Credit cards, kids can be a bad combo
You wouldn’t hand your teen the keys to the car without first requiring some lessons and lots of practice behind the wheel, right?
But when it comes to credit cards, many parents have no qualms about letting one of their kids borrow their plastic to buy stuff online. And often, parents get burned in the process when the monthly statement arrives showing unauthorized purchases and other surprises.
Data compiled by the Lending Tree’s CompareCards service revealed that more than half of parents with children under 18 have let their kids borrow the plastic, and nearly half of those respondents regretted doing so.
But here’s even more alarming data: About 30 percent of the 1,500 parents surveyed said their teen used their card without permission. About 66 percent of men said they had been taken advantage of compared with 43 percent of women.
Many parents “have been burned by the volatile mixture of kids and credit cards,” said Matt Schulz, CompareCards’ chief industry analyst.
Many parents likely don’t sit down with their child and explain the good and the bad about using credit and debit cards, and the consequences of abusing the privilege.
“There’s no one-sizefits-all answer when it comes to kids, and that’s certainly true when money is involved,” Schulz said. “Some 10-year-olds are mature enough to handle a credit or debit card to buy themselves a toy on Amazon, while some 17and 18-year olds are so untrustworthy that you wouldn’t dare let them within 100 feet of your plastic.”
What should parents do? Communicate, said Schulz.
Explain the fees and charges for failing to pay on time, along with interest-rate penalties for not paying off the balance each month.