What is credit card education for teens?
Getting your credit card is one of the exciting things that happen to enter adulthood. This happens when you are 18 years old in some states and 21 in others. Owning a credit card increases your purchasing power and gives you an opportunity to build your credit score. However, irresponsible use of your credit card can get you in trouble. You will accumulate unmanaged credit card debt and damage your credit history.
What does credit card education mean to young people?
Credit card education helps first-time card users develop strong financial habits. It mainly covers three main lessons:
#1 How Credit Cards Work
#2 How to use credit cards to build good credit
#3 Mistakes to Avoid When Using a Credit Card
The importance of credit card education for young people
Credit cards make it easy to overspend without accountability. It can be easy for first time users not to understand the consequences. Most young people do not understand the implications of credit card debt and how difficult it is to pay it off. Many people ignore the problem, hoping it will resolve itself, but it doesn’t. In fact, interest continues to rise, driving them into more and more debt.
In addition to credit card debt, late payments or non-payment of bills remain on your consumer credit report for up to 7 years. Each late payment also removes a few points from the credit score. This makes it more difficult to get a low-cost credit line later.
Educating young people about the basic uses of credit cards can help avoid these pitfalls. Before your teen gets his or her credit card, be sure to discuss the five points above.