The time when it was easy for young adults to get credit cards is long gone. Today, unless anyone under the age of twenty one can meet very rigid guidelines for proving their income, they won’t be able to get a credit card without having a co-signer who is of age. While it’s important to build credit, this makes it difficult for young people to do so. If you have a child that you feel could benefit from possessing a line of credit, you’ll probably have to help them get that card and ensure that they spend with it properly. Odds are your credit may be on the line as well, after all.
Start by sitting down with the young adult and discussing credit cards with them. Cover the importance of the cards including why they should be treated with respect. Once that they understand the responsibility that comes with credit, try to find the card that you feel is right for them. Include them in the decision, but help guide them towards the best one by keeping a few basic things in mind. Interest rates and annual fees are important, but be sure not get one with too high of a limit or else the temptation may get the better of them.
Once that you’ve secured the card, it will be time to let them use it as they wish. Remind them one more time of just how important responsible spending is. If you’ve co-signed, it’s in your rights to review the statements and account information so don’t hesitate to ensure that your child is spending on their credit cards with responsibility, that they’re making the payments on time, that they’re paying more than the minimum monthly payments when possible, and that they aren’t exceeding their limit. These are all issues that could impact their credit tremendously – and possibly yours – so check to ensure they’re not making mistakes.
Learning responsible spending and credit habits while building a solid credit history is a vital step towards securing a financial future. Your child may need help to get there, and providing them the ability to use credit cards and teaching them how to use them with respect is the best way to instill these values in them. It may sound like a major risk, but with your guidance you can provide your child with a solid financial foundation on which to build their future.