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How to teach teens to be responsible with credit cards

Posted at 2:37 PM, Aug 14, 2019
and last updated 2019-08-14 16:37:49-04

Using a credit card is an important part of building your credit score.  This score is used to determine whether you'll be approved for loans, employment opportunities, car insurance and as a renter.

David Sant, Chief Marketing Officer for Cyprus Credit Union, joined us with some tips to for parents to help their teens use a credit card.

If you are under 18, you will need to become an authorized user on someone else`s account. This is usually a parent or guardian in most cases. Choosing this route places extra responsibility on your shoulders because your mismanagement of the card will affect the other person`s credit.
If you choose to do this with your teen, understand that their mistakes are now your mistakes as well. Sit down with your teen and explain the consequences of misusing a credit card.
Picking the Right card
The goal of having a credit card in your teenage years should be to build your credit, not to rack up debt. Because of this, you should select a card that features a low interest rate and low fees.
This means that you may start out with a card that features little to no benefits and a low initial credit limit. As you become a more responsible user of credit and progress in your career, you`ll be able to upgrade your card down the line.
Small Purchases
When you first start using a credit card, begin with small purchases that you usually make anyway, such as filling up your gas tank. Once you make these purchases, immediately pay it off.
After starting this habit, you can start budgeting to make bigger purchases with your card. Having a plan in place to pay off the balance in full each month will help you save money by not having to pay interest.
Credit Score
Once you have a credit card and start using it, your credit score will begin being impacted. If you miss payments or spend more than 30% of your total credit, this may result in your score dropping. While it`s super easy for your score to drop, it`s equally as difficult to bring it back up again. Set reminders when payments are due.

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