Credit cards for teenagers is a controversial topic with many parents supporting them and others strongly opposing them. There are many reasons due to which credit cards should not be given to teenagers. The most important one being that no one should take a debt that they cannot pay back on their own.
Low income
Credit cards are often handed over to teenagers who have no ability to pay back the debt. Credit card companies lend money to college students who do not have enough income to match their credit limit. Part of the income of the teenager would be needed for paying various bills and living expenses. Some of the income should be kept for emergencies. The remaining income is very rarely more than the borrowing limit on a credit card.
If teenagers take more credit on their card than they can pay back from their monthly income, then they might end up making minimum payments for many years. Sometimes they might not even be able to make minimum payments and will end up with bad credit scores that will haunt them for years.
Extravagant spending habits
Ability to buy things on credit is a very tempting. If you have to pay for things in cash, then you find it difficult to buy expensive things. However, swiping the credit card for the same things is much easier. Teenagers who love shopping, video games, electronics or clothes will end up taking a lot of credit unless they have a very strong will power.
Many studies have shown that people who have credit cards end up spending more than those who use cash. This is because the impact of spending is felt more when making payments by cash. When a credit card is used, the full effect of spending is felt much later. And when so many adults end up having huge credit card bills, teenagers can hardly be blamed for taking too much credit.
Credit history can wait
Some people argue that credit cards for teenagers help them build a credit history. But teenage is not the right time to start building a credit history. Only when you have a job and a stable income, should you start thinking about building your credit history. In all likelihood, a teenager will end up building a negative credit history, which will do more harm than good.