Owning a credit card comes with a great deal of responsibility, and you should make yourself aware of all of the benefits — and drawbacks — of having one before applying.
Teaching your children and other young people you know about what comes with owning a credit card as they grow old enough to have one is one of the greatest lessons you could give them.
They will learn all about financial responsibility, making payments on time, maintaining a good credit score and perhaps most importantly, how they can avoid credit card debt.
Educating Younger People About Credit Card Debt
As young people get their first jobs and start putting money away, it is time they learn all about owning a credit card in their name.
Not only should they be taught how to make payments on time, how to check their balance and how to keep their score up, but they should also be educated on how they can avoid going into credit card debt.
Some new credit card users may assume that they can make purchases beyond their credit card limit and pay them back later. However, they should be advised to only buy what they can afford.
It is easy for young people to see something beyond their budget and think to themselves, I’ll buy just this one thing and then I’ll stop and pay it all off later!
Before they know it, their credit card balance has exceeded far beyond what they could ever afford, and it can take years to pay off all their debts and improve their credit score.
The longer they hold off on paying what they owe, the higher their interest rates will climb and they may never be able to pay off their debts completely.
This can make it especially difficult to reach other financial goals that they have such as retirement savings and emergency funds.
Prolonged credit card debt could also hinder their chances of buying a home, starting a business or going on the vacations they always dreamed of.
If younger people are taught all about smart spending and budgeting, why not throw credit card debt into the lessons? They will most certainly thank you when they are able to reach their financial goals without hefty debts looming over them.
