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Kids, Credit and Culpability

Kids, Credit and Culpability

Usually, when it comes to our kids and instilling the right message as they transcend into adulthood, the answers are black and white. Go to school, mind your manners, do your best, base your decisions on truth – the list is endless. But when it comes to financial matters, the big question is always whether less is more.

Do we or do we not provide credit cards to them as teenagers? Should we expand on our own financial matters and reveal our own salaries and debt? It can be confusing. The only sure thing that most parents can agree on is ignoring it means they risk their kids growing into financially unprepared adults.

The Reasoning of Some Parents

One leading financial expert, Dave Ramsey, told MSNBC in an interview recently that credit cards are the “root of all financial evil.” He went on to say that extending our teens their own credit card, or even one of our own, is never a good idea. There is a healthy percentage of parents who agree. Many say at a minimum, they don’t want to have the “credit talk” with their kids until they’re in college. The only problem is, by then, it might be too late. It’s no secret the credit card industry still heavily markets to college students.

The Justification of Some Parents

For those who might disagree with Ramsey’s point of view, their take is generally one of stressing responsibility. Much the way we work to ensure our kids are driving safely with seatbelts and without texting, these parents are the ones who believe it’s a slow dance, but that for the most part, they’re leading as they take proactive steps to educate their kids on the importance of responsible decision-making efforts.

Of those parents, they say the biggest lessons they hope their teens learn is how crucial on time payments are to a strong credit history, the difference in needs and wants and why “wanting” something is rarely, if ever, a good enough reason to pull out the plastic and finally, they want to be sure their teens are aware of how long it takes to pay off credit card debt when making only the minimum payments. They say their proactive approach is far better than a reaction since by the time parents react to a bad credit decision, the damage has been done.

That said, many parents are still split down the middle when it comes to revealing their own financial status to their children. Some say it’s not fair to the kids to know the monetary burdens of the family while others believe it’s all about reality.

Many Americans opt to protect their children when it comes to their bank balances, credit card debt and mortgage payments. Still others insist it’s a decision they made early on and they believe it’s a healthy lesson to teach their teens. One parent explained that his son and daughter love to travel with him.

He says he took advantage of that by explaining it’s because of his travel rewards credit card that they’re able to accompany him on some business trips. “If I didn’t take care of my credit, there’d be no rewards credit card and it would be difficult for them to come with me on some of these trips.”

The Introduction of Secured Credit Cards

Secured credit cards are just right for many families with teens and college students. It extends just enough freedom for these young people to get a solid hold on their finances without too much risk for the parents. It’s true many use secured and prepaid credit cards to rebuild their credit, and indeed, that was one of the reason these cards became the first choice for so many Americans; however, they have also filled another need with young adults.

And parents are loving it. For those teens who are behaving responsibly, they are able to see a positive credit history evolve and if they continue their new spending habits, they will soon know the freedoms a solid credit score can bring them including low interest credit card offers and even lower interest for their mortgages.

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