5 Things to Teach Your High Schooler About Credit Cards Before They Go to College

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Is your teen starting college soon? Don’t forget to teach them financial skills first. Find out why getting a credit card now could be a good teaching tool. 

Unfortunately, many young people rack up debt quickly because they don’t know how to use credit cards responsibly. If your teen is headed off to college soon, now is the perfect time to educate them on careful credit card usage. This can help them develop good financial habits before adulthood.

While some parents may think having their college-aged kids get a credit card is risky, it can be a great learning experience that sets them up for success. Here are a few things to teach your high schooler about credit cards before they go off to college.

1. Don’t overspend

Teaching your teen the importance of using their credit cards only to buy what they can afford is a must. Many people use credit cards to purchase things they want regardless of how much money they have, which can quickly lead to an expensive credit card debt problem. Learning budgeting skills now will set your teen up for life.

2. Pay more than the minimum amount due

Another way to set your teen up for success is to teach them to pay their entire card balance. Credit card issuers list a minimum amount due, and it can be tempting to pay the lower amount rather than the entire balance. But to avoid accruing credit card interest, paying the card off in full every month is a must. Your child will appreciate that you taught them how credit card interest works and how to avoid interest charges, which can drain their checking account balance.

3. Don’t miss any payments

You can also teach your teen the importance of paying their bills on time. One major factor that makes up a credit score is payment history. If your teen forgets to pay their credit card bill or makes a late payment, their credit card issuer will charge a late fee.

If a payment is made more than 30 days late, your teen may get a negative mark on their credit report, which could harm their credit score. If you think your college-bound kiddo will be too forgetful to stay on top of their bills, consider having them set up automatic payments.

4. Pay attention to credit usage

It can be helpful for your teen to monitor their credit card usage. Their first credit card will likely have a lower credit limit, making it even more essential that they know not to use up too much of their available credit. Credit utilization ratio, or how much available credit is used, makes up 30% of your FICO® Score. It’s recommended that consumers keep their credit utilization ratio below 30%. You can teach your teen how to calculate this ratio so they can make more informed spending decisions.

5. Be aware of credit card fees

Your teen should also take time to learn about credit card fees. Some credit cards have an annual fee. However, there are credit cards with no annual fee. But other fees may be charged, depending on credit usage. Your teen can avoid late fees, cash advance fees, foreign transaction fees, and credit card interest if they take the proper steps. Teaching your child to be aware of these potential fees and how to avoid them can help them save money.

Don’t ignore credit cards, but do offer education

Credit cards are a solid personal finance tool. While learning to use them responsibly takes practice, credit cards can offer many benefits. By getting a credit card before college, your child can learn money management skills and can take steps to establish credit early in life. To learn more, check our list of the best credit cards for young adults.

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