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The Pros and Cons of Giving Your Child A Credit Card

In the modern world, a credit card is like a smartphone. People can’t live without their credit cards and they believe their children need them as well. Is it true? Does your child really need the card? Statistics show that today 8 to 12 years old children already have at least one credit card. On the one hand, it may seem to be a good idea to start teaching your child how to use credit cards early. On the other hand, this can wreck your family budget. Weigh the following pros and cons before giving your child a credit card.

The Pros of Giving Your Child a Credit Card

It’s an excellent financial teaching tool

You might think that there’s nothing complicated with using credit cards. All you need to do is just swipe it and the purchase is done. This is not the case with your child. You can use a credit card as a powerful money teaching tool. If you fail to explain to your kid how to use a credit card correctly, they will keep swiping until you receive a huge debt bill to pay.

You should talk to your child about the interest attached to each purchase made with their credit card and the minimum balance required for monthly payment. Plus, some credit cards have a saving option. It’s when you put a certain amount on your credit card and receive the monthly or yearly interest.

Avoid cash worries

You don’t have to worry about giving your child pocket money every morning. Your child won’t lose cash and no one will steal it from them. When a credit card is lost or stolen, you can easily block it to avoid losing your money. Plus, you will be sure that your child has money if they urgently need it. No cash, no worries.

Build a good credit score

It’s never too early to start establishing your child’s credit score. If your child uses their credit card regularly and you pay the credit card bills on time, you’re helping your little one build a good credit history. Having a good credit score is crucial to thrive and survive in the grown-up world.

Earn sweet rewards

Note: You should keep this a secret to not tempt your child to spend more in order to earn more points.

Many credit cards offer rewards for every purchase. When using a credit card wisely, over time, your child may be able to earn a number of different rewards like discounts on grocery, meals or gadgets as well as a free plane or train ticket. That’s a perk worth having.

The Cons of Giving Your Child a Credit Card

Ruin a credit score

Just like your child can establish a good credit score, they can also destroy it. Late payments and drained balance will not only lead to a bad credit, but will also get your family into a crazy debt-filled world. There are many examples of families who spent 2 to 3 years just paying off their children’s credit card debts.

They may build wrong views on money

Your child may see you use a credit card to buy everything you need and they may think that a credit card is a wonderful tool to get easy money. Swipe after swipe, and they will think that a credit card is a life saver and tons of fun. They will more likely end up living a debt-filled life after draining your bank account.

They will learn to live beyond their means

Credit cards open many closed doors to us. We compare our lives to others’ and dream of living a better life. Minimum payment is what allures us to buy the things we can’t afford because we mistakenly believe we can pay off any debt later. Also. how about the fees?

Children are more prone to comparison thanks to social media where wealthier children share their luxury lifestyle photos. Giving them a credit card is like telling them, “You can live such a lifestyle as well.” No matter how much you teach them to spend smartly, unfortunately, the Internet tells them otherwise.

They may become addicted to it

Shopaholics are madly addictive to credit cards and they have tons of them. You can’t be sure that your child won’t become addicted to their credit card as well. When they grow up, they might want to open new credit cards to purchase the things they can’t afford. “Easy” money is a dangerous thing.

If you notice that your child tends to spend too much pocket money, don’t give them a credit card. You don’t want them to dig a debt hole for themselves that may take a lifetime to get out of, right?

Others may take advantage of your child’s card

The days where older children grabbed money from the younger ones haven’t gone. Nowadays, teens often make younger school children withdraw cash from their credit cards for them. Or, they just trick them into revealing the PIN to a card and then steal it. School scammers never take advantage of children who carry a tiny amount of daily cash, so it’s better to be safe than sorry.

They are more likely to make impulse purchases

Adults are guilty of impulse buys, children more so. One impulse purchase often leads to a second, third, fourth, and so on. This transition into a habit is hard to ditch. Prevent your kid from adopting this habit by not giving them a credit card at least until 18.

Giving your child a credit card, especially at a very young age, is just asking for big trouble. That piece of plastic can instantly destroy your family budget, albeit there are still a few pros. It’s up to you to decide whether to get a card for your kid, but why not let them be a child for a while longer instead of dumping adult responsibilities on them.

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