Today, Mellody Hobson talks about kids and credit cards.
I need you to hear me out on this: I think that parents should open credit cards for their kids when they are just sixteen years old.
Credit cards are a weapon of mass destruction if they aren’t used correctly. Sixteen coincides with other big responsibilities like driving. You wouldn’t just hand over a set of car keys to your child before teaching them how to drive. Driver’s ed is required by law. But what about financial education? We can’t send our kids off to college, put a powerful piece of plastic in their palms and expect them not to crash and burn!
I’m not talking about need; I’m talking about training. I think part of the reason we’ve gotten into so much trouble with credit cards is that no one taught us. Just like a 15-year-old has a learner’s permit before handling two tons of metal, sixteen is a great age to get a credit learner’s permit. That way, you have two years to teach your kids how to sensibly use a credit card before they leave the house. You can monitor their activity, sit down with them, review the bill, explain the trap of high interest rates and penalties for late payments—all before they’re 18, when they leave the house and start to think of themselves as independent adults. By then, parents have much less influence—not to mention control.
Now, I have some guidelines. First, we are talking about ONE credit card. I don’t think anyone should have more than one credit card, much less a teenager. A recent survey found that half of college students own four or more credit cards. That’s crazy! NO ONE needs that many credit cards. Next, the card needs to be paid off entirely. Every. Month. I cannot stress this enough. It’s not okay to just pay off the minimum balance.
One option is to make your child an authorized user on your card. This allows you to closely monitor what they’re spending and where, and it makes the parent ultimately responsible for all charges. The upside is that your child’s usage of the card is reported to the credit bureaus, which can start building a positive credit score.
Yet another option to open a “secured card” so your child learns to stay within a budget and be responsible, making timely monthly payments. With a secured card, the cardholder can only charge as much as the sum of money that’s deposited in advance. So, for example, if your child deposits $200, it remains security for the bank, and they can charge up to $200. Paying reliably means building a good credit history — a necessity for the future.
Is it hard for a teenager to get a credit card without a credit history?
Well, yes and no. In the past, every college welcome week was decorated with booths from banks offering cards to students with no income and all they required in exchange was a signature and an address. Plus, the student walked away with a free frisbee. Now, new federal rules keep banks off college campuses and prevent them from giving credit cards to students without jobs or assets.
But it’s a new world, and kids get their hands on them anyway. Get this: Now banks find college students through their Facebook profiles and entice students through games and prizes. Listen, this is NOT a “live and learn” life lesson for your kids. In a recent survey, found that only 63% of students said their parents helped them learn about managing their money, whereas 82% said their parents taught them to drive. It’s time to up parents’ influence on financial education before any damage is done.
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This Week’s Celebrity Instagrams (10/15-10/21)
31 photos Launch gallery
1. Just a NY girl with BIG dreams....
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2. HAPPY CHILDREN=QUALITY PARENTING. We don't always see eye to eye on everything and that's normal. We're human beings. But we come together and do it right for what's important, the kids. We are not enemies, we are parents. And we are parents 1st. S/O to @monyettashaw for making Mason's bday memorable. S/O to @itscrystalsmith at home taking care of our other lil' Prince. ❤️❤️❤️ THIS IS WHAT CO-PARENTING LOOKS LIKE. #Blessed #Happy #AboveTheDrama #BiggerThanUs
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3. So happy to finally be able to share with you all that I’m the new Global Brand Ambassador for @Revlon! Follow my day on RevlonSnaps. Yay! Choose Love, Everybody! #RevlonXCiara #chooselove #ad
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4. Glam on point!!!@makeupbymotoko & @shaylinjoneshair #easybreezy @lifetimetv #beachesmovie #january2017 😘
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5. ✨True love ✨📸: @jessiemarrerophotography
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7. Today was not easy..but by the grace of God we all got through it. Words cannot express our gratitude for all of your Prayers, Positive thoughts and Support for us throughout the years. Tommy will be missed but most certainly never forgotten...And PLEASE don't ask "Where's Martin?.." he was there too...just not in this picture. Lol! God bless you all.. #LoveConquersAll #MartinShow
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9. West coast get ready for #RockyHorror. I will be live tweeting again. #letsdothetimewarpagain
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10. #THEKEYS pre order yours now ... Available everywhere #NOV22 #WeTheBest 🔑🔑🔑🔑🔑🔑🔑🔑🔑🔑🔑🔑🔑🔑🔑🔑🔑🔑🔑🔑
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11. We about to ROCK at #KCABlackBall!! All for our life-changing effort to end 🌎 AIDS.
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12. Today's #SNAPJACK is brought to you by @yazzthegreatest 😂😂😂💋💋💋
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13. Damn girl you kinda old to be headed to the Go Go. You coming in at the age they leaving. LMAO
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14. Daddy daycare B-Boxin with @acewellstucker @shopraisingace
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15. #FBF Naviyd & URV "LIL MONSTERS"
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16. HAPPY BIRTHDAY TO ONE OF THE BIGGEST LEGENDS IN OUR HIPHOP HISTORY! @snoopdogg CONTINUED BLESSING AND LOVE FAMILY!!!!! REAL OG!
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17. Thank you for a beautiful night VSU! Let's do it again! #HOMECOMING
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18. Had a great time this morning with my familia Erica, Griff & Truth!!
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19. Check out my interview on @essence facebook live. #inmyownwords #nycpromo #day2
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20. #She💋 #tbt #TheCoveAtTheAtlantis #DawgPawsAndAll
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21. Bae #retailtherapy
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22. Why me and @coryhardrict got the same pose... and notee... new mouth #naked
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23. When my husband is my personal 'hype-man'! it kills me every time! 💜😂 #WHATNOW #lostfiles📷
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24. Diggy Simmons
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25. Hand full of @jacquieaiche 💙💎💍 @esnail_la 💅🏾
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26. SuperSoulers! You can watch my interview with Carl Lentz live from my Facebook page, tomorrow at 11a ET| 8a PT. #SuperSoulSunday
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27. 💋 .. When the friendship is easy like Sunday morning. ☀️
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28. Sunday mornings are the best........... hugs and cuddles with my angel
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29. #huggar16 #hellohuggars
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30. My gym is everywhere!.. #RnBMoney #TheGeneral 📸: @twelvepastseven
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31. Nothing I would rather be doing... Rocko setting up our movie, Romelō working on a puzzle & Laiyah singing and sharing all she's learning at school... I'm so grateful for the joy they've brought into my life ... Praying for peace , joy & love in the home of EVERY family ♥️ #HeadScarfPJSunday LOL 😂
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