How Old Should Kids Be to Get a Credit Card?

I couldn't believe my eyes...my 9 year old daughter got a credit card application in the mail!

How is that possible? I know that teens as young as 17 years old regularly get credit card applications stuffing their mailboxes...but a 9 year old?!

Just for the fun of it, we tried an experiment. I had my daughter fill out the application listing her $24 monthly allowance as income and sent it in. Luckily whe was denied - but the letter encouraged her to "reapply in 1 year"!

Something I didn't think about at the time - will this rejection be on her credit report...does she have a credit rating? I'll let you know when I find out.

So how old should your kids be to get a credit card? It really depends. Here are 3 "rules of engagement" I judge my own 2 teenagers:

1) Are they responsible with their money on saving, spending, and investing for the long haul?

2) Do they have a reliable job or source of income?

3) Do they understand the importance of only buying things on credit that they are able to pay for at the end of the month?

If you answer yes to all three of these questions...then your teen is ready to "test" out having a credit card. Expect mistakes though - and having to cut up their card into a million pieces!

You can give them another chance later.

What are your thoughts on credit cards for kids?

Sonja

Teaching Your Kids to Pay For Their Own Wheels

My Daughter is Getting Her Drivers License...Sounds like $$ to Me!

The day is almost here...March 6th, my oldest daughter Rachel will be taking her drivers license test. Where did the time go? I still remember putting full Karate pads on her to teach her how to ride a bike! For the past week, every day when she comes home from school she reminds me, "ten more days until my license...five more days...aren't you excited Mom?!" I answer her truthfully - yes and no.

I'm excited for her to help me be the taxi driver for her two younger brothers and sister...to run to the grocery store...to the post office...to the bank...but I'm not excited for the money it's going to cost for insurance, gas, and car repairs. I'm preparing myself for those "accidental oops" of hitting something that wasn't there a minute ago! But I'm not one to chirp too loudly...because I have been known to "bump" into bikes, lawn tractors, fence posts, 4-wheelers, and so on. In my own defense, you need to know that I drive a full size van that has a HUGE blindspot...especially when backing up into the garage!

My husband cringes when I tell him that I turn the radio off so I can hear if I hit anything...or ask him why I need to use the side mirrors? I can't imagine why.

But having a teenager driving now is going to cost us - big time. One of the first things I did as permit day gets closer is call my insurance agent, I wanted advice on how to keep insurance costs down. The first piece of advice he gave me is to NOT let my daughter drive a vehicle with any kind of letter or number in it...such as Mazda MX6 or LX 580. Those types of cars are double the cost to insure. Great tip.

He also recommended listing her as the driver of our oldest, least expensive vehicle we own to keep the cost down. Looks like she'll be listed as driving the 1996 ford van! And lastly, good grades count. Anything over a 3.0 grade point average will keep costs to a minimum.

So now I know exactly how much my daughter's car insurance is going to be and she can plan accordingly. Did you catch the "she" part?

So Who Should Pay For the Insurance...And a Car?

There is no reason whatsoever that your son or daughter should be allowed to drive if she can't pay for her own insurance and gas. Having a driver's license is a privilege...not a God given right. It's also a great motivator for getting a job!

And then there's the issue of a car to drive. I have no problem letting my daughter drive our car as long as she keeps her grades respectable, is responsible, and can afford to pay the insurance and gas. But of course she doesn't want to drive the "family" van...I can't say I blame her...so she and her brother, who is only a year behind her, have been saving to buy a used car. Great idea!

We've talked a lot about the prices of cars and my kids know it's best to buy a used car for three reasons:

1) It's all they can afford

2) Insurance costs will be a lot less on a used car

3) New cars drop almost 20% in value as soon as you drive it off the lot!

My husband and I haven't bought a new car in over 15 years now. The last car my husband bought a year ago, he had two requirements. It had to be a four door sedan with bench seats (to fit all 6 in our family if we had to!) and the age of the car had to be in the same century! We found the perfect Lincoln Towncar...and what really sold me was the heated leather seats...I thought it was the best thing since microwave ovens!

But My Kid Gets Straight A's...She Deserves a New Car

As a parent, my job is to teach my kids to be independent...and ultimately work myself out of a job. If you teach your kids to be dependent on you for everything...including buying them a car, and paying for their car insurance and gas...then you're not teaching them to live on their own. How long will you pay for their insurance...until they're 18...22...26...30? There will always be a reason why you should...but don't! Your kids will be much better off without your money. They'll have higher self esteem and a better work ethic.

Remember, you're not going to be around forever...and you're not going to be able to afford supporting them forever. Your kids don't "deserve" a car or your money simply for getting good grades or being good kids. Does your employer buy you a new car and pay for your insurance because you do a good job? I expect my kids to get good grades because they are capable...and I expect them to behave responsibly because they are good kids!

So encourage your teens to save for a car, get a job to pay for gas and insurance, and keep those grades up to save A LOT of money! And keep reminding them to save half of their earnings to become a millionaire by the "old" age of 40...and share generously with others. What goes around comes around. It's the way of the world.

Until next time...Happy Teaching...and please keep me in your thoughts and prayers as I'm driving around in a full sized van with my teenage daughter!

Sonja