Teaching the rules of the road

Credit card misuse is a leading cause of debt among college students, and yet credit cards are virtually a necessity in today’s world. So the answer is not to avoid them, but to learn how to use them responsibly. And the earlier, the better.

Ready for plastic?

A credit card can be a useful tool for a teen, as long as he or she is closely monitored and taught how to use the card responsibly. Here are some steps to consider before you move ahead:

• Make sure your son or daughter already has a checking account. It's important to know how to write checks and track money before using a credit card.
• Give your teen a credit card linked to your own credit card. This way you can monitor activity and help your teen learn how to use credit with you, before he or she does it alone.
• Limit how much your kids can charge. Whether they’re authorized users on your card or they have their own, start with a low limit.
• Help them understand the details. When it’s time to issue your teen's very own credit card, make sure he or she knows exactly how the card works, what the interest rates and fees are, and when the bills are due.
• Emphasize the importance of a good credit history. Discuss credit reports and how they can affect your ability to borrow—now and in the future.

Credit can help—but it can also hurt. Read more about credit and debt and share ideas with your kids.