Should You Give Your Teenager a Credit Card?

Some parents are nervous about handing their teenage offspring any sort of elevated responsibility -- the keys to their car, for instance, or full and unmonitored access to cable TV. Other moms and dads are more trusting or naive, depending on your point of view.

A big leap of faith in a parent-teenager relationship is the bestowing of a credit card. With credit comes responsibility and obligation. Those in the "Get a ride with your friends instead" crowd probably recoil at the idea, while the "Here's the remote and watch whatever you want" set are likely more comfortable with the young one carrying some plastic.

We Fools have a great many opinions that span the full range between those camps. Here are two of us taking opposite sides of the debate.

: For the great many of us who are not millionaires, sooner or later we'll have to use credit to buy something. We don't (typically) have thousands of dollars stashed under the floorboards to buy a house, a car, or that monster-screen TV. So we'll have to borrow money for those purchases.

Obtaining a credit card for a young person provides the perfect introduction to the practice. A card is a basic form of borrowing: Any swipe on it is a loan that must be paid back in a timely way or else the borrower is charged (usually exorbitant) interest. So, spending must be monitored, controlled, considered, and planned. What better way to instill fiscal discipline in someone on the brink of adulthood, with its many financial obligations?

Teenagers can and do learn from this. They might be stereotyped as reckless and irresponsible, but the statistics do not bear this out -- at least as far as credit cards are concerned. The 90-day delinquency rate for cardholders under 30 years of age is barely over 2%. That's only a notch higher than the theoretically much more responsible 30-39 and 40-49 age ranges.

Jason Hall : Teenagers may be the absolutely worst age group to give a credit card to. They're lazy, poor, and overloaded with hormones that make them walking impulse buyers. It's only the "lazy" and "poor" bit that keep them from actually being able to cause themselves financial harm.

OK, so maybe I'm being a little overemotional. To Eric's point, teens have just as much capacity to be responsible (or not) as any age group. But the difference is their lack of experience , which is what can make a credit card dangerous in the hands of a teen.

Furthermore, it's probably better to give them the experience of how credit cards can be helpful tools if used responsibly before they're out on their own, when the debt can pile up quickly and cause long-term harm to their credit report and score and sheer embarrassment can keep them from asking for help before it's too late.

However, credit is a lesson that's best learned after they have already grasped the concept of saving and spending within one's means, which are far more important financial lessons than the convenience of credit cards.

In summary, kids need to understand where money comes from, and that the answer isn't "mom and dad," and if you just toss a credit card to junior with no explanations or limits (or if you set limits but don't enforce them), you're setting them up for financial failure when they're on their own.

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