Teenagers have never heard of credit and their parents need to provide the tools and education they need. A great gift for teens is to teach them financial responsibility and financial literacy. A strong credit score will help your teen. Here are some tips to get your teen started.
Credit card authorization for minors
A credit card may allow you to add your child as an authorized user. This can help you start building credit even before they turn 18. Each time an authorized user pays, major issuers notify credit reporting agencies. The child will get credit for the payments even though the account isn't theirs. This helps build their credit and allows them to get better cards as they age.
It's important to remember that a minor under the age of 18 can't open a credit card, but if you add your child as an authorized user, you'll be able to give them access to credit card benefits. Authorized users are able to get their own card, which is tied to the primary cardholder's account.
One or more accounts can be managed
It is a great way for your child to show maturity and responsibility by managing one or two accounts early in his/her life. Your child can learn valuable lessons about money management by saving a few dollars or using a checking account. You can also allow your child to use the debit card. This will teach him how to tell the difference between a purchase that is necessary and one that you consider a luxury.
Many banks, credit unions, and banks offer checking options for teenagers. These accounts usually have lower fees than standard accounts. Opening a checking bank account for your teenager will teach them about money management, as well as how to reconcile their accounts. You can also become a cosigner to their account, which will make monitoring the teen's spending easier.
Budgeting and responsibly spending
Teenagers don't have to be too old to learn how to budget responsibly. You can start by using a debit card that allows you to pay with your own money. Credit cards on the other side are loans from credit card providers, with late payments being charged interest. A budget can help you save money for your long-term financial health.
It is a great way for teens to set goals and think about both long-term as well as short-term goals. They could set short-term objectives like saving for a car. However, they might also be aiming for longer-term career goals such as college education or working towards a job.
It is possible to prevent identity theft
One of the most important tips for avoiding identity theft as a teenager is to be wary of online social networking sites. Teens aren't afraid to share personal information with friends. Status updates can be found online. This is a great way for identity thieves to collect data over time and use it to create fake identities. Online updates can reveal whereabouts and the address of a teenage's home.
Even though teenagers may not know it, identity theft can still happen to them. Thieves will often target young people with clean credit scores. Their credit report is less likely to be checked regularly, making them more vulnerable. Teenagers' social security numbers are available online, and they're easy to obtain. An identity thief could even be a friend or family member.