A lot of you already do, it seems. “A 2005 study by the Jump$tart Coalition for Financial Literacy reveals that 31.8 percent of high school seniors use a credit card. About half of these students have a card in their own names and the rest use cards issued in a parent’s name.” Is this wise?

Parents have many options, a checking account with a debit card is relatively worry free, but debit cards can offer less fraud protection and then, of course, there are overdraft fees to worry about. Next, there’s the “pre-paid” credit card. It allows greater parental control, but you’ll get socked with fees for reloading the card, “inactivity fees”, enrollment fees. Ugh. So what does Bankrate recommend?

As a first foray into credit, Minker recommends a low-limit joint credit card in the teen’s name, backed by a co-signing parent. A person younger than 18 cannot apply for a credit card without a parent’s approval, so this is a good way for a parent to monitor a teen’s card use while building a credit history for the teen.

Remember to sit down and talk with your kid about paying off their card in full each month. Lots more in Bankrate’s article. —MEGHANN MARCO

Educating teens about credit [Bankrate]

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