Teaching your children early on how to build credit and how to protect it is essential to the success of their financial future. First, parents should get a credit card for each child (the earlier the better). That does not mean you give the child the credit card, but you should occasionally (once a month) make small purchase on the card, and pay it off in full each month. That is the first secret – pay off the credit card balance in full every month. Never miss a payment, and never be late. The longer the line of credit is open, the better. Never use more than 25% of the credit limit. And, you should proactively seek to increase the credit limit … often. Then, when a parent feels the child is financially responsible enough to have the card, the child then must make occasional purchases, pay it off in full each month, etc.
Remember, building credit is only half the battle. In this day and age, identity theft protection should be regarded just as highly as life or health insurance. Parents and children should always protect their Social Security Number, never lose their credit cards, protect financial information online, and never answer emails or phone calls asking to ‘update information,’ etc. Always regard your credit as an asset. It will insure you receive lower rates, better jobs, larger loans, better pay, etc. Protecting your credit and your children’s can have life long effects. Credit cards are essential in our day and age to build credit; and if used properly, they can become an asset in every regard.
Tags: children, consumer protection, credit cards, financial advice, identity theft
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