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Tips for Talking to Your Kids About Credit Cards

Young people, whether traveling on the path to college or into the workforce, will be faced with an increasing number of financial decisions. Their knowledge and attitudes about spending, savings, credit and debt will have a significant impact on their futures. Parents, more than anyone else, can help put them on the path to financial success.

Benefits of using credit cards

When used properly, credit cards can be a safe, convenient way to pay for goods and services. Credit cards have several advantages:

  • They are safer than carrying cash.
  • They are accepted at millions of locations around the world, including online sites.
  • You can purchase goods and services now, even if you don't have the money on hand.
  • The credit card issuer will act on your behalf during disputes with merchants.
  • If you promptly report a lost or stolen card, you won't be responsible for fraudulent purchases or withdrawals over $50; MasterCard® or VISA® cards have "zero liability" protection, which means even that $50 is waived in most cases.
  • Some cards offer rewards programs for usage.

Cautions about using credit cards

Credit cards are serious financial products and need to be used with care. You should know:

  • If you carry a balance you will pay interest, increasing the real cost of the items you purchase.
  • You need to make sure you can afford to pay back what you charge.
  • They can make impulse purchases easier, and that can add up and blow your budget.
  • They require discipline about paying on time and staying within credit limits; mistakes can result in fees, interest rate increases (sometimes significant) and damage to your credit history.


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