person is 17 or 55, racking up an extreme amount of credit card debt and not paying it off can destroy his credit score. If a 17-year-old college freshman charges $5,000 worth of stuff and has a high interest rate of 22 percent, he can owe several thousand dollars more to their credit card companies in no time. If he doesn't make payments on time, he can destroy his credit score, making it difficult for him to rent or own property and buy a car in the future, among other things.

Financial Responsibility

Parents may co-sign credit cards for their children because they think it will teach them financial responsibility. But in reality, it rarely does. According to MSN Money, teens lose track of when they need to pay their credit card bills just like they lose track of when to turn in a college paper. Or, they depend on their parents to pick up the slack if they can't pay the bills.

Responsibility: Teens and Credit Cards

Teens often get into debt with credit cards because they don't know that much about them. The lure of the minimum payment on credit cards overshadows the high interest rates and late fees that teens can incur. It's important for parents to teach their kids about what it means to have a credit card, how it should be used and every detail about paying credit card charges off.

High School Teens and Credit Cards

Believe it or not, even teens in high school have credit cards. According to cardratings.com, a credit card can be issued to kids before they turn 18, but creditors can't force them to pay off debt that they incur. That debt will be passed on to their parents if the kids do not pay it off. It has also been estimated that 40 percent of all high school juniors and seniors have a credit card, according to the site. Because these teens are not held responsible for the items that they charge, they do not learn financial responsibility and can rack up debt for their parents. Regardless if a teen is given a credit card by their parents, or they figure out a way to get their own credit card, it is a better idea for them to use a debit card that is connected to their own checking accounts. Since they are using real money in real time, this is a better way for teens to learn how to be financially responsible. To help teens avoid credit card issues, parents can set limits on their credit cards when they co-sign for it, according to MSN Money. That way, instead of having a $5,000 limit, they can keep the limit low at around $300 a month. Parents can also encourage or enroll their teens in personal finance classes.

Reasons Teens Should Not Be Allowed to Use Credit Cards by moneyearningclub.com