If This Happens A Child Will Never Learn To Be Responsible With His Credit Card

In the multi- dimensional and fast paced world of today you need to inculcate knowledge about money management in children from a young age.

Finance education is important as children who taste independent living for the first time can go astray when in the company of undisciplined peers. Since children generally move away from home to attend college they need to learn about credit cards and how to use them. Most parents introduce their kids to the use and management of credit cards while they are living at home. Student credit cards are especially formulated for use by students and have certain restrictions in built to protect the student from over spending. As soon as a child turns 18 parents may: give the child a" companion card" to their personal credit card or get the child a student credit card. The bank or institution offering a student credit card will initial offer a limit of USD 500- 100Increases in credit limit are okayed if a parent or guardian becomes a co signer and takes responsibility for payment of bills. Before choosing a card it is important to carry out a comparison study and decide whether the student should have a credit card, flexible rewards card, debit card, or prepaid card.

Most student credit cards have a higher interest rate as the risk for the bank or financial institution is greater. The parent or guardian must sit with the student and discuss in detail what each kind of card offers, interest payable, the billing, as well as rewards. Determine what is most suitable and affordable. Teach the child the importance of comparing various offers. A child must comprehend the rules of credit cards, understand the credit card statement, know about interest rates, and the problems, card fees caused when only a minimum payment is done. And, a parent or guardian must never pay unpaid bills or bail a child out. A child must never charge more on a card than can be paid back at the end of a month.

If this happens a child will never learn to be responsible with his credit card. It must never be used as additional spending fund. It is important for the student to realize that a card is a convenience and to be used in an emergency. It is important for a child to know what a credit score is and how to build an excellent credit report. A student credit card gives a young adult a sense of security and teaches the child how to manage his or her finances and set the foundation of building a solid credit score and report. It is imperative for the child to realize that a credit card is a responsibility and not a toy. Lessons inculcated when young are never forgotten and handling a student credit card is an important hurdle to cross on the path to adulthood.