Your Teenagers and Their Credit

Help your high school and college-age children become responsible credit consumers.

You may have had your first experience with credit as a college student. You probably know about the incredible volume of credit card offers available to students. Did you wonder why banks and retail stores offer credit to students who are living on a fixed income, sometimes without a regular job? Banks and retailers are looking for new business, and students are prime targets. Creditors know two important things about offering credit to high school and college students:

The student will likely be a customer for life.
The student's parents will often pay the balance if the student falls behind.

A Great Opportunity

Banks and retailers are looking to students for new business, and its a good idea for your child to establish a good credit history while in school. As the parent of a college student or a high school student preparing for college, you have an opportunity to teach your child how to be a responsible credit consumer. Steps to take include:

Discuss why it's important to establish and maintain good credit. Your children are setting the stage for their long-term financial well being.
Explore the different types of credit cards. Bankcards are accepted wherever the VISA and MasterCard logos are displayed, while department store cards can only be used in one place.
Explain how credit card interest is calculated. Your children may not realize that there is a charge to use a credit card.
Teach your children how to create and maintain a budget. Start by identifying total income and expenses:
- Income, financial aid, money from parents, part-time job, etc.
- Expenses, books, meals, clothing, entertainment, etc.
Stress the importance of paying bills on time. Late payments become part of their credit record.
Share your experience with using credit. Your children probably see you use credit cards to make purchases, but they may not know anything about paying the bill each month. Personal examples often help someone else learn.

Remember that your children can apply for credit without your permission. Knowing they will be faced with important credit decisions when they get to college can help you focus on an important discussion. Why not use this time to help them start off on the right foot?

For more information on any of these topics, read the related articles in our Library.