Teenagers are still learning about credit. Parents should give them the tools and financial education that they need. A great gift for teens is to teach them financial responsibility and financial literacy. Good credit is a great way to take care of your teenager. These are some ways to help your teen get started.
Adding a minor as an authorized user on credit cards
Adding a child as an authorized user on a credit card can be a great way to start building credit before they turn 18 years old. 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 improves their credit score and can help them get better cards later in life.
It's important that you remember that credit cards are not available to minors under 18. However, authorized users can add their child to your credit card account to allow them to access credit card benefits. Authorized users receive a card in the name of the primary cardholder.
Manage one or more accounts
You can demonstrate maturity and responsibility by helping your child manage one or more accounts to help build credit. Saving a little money or opening a checking account will help your child learn about money management and give you valuable experience in the long-term. Similarly, allowing your child to use your debit card will teach him to recognize the difference between a necessary purchase and one that is a luxury.
Many banks and credit institutions offer checking accounts to teenagers. These accounts have lower fees than standard ones. Opening a checking bank account for your teenager will teach them about money management, as well as how to reconcile their accounts. It is possible to become a cosigner of the account for your teen, which will make it easier for you to monitor their spending.
Budgeting and responsible 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. Budgeting is a great way to save money and keep your spending under control.
Setting goals can help your teenager think about long-term, as well short-term goals. They can set short-term goals, such as saving for a vehicle, but longer-term goals may include college educations or working towards a career.
Identity theft prevention
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. Identity thieves have a lot of ways to get data over time, and to create fake identities. For example, online updates may reveal a teen's home address or whereabouts.
While a teenager doesn't realize it, his or her information is still highly susceptible to identity theft. Thieves target young people with clean credit histories. 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. Even close friends and family members could be identity thieves.