When to Teach Your Kids About Credit

Some things just aren’t taught in schools, like how to build and maintain one’s credit. Giving your children a lesson in credit and how to maintain it is pivotal to their success as an adult.

One of the best things a parent can do is teach his or her children about personal finance and give them tips about how to make good financial decisions, including teaching them about credit. While every child is different, it is probably a good idea to start educating your children about personal finance when they enter their teenage years. I know my father had me take a course with him on personal finance, which included discussing credit cards and how to develop a credit history, before I graduated high school.

What's the best age for them to learn?

After your children turn 13, you should start their financial education as a parent. Beginning with savings accounts and writing checks is likely a good start. Then you should start to discuss credit cards, how they differ from debit cards, when it is beneficial to use credit cards, and what common mistakes that young people often make when they first get credit cards. You should next discuss credit history and the role that credit cards play in establishing good credit that can benefit your children later on when they would like to purchase a car or a house.

What lessons are the most important?

It is also important that you demonstrate good financial decisions about credit for your children. Teenagers pay very close attention to their role models. Often, your children will handle finances like you do. If you demonstrate good habits in using your credit cards, it is likely that your children will as well. For example, if your children know that you do not miss paying off your credit card every month, they will be more likely to make sure that they are responsible to pay off their credit cards every month. Similarly, if your children know that you only spend money that you have even if your credit limit is higher every month, they will be more likely to use their credit cards that way. Finally, if you have a good credit score and explain to your children how to obtain one over time, your children will be more likely to want a good credit score like you.

Should I cosign for them?

Different people have different ideas about cosigning for their children to get credit cards. Obviously, there may be reasons why you wouldn't want to cosign a credit card application for a child, but, in most instances, you can set your children up for success by cosigning for a credit card and giving them a chance to build a good credit history. If a parent does not cosign for a credit card, your children will have to have a somewhat substantial amount of money saved themselves. This means that they may have to wait a little longer to get a credit card. I know I personally appreciated the opportunity to start building a good credit history as soon as possible since my father cosigned for my first credit card.

In closing, parents have a lot of areas in which they need to teach their children, including in personal finance. By taking the time to talk to your children about credit cards, credit history, and just credit in general when they enter their teenage years, you will set your children up for financial success.

Ready to find the perfect card?
Ready to find the perfect card?
Compare cards for all credit ranges.

Leave a Comment

Advertiser Disclosure:

The credit card offers that appear on this site are from credit card issuers from which CardGuru.com receives compensation. This compensation may impact how and where products appear on this site, including the order in which they may appear within listing categories. CardGuru.com does not include all credit card offers that might be available to consumers in the marketplace.

Editorial Note:

Any opinions, analyses, reviews or recommendations expressed on this page are those of the author's alone, and have not been reviewed, approved or otherwise endorsed by any card issuer.