How to Avoid Teen Credit Card Debt

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Much like adults around the world, teenager too are swept away with the appeal of credit cards and many are thousands of dollars in debt before they are even legally allowed to buy their first beer or glass of wine.

How do we stop this trend of young people getting in debt so young?  Better yet, how do you avoid you own teenager from falling into this very serious trap that we all know too well?

First, teach your teen how to manager their pocket money.  Have them write down where they spend everything.  After a couple of weeks with this routine, take your teen and open up a joint checking account with them.

This is the time to really start educating your teen about personal finances, financial responsibility and financial debt.  He or she needs to fully understand the consequences of what happens when a bank account is overdrawn.  Hence, leaning how to balance a checkbook and manage their money becomes a vital prerequisite to having any credit card.

Start letting them do their bank transactions on their own but remind them of certain things along the way and check in with them every couple weeks or so.  A financial meeting persay.  The checking account debit bank card is great practice for a real credit card without the implications of the APR and the late fees.  However, work with them to make sure that they are recording their entries into their bank register to balance their checkbook.  Also, remind them to keep up with their ATM withdrawals and any fees.  Bank fees will need to be recorded on their bank register as well. 

After three solid months of experienced banking that you and your teen feel good about, you can get a prepaid credit card for them, that is preloaded with a $200 or $250 limit on it.  Teach them how to use the credit card with a step-by-step approach system.  By the time your teen gets a real credit card, he or she will be prepared and enabled to use it in a smart and knowledgeable way without letting his or her spending desires get in the way.


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