While credit cards can be very
useful financial tools, the borrowed money is not "free." Here are
two opportunities to share that lesson with your kids.
When choosing a card. Show your kids the entire credit card
lifecycle. Explain that when evaluating credit cards, a comparison of benefits
is crucial. For example, although choosing a credit card that offers a large
signing bonus may be tempting, an annual fee associated with the card can mean
the benefit is not worth the cost.
When making payments. Have your kids review the monthly statement
with you. Let them see the time lapse between the date a purchase is charged to
when the bill is due, and mention how quickly the balance can add up over time
if good spending habits are not followed. Explain the consequences of paying
only the minimum required amount each month versus the entire amount due.
You don't have to have all the answers when teaching your
kids good credit card skills. Learning together gives you an opportunity to
strengthen your understanding of card features and terms, as well as your child's
understanding. Let us know if you have questions. We're happy to help.
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