Should teenagers have credit cards?

This is a question that every parent faces at one time or another. As with any teen issue there are two very relevant sides and both sides have some pretty good arguments.

The Pros - A teen having a credit card would teach them early on how to budget money and make sound financial decisions. They would learn that if they want something and are responsible enough to work to get it, that they can get it now and pay for it later. Credit cards are nice to have in an emergency, like a car repair or a taxi ride home.

The Cons - The peer pressure while hanging out at the mall with friends is stronger when the credit card allows them to give in to the pressure of buying those cute designer shoes to wear to the "party tonight"...that they didn't really need to begin with. Or to pay for the pizza delivery because they are the only one with any "money."

Without that credit card they would have to wait and earn the money first. With the credit card, it can be purchased with no immediate consequences, but possibly forgotten the next month....hurting their credit scores.

So, what is a parent to do with this dilemma? You could hope that you have educated them well enough that they won’t go crazy. But that’s not very re-assuring.

A better option might well be the pre loaded debit card. You can buy them almost anywhere nowadays and load on what you would allow them to spend, or even their allowance or part of their paycheck. But, if they are working then only do that for them for the first month and let THEM figure out how to handle the card going forward. Ofcourse assuming that up until this point you have supplied them with an educational value that goes far beyond its monetary value.

When purchasing these cards, be sure to read the fine print for usage fees and activiation fees! Some are really high.

If they go crazy with it, the card will stop them when it’s empty, you can explain to them that if the card should reach zero the person swiping the card for them will inform them that the card was declined and they will have to figure out how to explain that to the friends.

Personally, I think credit cards can easily ruin a teens credit before they even have a chance to establish it. I plan to set my kids up with a checking account and debit card. That way when they run out of money, they run out and no financial damages are incurred and they learn to live by a budget.