Credit Smart Teens

The Money Minute is brought to you by Mary Hurlburt, the Director of Community Outreach.

January 21, 2008

Credit Smart Teens

Teach your teen to be credit smart and money conscious, and you will provide the foundation for a life-time of good financial decisions. I just made my second credit presentation this week to high school seniors, and I was so impressed by those whose parents had already talked to them about credit.

So here’s my list of how to mold a credit smart teen:
 

• Explain to your teen why maintaining good credit is important. Many may think this is something they’ll worry about when they graduate, but by then it may be too late. Employers, landlords and insurance companies are all pulling credit reports today. Emphasize to your teen they may not get the job they really want, may not be able to live in the apartment of their choice, or may pay more for their insurance just because they didn’t take the time to pay their bills on time.
• Let your student get a credit card but limit the amount they can charge. You should also review the monthly statements together.  Explain the meaning of each line on the statement.
• Make learning fun. Show how fast charges appear after swiping the card and how fast returns are credited to the account. Point out the accrued interest if the bill is not paid in full each month.
• Calculate payments. Find a payoff calculator on the Web and show your teen how long it will take to pay off a credit card if they carry a balance from month to month – especially if they make only the minimum payment. 
• Teach your teen about credit fraud. Identity theft continues to be the number one rising white-collar crime in the country. College students are especially vulnerable.
• The best way to help ensure good credit is to pay the bills on time. Your teen is entitled to a free credit report from www.annualcreditreport.com or 1 (877) 322-8228 (toll-free). After a few months of using credit, suggest your teen check their credit report.
   

Once you’ve gotten your teen’s attention, suggest they go to www.myfico.com for more information about credit and credit scores. There are two publications they can download as well as a blog that is often quite amusing.

The Money Minute is brought to you by Mary Hurlburt, the Director of Community Outreach at the Consumer Credit Counseling Service. Do you have a question for Mary? Email her at mhurlburt@cccservices.com.