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UPDATED AUGUST 2020USAA Community Building Teen Credit.jpg

When did you get your first credit card? If you’re like me, it might have been after you had left home. Today, that approach may not makes sense. Beyond just being able to borrow money at a competitive rate, everything from potential job opportunities, insurance rates and housing options are impacted by how well we manage credit. All of that could make an earlier start appropriate. We made a concerted effort to begin the process with our two youngest kids before they left the house, and so far, its paid dividends. Yes, credit can be dangerous, but starting early provides an opportunity to teach good habits and oversee the process while your parental influence is at its peak.


Here’s a 5-step process to get your teen off to a good start with credit.


Start with debit. When it comes to training, I’m sure you’ve heard this before: crawl, walk, run. Before they start running – using a credit card—cover the basics. Consider setting them up with checking and savings accounts. Familiarize them with how these accounts work and their distinct purposes. Their first plastic should be a debit card. This will allow them to learn a valuable lesson: Plastic is a convenience, not a means to spend what they don’t have.


Put on your drill sergeant hat—credit boot camp. With banking basics behind them, it’s time to start talking credit. Notice, I said talking, not using. Make sure your kids understand that they will be building a credit reputation from day one and reputation matters. Ensure they understand the basic factors that make up a credit score and the associated good behaviors: Pay on time, every time and not owing a lot should be top of mind. While you’re at it, don’t forget to explain credit card annual fees, interest rates, and the peril of minimum payments. This “boot camp” will likely happen over the course of months of discussions.


Set them up with a secured credit card. This type of card is a great way for someone starting out to build – or someone starting over to rebuild – their credit. The limit of the card will be the same as the bank deposit that secures the card. An attractive feature of this approach is that it limits the risk…no option to binge spend.


Open a joint credit card account. Co-signing for a credit card is a nice next step. Because you are both responsible for what happens, you’ll both have access to what is happening. Look for a lower limit card (you still want to minimize risk). Once you make this step, the training wheels are coming off. Some folks consider adding their kids as an authorized user. This technique can work also, but it doesn’t necessarily offer all of the credit-building benefits to their credit record as a joint account would.


Continue to consult. I spoke with my parents about financial matters well into adulthood and you should to. No one has their best interest in mind more than you do. Making money talks a part of your routine conversations today will help ensure they are comfortable coming to you in the future.


How have you helped your teen navigate credit?



About the Blogger: JJ Montanaro is part of the Military Affairs team at USAA. He’s a graduate of the U.S. Military Academy and has over 20 years of financial planning experience.


Disclosures: The information contained is provided for informational purposes only and is not intended to substitute for obtaining professional financial advice. Please thoroughly research and seek professional advice before acting on any information you may have found in this article. This article in no way attempts to provide financial advice that relates to all personal circumstances.




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Consumer debt in the United States is almost $4 trillion dollars.  The only thing I will be teaching my children about credit cards is to STAY AWAY FROM THEM.  Disappointed by this article, USAA.


I suppose it might depend on your child, and some are more likely to be responsible at an earlier age than others, but I have to agree with the author and disagree with the other negative comment.  (Not to mention the fact that I'm this digital age it is getting more and more difficult to function without a credit card).  My father taught me beginning in my teens that credit cards are: 1) purely for convenience, so you don't have to carry around a wad of cash, and 2) that they are not really to be used for  "credit" per se by anyone with a brain, 3) that they were to be paid off every month and 4) NEVER to charge something (like, say, an expensive television or today a phone) unless you had saved in advance and could pay for it by month's end when the bill came.  I heeded that advice and have always used them that way (maybe twice in my life, we were short on cash and it had to be paid by the following month because we had put cash into a CD or mutual fund and didn't want to remove it, but short of that, I have never abused violated these rules.  My father also gave me a few examples of anonymous clients he had (he was a lawyer) who had gotten themselves into real trouble with credit cards and ended up declaring bankruptcy and spent years rebuilding their credit.  It gave me a good scare (as it should anyone).  His other advice was to only have one card that you use all the time (preferably from USAA!) and possibly just one more that is only there in case you misplace the other one temporarily or have to loan it to a child or spouse.  This mantra, along with "never buy a house unless you can afford to put it on a 15 year fixed rate mortgage," as well as, "save at least 10% of your paycheck each month into an emergency fund," and "contribute at least as much to your 401K as your employer will match" were repeated throughout childhood and young adulthood and it stuck for me, and my 3 siblings as well.  I started in on my 4 kids with these same ideas in their "tween" years and so far so good.  (Oldest is 25, youngest 15)  So far they are also financially responsible.  My father's parents were not, apparently, financially responsible and lived hand to mouth most of their lives, so I have no idea how my father latched on to these ideas but thank goodness he did.  --I agree with this author that setting a good example

and beginning the training early and often is key and so far it has worked for my family.  Try preaching, teaching from an early age, Ana a short leash and you might be surprised.  


Thanks @Techie Mom , It sounds like your Dad set you up for financial success (and you listened!). I too am thankful for similar lessons from my father. What a gift you are giving to your kids- the knowledge and guidance to set them up for long term financial success. Thank you for sharing your story and for taking the time to comment! Looking forward to more posts form you here in community!