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May 31, 2016 02:32 PM IST | Source:

Should you give your teenage child access to a credit card?

If you are still thinking about granting your daughter some plastic money, do read on.

Rajiv Raj

You may think that teenage children and credit cards are a recipe for disaster but before you dismiss the idea give it a second thought. We live in a world that is dominated by credit where everything from groceries to gadget are now being bought on the credit card and the generation next may well loose the use for cash! In a world like this, it is very important to give children the exposure about the use of credit and the need to build a good CIBIL score and make an attempt to increase it as well. So if you have been toying with the idea of giving your teenaged kids access to a credit card, here are some compelling reasons to go ahead with it.

A good start to building credit

Till your child reaches the age of 18, she will not be authorized as a primary user of a credit card. She can however use an add on card on which you are the primary holder and by doing so the card issuer begins reporting her credit usage to CIBIL which gives her a head start on building good credit. When you give her the add on card, you must educate her on the responsible use of the card and the need to make timely repayments. Ensure that she makes the best attempt to repay the outstanding amount with the pocket money she earns or some odd jobs that she may take up along with her academics during vacations and the like. Teaching her responsible use of credit is a life skill that will help her improve her CIBIL score when she grows up and has access to more credit lines.

Using plastic money for the right reasons

It is important for you as a parent to tell your teenage child that using a credit card per se is not a bad thing so long as it is used responsibly. She should not be intimidated by the idea of using the card, but use it for the fact that it is indeed supremely convenient. Whether she needs to grab a quick bite between classes or make a dash to the bookstore and does not have the cash on her, a credit card can come in handy.

Aid in an emergency

Much as you would like to protect your child from all evils and untoward situations in life, the truth is sometimes life may throw a spanner at them. Your teenage child may thus find herself stuck in a situation that is not so pleasant. For instance, God forbid she misses a connecting train or a bus when she is on a school or college trip and may have to get a ticket on her own. Besides there may be medical emergencies as well where access to a credit card may prove to be a stitch in time.

Preparedness for life

Children who do not have access to finances at any early stage or are shielded from all financial decisions or situations in the family at the early stage in life may get a rude awakening when time comes for them to handle finances on their own. However, with guided access to a credit card in their teen years they grow up to be responsible individuals who are then equipped to handle credit responsibly for the rest of their lives.

Parental guidance

While making your teen an authorized user of your credit card or giving her an add on card is a good idea here are the things you should most definitely do:
• Keep a close watch on the credit card statement and encourage her to review the bills with you so that chances of unauthorized uses are waived off
• Encourage her to keep receipts of whatever purchases she makes and match them against the statements
• Always pay the outstanding amount in full within the billing cycle on time
• Tell her how crucial timely repayments are to build a good CIBIL score
• Check your own CIBIL report periodically and explain to her how to keep a watch over one’s CIBIL score
• Teach her that lending her credit card to anyone no matter how close is a strict no-no.
• In case of a lost card, ensure that it is reported immediately

Finally, be prepared to deal with some teenage drama and be ready for situations where blames will fly thick and fast, but where it is necessary to put your foot down like setting an account limit is the best way to avoid unpleasant or even rude shocks at a later date. Your teenage child may be quick to judge you or blame you, and may even come across as ungrateful, but as parent you are undoubtedly preparing your child for life by giving her access to a credit card from her teenage years.
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