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5 Golden Rules of Credit Cards your Kids Must Know

Posted July 6, 2012 by Jonny Pean to Credit / Credit Cards 1 0
This post was written by a EasyFinance.com Community member. The views expressed below may not reflect the views of EasyFinance.com.

Hey readers, this is Jonny Pean at your service. I am a blogger and a financial consultant by profession and today I am extremely delighted to have received the opportunity to share my insights on some financial aspects with you thorough easyfinance.com blog.

The financial problem as we all know creeps up due to some particular reasons, it may be your improper utilization of your finances, overspending on your credit cards or excessive shopping. No matter what the reason is, the root cause is that this financial mishandling can lead you to a debt which is not a favourable situation for sure. The problem if handled from the very start can be coped up with in a better way. You should be careful with your spending spree and also teach your kids the same guidelines. Today I would like to discuss some golden rules of credit cards that your kids must know. The insight is meant to help them handle credit cards better and keep a safe distance from debts. Here are a few things that you as a parent need to consider teaching them:

1. Detailed explanation about credit card functioning: Many teens use credit cards without having proper knowledge about it. Sometimes they spend on credit cards without even knowing about the flipsides. Most of them do not even seem to have no idea what happens when they cross their spending limits on such cards. In order to ensure that your kids do not face the same problems make sure that you provide complete knowledge about credit card functioning to your kids. You can even show them one of your credit cards as an example so they get an idea of the matter.

2. Warnings on overspending: Exempting your kids from having a credit card will not help as they would need it now or later. If they keen on getting a card they may even get it without your consent. That may create a gap in your relationship. Do not pose as an enemy but a friend. Let them have the card but let them know the evil sides. Point out to them the dangers they can get into if they misuse their cards. Warn them about overspending and the related problems.

3.  Usage according to payback capability: Your kids should know where to put a stop with the spending. They should behave sensibly and be responsible for the expenses on their cards. Let them know that it is necessary to use the cards to the extent that they can afford to pay back. Spending recklessly will lead them to cross the limits to which they can spend. The high interest rates when added to the overdue balance can lead them to debts. So, advise them to use their card judiciously.

4. Facts on high interest rates: All the credit cards come along with a high interest rate. This is an important fact that your kids must know. Defaults on such credit cards can thus attach huge debts in no time. It is also important to explain to them that they are only eligible to apply for a low interest credit card in future if they can show a good credit history without defaults. Thus maintaining a good credit from then on should be primary concern.

5. Avoiding default payments: In order to have a good credit score you need to avoid any defaults on payments. Teach your kids the importance of paying the dues on time. Make sure that you follow it yourself so your kids can learn from you. Making timely payments can keep your credit card history positive and will let you be eligible for further loans. Set it as an example for your kids and help them in grasping the process correctly in every way possible.

About Jonny Pean: Author’s Bio: Jonny Pean is a blogger exquisitely involved in helping people get rid of their debt problems and financial crunches. His articles are known for useful insights and deep thoughts on amending the problems that make life difficult. He specializes in writing informative articles related to credit cards, budgeting, loans and home equity. You can visit his financial blogs The Finance Wand & Know Your Debt.

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