Don’t give children under the age of 10 a credit card. How’s that for parenting advice? It seems just plain stupid to have to say that, doesn’t it? We all seem to realize that a child under the age of 10 really has no business having a credit card, right? Today, we’re going to examine the reasons why it’s a bad idea to extend a child credit and relate that to general parenting practices.Why don’t we let children use credit cards? They would never pay their bills, that’s why. Kids would impulsively run out and buy everything they could think of and fill the house with toys and games and candy and books and videos and stuffed animals and they would run up hundreds of thousands of dollars of debt and they would have absolutely no concept of what they had just done. They would have no means by which to pay it back and they would have no real motivation to pay it back because they could care less about their “credit rating.” That’s a number of good reasons why we don’t let kids have credit cards. How does this relate to anything else? I want you to think about the basic concept of ‘extending credit’ to a child. That is, giving a child something now and expecting him to pay for it later. Generally, the concept doesn’t work, for all the reasons given above. Once the kid has whatever it is, they have no motivation to pay for the item and they don’t care about their credit rating. Therefore, it is really important for parents to get “payment” from a kid first before the kid gets the “product.” That is, a parent should say, “You need to clean your room first, then we can go get a video,” or “If you do your homework all this week, we can go to McDonald’s Play land on Saturday.” That’s getting payment before the kid gets what he wants. If you say, “I’ll get you this game now, but you have to feed the dog every night this week,” or “I’ll let you watch this movie now, but you have to promise me you’ll empty the dishwasher,” you are very likely to be disappointed because kids overall have a really difficult time paying off their debt. That’s why we don’t give them credit cards and that’s also why parents really shouldn’t ‘extend credit’ to a kid when it comes to doing something for you in exchange for them getting something they want from you.
Once a child really learns to pay for things before he gets them, you can begin to play with the notion of credit, but keep in mind the child will need a long time to learn how to manage credit responsibly. Please think about how many adults still cannot handle credit responsibly and don’t expect something from your 12-year-old that many 28-year-olds still can’t do. You can try giving them a few things in advance of their payment and just see how it goes, reverting back to the old “pay first” method when you meet with some difficulty. You’ll want to play with it back and forth during the years from about 12 to 18 so they can get some experience with using credit long before they get their first credit card, but don’t let them get too far into debt. Pull back the credit line each time they don’t ‘pay up’ and give them a chance to learn the concept over a number of years.