Before your teen even goes to college and recklessly spends with his credit card, prepare him while he’s still under your roof. Teach your kids about financial responsibility by obtaining for them credit cards for teens. Yes, you heard me right. Credit cards for teens.

A lot of parents mistakenly assume that just because their teens are able to manage savings accounts, they are ready for credit cards for teens. This is not always the case.

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Before actually obtaining such cards, school your kids about financial responsibility with prepaid debit cards. Load the cards with their allowance and allow them to spend using the cards. By using prepaid debit cards, you allow your kids to practice financial responsibility without the risk of incurring debt since they only get to spend the amount loaded onto the cards.

When your teens manage to prove that they can be wise spenders, you can then think about credit cards for teens.

Good starter cards would be co-signer credit cards. Co-signer credit cards are made available to teens at least 16 years of age, with an adult as a co-signer. The advantage of cards such as these is that they will only allow teens to incur debts of $200-500. There is no annual fee for these cards.

Remember, when your teen has a credit card, you should discuss with them the monthly purchase they made. By doing so, you become aware of your child’s spending habits and you teen is made more aware of whether or not they have been spending wisely.

When the bill for the card arrives each month, it is an opportune time for parents to discuss money management with their teens. Parents should make their teens aware that credit reports go on their permanent record and may affect their future relationships with banks and potential employers.

Credit cards for teens can incur interest rates of 9.24 to 18.24%. Parents have to make their teens aware of interest rates as well as late fees. By properly educating their kids of the value of money, paying on time, having a good credit history and not spending more than they have or earn, teens are able to become financially literate.

By obtaining credit cards for teens, teens become more financially savvy when they obtain ‘grown-up’ credit cards in the future.