Published: May 25, 2021 | Updated: June 2, 2021 | Posted by: Moneymax | Credit Card
Initially, the idea of giving your teen a credit card may conjure images of big monthly bills or of your kid dining out or partying with kids. After all, teens are not always thought of as financially responsible individuals. Even if your kid is an accountable and sensible person, you may still feel anxious.
To quell some of your unfounded fears, let us share with you these words: A lot of teens actually have a good sense of what’s practical or not. So cut them some slack—don’t underestimate their wisdom.
If you’ve been thinking things through, let us help you. We’ve come up with a simple guide that will let you determine if you should get credit cards for teens.
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It’s highly encouraged that you give your teens a credit card. Doing so actually comes with a lot of benefits, like the ones listed below. But we advise that you always proceed with utmost caution.
A lot of young adults and even established professionals have ended up dealing with unmanageable credit card debts. Primarily, this is because they’re not aware of the potential consequences of card misuse. Even if they have an idea of these repercussions, these adults underestimate them.
If you get your kid a credit card, you can explain how it works, its benefits, and its pitfalls. You can teach them early on about the importance of credit building (though they’re not likely going to deal with it at this point yet).
Of course, you wouldn’t want your kid to find themselves in a financial emergency. But you’ve got to think far ahead. Consider this scenario: Your kid may not be able to go home since they’re cash-strapped. But if they have a credit card, they can book a ride-hailing service to take them home. Ultimately, giving them a credit card also gives you peace of mind.
More often than not, bringing a credit card is obviously a whole lot safer than bringing cash. A lot of cards nowadays have superb security features. In case the card gets lost, you can always have it blocked and get a new credit card for teenagers.
Since many credit cards for teens are actually supplementary cards, your kid’s transactions will be added to your monthly billing statements. After monitoring your kid’s expenses, you can point out the problematic areas in their spending and provide some useful pieces of advice that will help them form good financial habits.
While you can actually give your teenage kid a credit card, you’ve got to do it at the right time—most probably when they already have an idea of what good spending is.
Here’s how you can figure out the right time to give them that card.
If you have taught your kid the value of frugality and resourcefulness at an early age, chances are they’re already applying what they learned to their teenage years. They may already be saving up for the things they want to buy, so they won’t have to ask for money from you. They may be budgeting their weekly allowance wisely.
When you notice these behaviors or patterns, you may consider giving them a credit card. Your teen will probably look at this card as another resource to manage.
If your teen is already making money from part-time jobs or side gigs, you can have them cover their expenses that appear in your monthly statement. That way, they’ll learn how to budget and set aside money for recurring financial obligations, such as credit card bills. This will also encourage them to curb their credit card expenses since they don’t want any significant deductions from their monthly salary.
If you want to give your teens a supplementary card, you should be prepared for the additional expenses that you’ll need to cover. Essentially, it is you who will be paying all the credit card bills, including the ones incurred by your kids. If your salary cannot accommodate this kind of concern, park the plan and think things through again.
College teens, especially those who are living far from home, will always face emergency expenses. To help them deal with these financial setbacks, you can let them use a credit card. But make sure to remind them that it should be used only in real emergencies and education-related requirements or expenses.
Credit cards for teens can come in handy during emergencies, but there is also a risk of them being misused by youngsters.
Here are some questions to ask your teen to help you evaluate whether he or she is ready to be trusted with the privilege:
These questions will give you an idea about your teen child’s perception of having a credit card of his/her own.
In the Philippines, banks don’t generally issue primary credit cards to teens aged 17 and below. They mostly grant credit card accounts to clients who are 21 years old and above.
But if you have a principal credit card, you can get your teens a supplementary card from your issuing bank.
Here are some supplementary card options that you can choose from for your teenage kids.
The best thing about this AUB credit card is that annual fees are waived for life. For your new purchases, the bank will not impose any interest. You can also earn 1 reward point for every PHP 20 spend on your supplementary card.
This is a good credit card for teens, as you can set limits as low as PHP 10,000. That way, your kid will be compelled to just work around this budget. Another great benefit of this card is that you get 10% back on interest charges when you pay at least the minimum due on or before the due date.
Another good option for teens is the EastWest Platinum Mastercard. This card allows you to set a credit limit for as low as PHP 2,500, which in turn will help control your kid’s spending.
Exciting perks also await principal and supplementary card owners if they book their flight tickets using the card. The bank will give you free comprehensive travel accident and inconvenience insurance worth up to PHP 20 million. This, though, is also subject to terms and conditions.
Because the BPI Family Credit Card is specially designed for families, you have some assurance that it can also suit your teen’s needs. On top of that, you can enjoy a 0% installment plan. Some purchases can also be converted into installments with very low add-on rates.
It’s reasonable to feel anxious at the thought of giving credit cards for teens. But you must fight some of those unfounded worries or fears if you want to teach them about the value of being financially responsible. Know that they can learn about financial responsibility only when they’re faced with real-world situations and dilemmas. In many cases, it is that credit card that will teach them about this particular lesson.
With a goal to help Filipinos lead healthier financial lives, Moneymax regularly publishes tips and tricks on personal finance and lifestyle, among many other topics. For more finance-related news and articles, follow Moneymax on Linkedin.