Teens and Credit Cards

We all know that our teens need to establish credit. It’s important for many reasons as they get older and become adults. However, there is always the risk that credit will be abused. My oldest daughter, now 20, is away at college. She’s never had a credit card. However, she did rent an apartment for one year while going to a local university. I had to cosign for the apartment. Our goal was for that to establish some credit for her alleviating the need for us to continue to cosign.

This year, she transferred to another university, and, once again, I was required to cosign. While I’m happy to assist my daughter, I also feel it’s important for her to take on the responsibility of bills without the backup of mom being on the hook if she can’t pay.

Now, my son, who is 17, has decided he wants to make a large purchase, and, yep, he wants us to cosign. I’m conflicted. This is for several reasons. First, he wanted to buy a car. A car! He has one. The reasoning was that at low interest with $6000 for his trade-in (they were running a special) and a loan at 84 months, he could afford this car. 84 months! Clearly, the logic, while accurate in his ability to pay, was flawed. 84 months for a car he doesn’t need with mom on the hook just isn’t going to happen.

Now, he wants a new laptop. This actually makes sense. His screen got broken (apparently the dog sat on it), and he is starting college classes in February. Laptops are much more reasonably priced than they were just a few years ago. This idea I can get behind. However, he wants a $1200 dollar laptop. Cough, cough. We went to Best Buy and were able to find one comparable to what he wants for $700. Still too much in my opinion. When he turns 18, he is able to get his own card. Whether or not they will give him that much credit is another story. Again, he wants mom to just get the card or cosign. While I see the value in what he wants, I can’t just meet this need. I won’t just get the card, but I may end up cosigning. Should I refuse and force him to get a laptop in his budget, or should I cosign allowing him a machine that will last longer and perhaps be more beneficial as he enters his college years? Dilemma.

What happens when my name is no longer tied to their credit? Yes, we’ve taught the value of savings and not buying anything on interest. We’ve demonstrated that credit cards can be used to one’s advantage as long as they are paid off every month. However, we’ve all tasted the allure of instant gratification. My hope is they will use their “power” wisely and not have to learn the fiscal hard way.

How have you introduced your teens to the world of credit?