It’s every parent’s dilemma: do I or don’t I request an additional credit card for my teen or college student? Many parents feel it’s an ideal start for their young adults in that it allows the teen access to credit, but the parents are kept in the loop and can help their teens bypass those classic credit traps – and at a disadvantage as they set out to define their own lives. Now, the question becomes which credit cards would better suit this dynamic? Here are a few suggestions that will save Mom and Dad money while allowing the lesson serve its purpose for their teens or young adults.
Intro 0% APR
A credit card that has an intro APR offer is an invaluable tool for parents who wish to stress the impact of interest rates on a credit card balance. Especially important is allowing a young person to see the total finance charges between the months that the intro APR expires. It can be an important lesson for those who are still unsure of the impact of interest, how it’s calculated and how it affects the balance.
The Discover More credit card offers a 0% intro APR for 15 months; allowing ample time for parents to get their point across to their children. There’s no annual fee, either and the APR is comparable with other offers for those with good credit histories. Also, card holders enjoy up to 20% in cash back bonuses when you shop through the Discover online retailer outlet. There are no rewards redemption fees and you can easily add another credit card to your account for your teen at no additional cost.
Cash Back Credit Cards
If the intro 0% APR offers are powerful tools, then those with cash back bonuses up front are just as important. The Chase Freedom Visa is a perfect example of how that cash back bonus, while impressive, isn’t free. Card holders who spend $500 in purchases during the first three months will earn $100 in cash back bonuses.
While this sounds like a great incentive, it shouldn’t be the primary reason one decides to add charges to their credit cards. Parents can show students how the cash back bonus is a “wash” if they don’t pay their balances in full each month and how it might ultimately cost them in the long run.
This credit card offers rotating 5% cash back categories each month and unlimited 1% cash back on all other purchases. There are no annual fees associated with this offer, either and it too has a 0% intro rate: 12 months for balance transfers and 6 months for all your purchases.
The Southwest Airlines Rapid Rewards Plus card offer is worth your consideration if you’re looking to show the benefits of a co-branded credit card. We like this offer for its many perks, but it too can be used as a teaching tool for young people. The co-branded offers are always good, but understanding their purpose beforehand is the key to better financial decisions.
Remember, too, that courtesy of the 2009 CARD Act, today’s college student doesn’t have the same immediate access to credit cards. Gone are the days when credit card companies could set up a table on a college campus and have hundreds – if not more – students lining up to apply for a credit card.
The guidelines are much stricter these days; thus highlighting the need for parents to really put that foundation in place that can help ensure stronger financial choices as their teens grow into adulthood. Of course the irony is that credit card companies targeted college campuses for years in hopes Mom an Dad had been a bit lax in their efforts of teaching their children the importance of strong financial decision making processes.
Just acknowledging and discussing the benefits and downsides of credit cards can go a long way in helping teens put strong buying habits into place for their futures. Unfortunately, some parents never consider the relevance of such a talk. It’s never too late, though. An honest and confident approach can more than serve your purpose – not to mention the gift you’re giving by raising fiscally responsible teens who are willing to be part of the solution versus the problem.
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