Using Credit Wisely

The rules never change

From avoiding the lure of multiple credit cards to good bill-paying habits, teaching your kids to make smart credit card choices now can help them stay on top of debt in the future. Put these ideas on the top of your list:
  • Shop around for the right card. Look for low interest rates and no annual fees.
  • Learn the details. What's the interest rate? What's the billing cycle? How long is the grace period? How much are late fees?
  • Don't sign up for offers without looking at the rates.
  • Don't be lured into carrying multiple cards. One is enough—especially for a teen!
  • Keep track of every credit card purchase each month. It's easy to do this online with most cards.
  • Charge only as much as you can afford—or less.
  • Don't use a credit card for purchases less than $10. These small purchases can add up fast. Use cash instead.
  • Don't carry a balance if you can avoid it. It's best to pay off the entire balance before the end of the grace period so you don't have to pay interest. If you can't pay off the entire balance, pay MORE than the minimum.
  • Pay your bills on time. Late fees are expensive and, over time, they accrue interest. They can also negatively impact your credit score.

Regulations to protect you and your teen

Realizing that credit cards can be dangerous for many teens, Congress included in the Credit Card Accountability Responsibility and Disclosure Act of 2009 a number of provisions that protect people younger than 21. People under age 21 now need an adult co-signer or show proof that they can repay the debt. In addition, people under age 21 must get permission from parents or guardians to increase credit limits on joint accounts held with those adults.

For other provisions of this act that ban credit card abuses for all Americans, see Credit Card Dos and Don'ts.
 
Want more ideas? Read Ask Carrie on what your kids need to know about credit.

Our Two Cents
Let the numbers speak for themselves. Use the to show your kids the real cost of carrying a credit card balance. They'll be surprised at how quickly it can add up!

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