Kids and credit cards: How soon is too soon?

May 2, 2013 at 3:00 p.m. ET

It’s a simple fact: Parents do not like talking to their kids about money. In fact, over 60 percent of parents surveyed said they would rather talk to their kids about sex than about money. This could be why so many of those children turned into adults that don’t know how to handle a credit card, which is why this country is $793 billion in credit card debt.

Teen girl with credit card

and your kids

When you mention kids and credit cards, most parents usually cringe. Kids shouldn’t have credit cards, right? They aren’t responsible enough. They don’t even have an income. There is no reason that a child needs a credit card. Well, it turns out that there actually is a very good reason a child needs a credit card, and it has to do with how they will relate to credit later in life.

Contributed by Jeff Hindenach,

“Teaching children about money and credit is something that starts very young and builds as their cognitive abilities and capacity for abstract thinking increase,” Allison Kawa, a Los Angeles-based child and adolescent psychologist, said. “By laying the foundation for children to understand the function and value of money from early childhood, introducing credit in high school is less esoteric.”

So how do you go about explaining the complicated issue of money and credit to your child? The best way is to start small and work your way up as your child grows.


Around age 3 or 4, children begin their inquisitive phase and start asking questions like, “How do birds fly?” or “Why do I have a belly button?” This is the best time to answer their questions open and honestly, and to teach them a little about credit and money at an early age.

“For example, having your preschooler give the server at Baskin Robbins the money in exchange for an ice cream cone teaches them the function of money,” Kawa explained. “Doing this with actual cash makes it a more concrete experience for them.”

If your preschooler sees you using a credit card and asks what it is, explain to them the concept of paying later. A good response might be, “This is a credit card. I can use it now at the store and then I get a piece of paper later that tells me how much I have to pay.” Any answer that makes it clear that you will have to eventually use money to pay for what you just bought will work.

Grade school

This is a good age range to show your child how credit works. If your child wants to buy something with their allowance, use your credit card to pay for it instead. Explain to them how the card works and that when the bill comes, they will have to pay you the money for their purchase. If they have already spent the money on something else when the bill comes, tell them that they now owe you 50 cents more, which will teach them about interest and why it's important to pay credit cards on time.

Middle school

It might seem like a 13-year-old is too young to have a credit card, but by adding your child to your credit card, it will be easier to monitor their spending and teach them about proper credit card use. It will also give them a head start on building a solid credit history, which will make it easier for them to buy a car or rent an apartment in the future. If you wait until your child is 18, they may be eligible to get a credit card on their own — if they can prove a steady source of income — and then their credit spending will be out of your hands.

If you do decide to add your child to one of your credit cards, make sure it is one with a low limit, so they aren't tempted to run up a huge bill on your card. Remember, you are putting a lot of trust in your child. If they charge more to the card than you can pay off, it might end up hurting your credit as well as theirs. It might even be a good idea to apply for a new card and cap the credit limit at $500 or even lower. Constantly check your account online to monitor your kid's spending, and sit down with them every month to go over the bill. These days many cards even have “spending alerts” that you can set to email or text you when purchase thresholds happen or spending activity occurs, which makes it easier to be aware of what’s happening on your card in real time.

High school

This is a good time to have your child start building their credit and learning the value of saving. This might be the right occasion to open an online savings account for your teen to encourage them to start squirreling away some money for when they move out. Especially in high school, positive reinforcement is a great tool to use when it comes to proper money management.

“Parents can also incentivize saving by creating ‘matching plans,’” Kawa explained. “For example, if a teen is saving for a car, parents might consider matching whatever their teen saves from part-time jobs or birthday money.”


As soon as your child turns 18, have them apply for their first credit card. This will allow you to monitor their spending for at least a few months before they go off to college. If your child does not have a steady source of income, you may need to co-sign on the card, which will make it easier to monitor their spending habits.

For young adults in college, there are many student credit cards to choose from. Look for a card that offers a zero percent introductory APR on purchases, as well as one that offers cash back rewards. Check out these credit card reviews to get a better idea of which one would be right for your child.

About the author

Jeff Hindenach started his career as a journalist for the San Jose Mercury News and the San Francisco Examiner. He is currently an editor with, a leading consumer and small business information website. He specializes in credit monitoring, legal services and security software.

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