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Credit card tips for parents and teens

1. Go over the credit agreement with your teenager.

Make sure your son or daughter can answer the following questions before they sign on the dotted line:

  • What is the annual percentage rate?
  • How is the minimum payment figured?
  • What is the grace period?
  • If you are late, are you charged a late fee?
  • What happens if you go over the credit limit?

2. Decide what the credit card will be used for.

  • Emergencies only -- What is considered an emergency?
  • For a particular item -- bike, computer equipment, books, car repair, clothes

3. Determine how the bill will be paid.

  • Who is responsible for paying the bill?
  • Will the parent and the young adult both contribute money to pay the bill?
  • What percentage of the bill will each party contribute?


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4. If the teen will contribute to the bill, how will the money be earned?

  • Money saved from summer job
  • Work during school year -- Discuss the number of hours to be worked. Will the young adult be able to go to school, work, complete homework and take part in school activities?

5. Discuss what will happen if the teen cannot pay one month.

Explain to the young adult that not paying a credit card bill will affect his/her future. Explain what a credit report is? What information is found the credit report and what it is used for?

6. It is suggested...  

The teen should only carry the credit card when it is being used for a purpose, not every day. This will limit the amount that is charged.

Source: Consumer Credit Counseling Service of Rhode Island

-- Updated: Jan. 3, 2002

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See Also
Understanding credit card contracts
Pop quiz: How much do you know about credit?
The true cost of paying the minimum
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