Teach your kids how credit cards work. Most children view credit cards as free money which isn’t true so the sooner you can get them out of that mentality, the better of they will be in the future – this credit card interest calculator can be used as a tool to show them that it’s not true.
You will need to explain to your children what the benefits of a credit card is while also making it clear that there are risks. They should know that they can build a good credit score with their cards so it’s important to keep on top of repayments and they don’t allow themselves to make purchases they know will be hard to pay back. If they know that they will have to get a no credit history credit card, to begin with, because the banks don’t know if they are reliable with payments until they build credit, they will be able to narrow down their search when looking into their option, should they choose to get a credit card. Once they have built credit, they will be able to get better rates on things like mortgage or from loan lenders. They can even use their score to get a second card with a higher limit.
Review with them how the money must be paid back and how interest works. Make sure you also explain how some adults get trapped with debt by only making minimum monthly payments. Show them how different cards offer different interest rates.