Teenagers are still learning about credit. Parents should give them the tools and financial education that they need. A great gift for teens is to teach them financial responsibility and financial literacy. A good credit will take care of your teen. Here are some tips to get your teen started.
Credit cards can be used to add a minor to the authorized user list
Adding a child as an authorized user on a credit card can be a great way to start building credit before they turn 18 years old. Credit reporting agencies will be notified by major issuers whenever an authorized user makes payment. The child will get credit for the payments even though the account isn't theirs. This builds their credit file and helps them get better cards when they're older.
It's important that you remember that credit cards are not available to minors under 18. However, authorized users can add their child to your credit card account to allow them to access credit card benefits. Authorized users are able to get their own card, which is tied to the primary cardholder's account.
Management of one or two accounts
Managing one or two accounts to build credit early in a teenager's life is a great way to demonstrate your child's maturity and responsibility. Your child can learn valuable lessons about money management by saving a few dollars or using a checking account. Allowing your child to use a debit card will help him distinguish between a necessary purchase from one that is luxurious.
Many credit unions and banks offer checking accounts for teenagers. These accounts often have lower fees that standard accounts. If you open a checking accounts for your teen, it will help to teach your child money management and how reconcile accounts. You can also become a cosigner to their account, which will make monitoring the teen's spending easier.
Spending responsibly and budgeting
It's not too late for teenagers to learn how to budget and spend responsibly. A debit card is a way for them to start paying with their own money. Credit cards on the other side are loans from credit card providers, with late payments being charged interest. Budgeting is a great way to save money and keep your spending under control.
It is a great way for teens to set goals and think about both long-term as well as short-term goals. They could set short-term objectives like saving for a car. However, they might also be aiming for longer-term career goals such as college education or working towards a job.
It is possible to prevent identity theft
One of the most important tips for avoiding identity theft as a teenager is to be wary of online social networking sites. Teens often share personal information with others, and status updates can be viewed publicly. Identity thieves can use this information to gather data and create fake identities. Online updates can reveal the address and whereabouts of a teenager's home, for example.
Although a teenager might not be aware of it, their information could still be used to commit identity theft. Thieves will often target young people with clean credit scores. Their credit report is less likely to be checked regularly, making them more vulnerable. You can easily find teens' social security numbers online. Identity thieves may even be a close friend or family member.