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 Post subject: Giving a Child a Credit Card
PostPosted: 23 Jun 2008, 10:48 
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You could argue all day about whether kids need credit cards. The concept of need is pretty subjective, especially when it comes to kids -- one day they'll claim to "need" a new iPod, and the next it's trendy kicks or the latest game system. But many parents and their progeny are already sold on the benefits of plastic (especially for emergencies), making them ripe pickings for bad-guy credit card companies.

Before you even venture into looking at specific credit card offers, you'll want to consider your own risk tolerance, your child's spending habits (and level of responsibility), and why you want your child to have a card.

If your child has low impulse control and the card is to be used only for emergencies, consider a secured credit card: one that is backed by money you have deposited in a savings account. That way, your child's spending is capped by something other than the often sky-high credit limits on regular credit cards. Also watch out for the fees and interest rates, though, since they can be surprisingly steep.

Should you decide to choose a mainstream credit card, you'll want to help your child evaluate the following:

1. Fees. Does the card come with an annual fee? What about other fees, including those for late payments, cash advances, balance transfers, international transactions, and charging over the credit limit?

Take some time to explain to your child exactly what actions (or inactions) trigger different types of fees. A first-time credit card holder isn't likely to know, for example, exactly how damaging a late payment can be both to one's credit rating and wallet.

2. Interest-free days (sometimes called the grace period). How long does the company allow between the purchase date and the time interest begins to accrue? Obviously, for the consumer, longer is better.

Make sure your child knows that there isn't any grace period at all if you carry a balance on the card. The interest accrues for the duration of time until the balance is paid off in full.

3. Introductory rates versus the real rate. Visit any college campus and you'll find lenders falling all over themselves to get their hands on the swarms of credit card virgins. All of the low introductory rates have a way of vanishing after a few months, however, leaving a real rate that is not nearly as attractive.

Critical info: Explain that credit card companies can change their rates at any time with written notice. Your child needs to check statements regularly for rate hikes or changes since written notice may come in the form of teensy-weensy print embedded deep in a monthly statement. Note, too, that credit card issuers may have it in writing that they can hike your rate if you are late paying any bills, not just theirs.

4. Rewards programs. If the card isn't exclusively for emergencies, your child may benefit from one that is linked to a rewards program. To see what's out there check out indexcreditcards.com.

Emphasize that a rewards program is a nice perk, but not an excuse for maxing out on spending.

No matter what the specifics on that first credit card, you want your child to treat it with a healthy respect. Teach your kid how to beat the credit card companies at their own game by paying off the balance in full (and on time) each month.

The best bet for most people would be to give your child a prepaid credit card and load it for them as needed that way you can gauge your child's spending habits and impulse control.


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 Post subject: Re: Giving a Child a Credit Card
PostPosted: 20 Jul 2008, 01:41 
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Anon wrote:
The best bet for most people would be to give your child a prepaid credit card and load it for them as needed that way you can gauge your child's spending habits and impulse control.

You mean debit cards? They're the only kind of a card I'd give to a child.


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 Post subject: Re: Giving a Child a Credit Card
PostPosted: 20 Jul 2008, 01:44 
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With a debit card, they can still go over and rack up huge overdraft fees.


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 Post subject: Re: Giving a Child a Credit Card
PostPosted: 24 Jul 2008, 12:09 
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Nammy wrote:
I need one because my dad makes me do all of the grocery shopping. :squint:


well...you are not a "kid"...

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 Post subject: Re: Giving a Child a Credit Card
PostPosted: 09 Aug 2008, 14:47 
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LET ME CLARIFY

NO ONE NEEDS A FUCKING CREDIT CARD PERIOD

PAY CASH


this is from a guy who is ...#xx,000.... in debt. and its a lot closer to 100k then it is to 0.

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 Post subject: Re: Giving a Child a Credit Card
PostPosted: 09 Aug 2008, 15:01 
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mzziqztixl wrote:
LET ME CLARIFY

NO ONE NEEDS A FUCKING CREDIT CARD PERIOD

PAY CASH


this is from a guy who is ...#xx,000.... in debt. and its a lot closer to 100k then it is to 0.


And I didn't know strippers took credit...

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 Post subject: Re: Giving a Child a Credit Card
PostPosted: 09 Aug 2008, 18:39 
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thats my ex. but thanks

let me add i've never been in a strip club period or a titty bar

i think they are for pussies

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 Post subject: Re: Giving a Child a Credit Card
PostPosted: 11 Aug 2008, 16:37 
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Nammy wrote:
Tell him that.


HAha, thats cute!

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 Post subject: Re: Giving a Child a Credit Card
PostPosted: 11 Aug 2008, 16:41 
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mzziqztixl wrote:
LET ME CLARIFY

NO ONE NEEDS A FUCKING CREDIT CARD PERIOD

PAY CASH


this is from a guy who is ...#xx,000.... in debt. and its a lot closer to 100k then it is to 0.


I Agree!!!! My husband and I just got out of debt. We had about $10k in credit cards and another $10k on a home equity line. ReFi'd the house and got rid of them. Now that everything has to come out of our checking acct we are more careful about how much we spend
Although we still spend way to much but whatever, there's no intrest now!

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 Post subject: Re: Giving a Child a Credit Card
PostPosted: 11 Aug 2008, 16:55 
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ive had a credit card since i turned 18, i use it to pay for everything, (I have cash to back it up) never a late payment, carried a balance maybe 2 times.

viewtopic.php?f=25&t=24

read that thread. Obviously if you are going to put yourself into debt with a credit card, you dont deserve a credit card; however realities of most people's lives require they have a CC at some point in their life. and teaching a younger kid to handle the responsibilities of credit early will pay dividends later in life.

Because if you dont learn how to manage your money early, you wont learn until its too late


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 Post subject: Re: Giving a Child a Credit Card
PostPosted: 11 Aug 2008, 17:07 
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I totally agree.

I had a cc since I was about 18 as well. It wasnt until I bought my house at age 20 then got married did I start really charging stuff. I just HAD to have the best pictures to hang on the walls and best dishes and most expensive wedding flowers, etc.

The cards were never really an issue though because we always had enough money to pay on them. Never were we ever broke. In fact, we could have made probably about 95% of the purchases with cash except that we were anxious to get stuff instead of waiting a paycheck or two to save and then get it. It just hit me one day how much we were really in debt.

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 Post subject: Re: Giving a Child a Credit Card
PostPosted: 11 Aug 2008, 17:21 
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Oh well I mean if you don't have the balance in your checking accoutn to buy stuff.... well ya don't buy it. getting 5% cash back though is effectively 5% off every purchase just for using a credit card (When you have the $$ to back it up)


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 Post subject: Re: Giving a Child a Credit Card
PostPosted: 18 Mar 2009, 22:33 
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Yeah, fuck credit cards. No thanks.


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