When children start to drive or go off to college, a credit card often seems like a logical addition to their repertoire. Credit cards are useful things to have for emergencies, after all – in the event that the car breaks down by the side of the road and the side of the road happens to be in the middle of nowhere, a cell phone and a credit card can get your child out of the worst of situations quite easily.
However, when students open up their first cards, generally their minds are focused on one syllable, and one syllable only: spend. The problem with credit cards is that due to the fact that there is not visual passage of money from the customer to the institution, many students forget that plastic is actually money. It’s not uncommon for some college students to end up cutting back on classes in order to fit in a job to cover credit card payments. A large number of students get into serious trouble with credit cards, mostly due to a lack of forethought regarding the subject.
This can all be avoided by taking the time to teach your children about credit cards and the proper use of plastic earlier in life. Yes, it might seem like overkill to try and introduce a five year old to the idea of APR and interest, but there are ways that you can start instructing your children in the use of credit cards years before they come into play.
A great way to do this is to involve your children when using credit cards at a restaurant. Explain to your children what it means to use a credit card, and where the money comes from when the plastic gets swiped. Many children might have a hard time with the concept, so it’s likely something that you’ll have to explain many times before your kids get it in its entirety. But that’s okay – even if little Jimmy doesn’t understand the ins and outs of interest after the first day seeing an American Express card, it doesn’t mean that he won’t eventually understand through repetition.
Restaurants are especially great places to bring up credit card usage because of the tip calculation. Let your children in on the calculation of the tip – tell them the difference between giving a waiter ten percent or twenty, and then invite them to help calculate it with you. You’d be surprised how much of an incentive getting to write on the receipt can be – most kids go crazy for the chance to “be like Mom and Dad” and write in the tip amount on the slip of paper.
So, the next time you’re at the restaurant, bring up the credit card to your kids. This can save you a lot of problems once they go off to college and have plastic of their own!