Parentpedia

What Experts Say

With today's teens so much on the go, the new teenage credit cards are very tempting. They are extremely convenient, allowing teenagers to go out without carrying cash, while at the same time enabling parents to see a record of where the money was spent. They also make it easier to return a purchase or dispute an overcharge.

Unfortunately, thanks to fees and high interest rates, they can also come with a high price tag, particularly if parents don't read the fine print. And teens who aren't ready for the responsibility can learn the hard way how hard it is to get out of debt.

"Until our kids have demonstrated that they understand money in a very concrete way, we shouldn't give them something as abstract as a credit card," says Susan Beacham, CEO and co-founder of Money Savvy Generation, a nonprofit that makes products to teach kids personal finance. "It's like throwing your kid the keys to the car before he has enough driving practice to stay alive."

Instead, Beacham says, parents should work up to credit cards slowly, starting first with a cash allowance, then a bank account, then a debit card before moving to credit. In this way, you provide step-by-step financial training, hopefully completed before your teen heads out on his own.

"University administrators report losing more kids to credit card debt than failing grades," says Beacham. "It's better if they learn under your roof than fail on their own."