By: Gregg Murset, CEO BusyKid
According to the Federal Reserve, American credit card debt hit a record high in 2017, rising to more than $1 trillion. Americans have gotten very comfortable with swiping at checkout or entering digits and clicking buy now online without worrying about the bill that will come later. According to a survey by CompareCards, 12 percent of credit and debit card users had at least one card declined in the last year. 32% were denied due to insufficient funds and 40% because the credit limit had been reached. And, a Bankrate survey found one in five Americans say they have more credit-card debt than they do in emergency savings. Another 12% said they had no credit card debt, but they also had no savings.
While some people are great at managing credit cards and pay off the balance every month, others are struggling. Parents can help their kids develop a healthy knowledge of credit cards and how to use them properly by introducing them to certain concepts early in life. Some of the personal finance topics and tools parents should cover include:
Use Rechargeable Debit Cards
Think of rechargeable debit cards as the preseason training for a credit card. Kids should spend some time learning to use and manage the money of a rechargeable card before ever graduating to a credit card. Would you ever allow your child to drive a car without getting training? Of course not!
Teachable Moments
Parenting is all about using teachable moments to leave lasting imprints for your child to use while becoming an adult. Preparing your child to use a credit card can provide many teachable moments, including the proper way to get a card in the first place. Eventually kids will be bombarded with offers so take the time now to help show them what card offers mean (or sometimes, don’t mean). Watch out for that APR!
Managing Invisible Money
Credit/Debit cards are perfect examples of invisible money that makes up about 90% of the world currency. It’s critical for kids (especially teens) to understand how invisible money works and how to manage it. Online payments, banking, shopping and entertainment are just some of the ways money moves without actual coins or paper. Since your kids won’t be carrying around a piggy bank, help them deal with money they can’t see.
Paying Their Part
If your child is going to have access to a credit card, then he/she should also be responsible for paying for whatever they buy. Handing over a card with no expectation of them paying for the items is like giving your children a blank check. Their spending needs to be based on budget.
Kids Should Earn It
Though some parents just prefer to give their kids a credit card to use however the need fits, kids should be earning the money they are spending in order to pay for what is bought. Just like in real life as an adult, it can be dangerous to keep using credit when you don’t have money coming in to cover the bills. Have your kids do projects around the house or weekly chores to earn an allowance. No income, no card.
Learn more and access more data here: http://www.comparecards.com/blog/survey-33-million-americans-may-have-been-card-fraud-victims-last-year/
Think of rechargeable debit cards as the preseason training for a credit card. Kids should spend some time learning to use and manage the money of a rechargeable card before ever graduating to a credit card. Would you ever allow your child to drive a car without getting training? Of course not!
Teachable Moments
Parenting is all about using teachable moments to leave lasting imprints for your child to use while becoming an adult. Preparing your child to use a credit card can provide many teachable moments, including the proper way to get a card in the first place. Eventually kids will be bombarded with offers so take the time now to help show them what card offers mean (or sometimes, don’t mean). Watch out for that APR!
Managing Invisible Money
Credit/Debit cards are perfect examples of invisible money that makes up about 90% of the world currency. It’s critical for kids (especially teens) to understand how invisible money works and how to manage it. Online payments, banking, shopping and entertainment are just some of the ways money moves without actual coins or paper. Since your kids won’t be carrying around a piggy bank, help them deal with money they can’t see.
Paying Their Part
If your child is going to have access to a credit card, then he/she should also be responsible for paying for whatever they buy. Handing over a card with no expectation of them paying for the items is like giving your children a blank check. Their spending needs to be based on budget.
Kids Should Earn It
Though some parents just prefer to give their kids a credit card to use however the need fits, kids should be earning the money they are spending in order to pay for what is bought. Just like in real life as an adult, it can be dangerous to keep using credit when you don’t have money coming in to cover the bills. Have your kids do projects around the house or weekly chores to earn an allowance. No income, no card.
Learn more and access more data here: http://www.comparecards.com/blog/survey-33-million-americans-may-have-been-card-fraud-victims-last-year/
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