If there’s one thing teenagers are good at, it’s wanting. They want later curfews with fewer check-ins, they want to take the car out on weekends without telling you where they’re going, and most of all they want a credit card to call their very own. Now, there’s nothing wrong with teaching your teen how to build and use credit responsibly, but if you’re going to pick up a piece of plastic for your kid these days, you need to be extra-vigilant about how they use it. Why? Because credit card theft has changed since you were a kid.
These days, a thief doesn’t even need to pick your teen’s pocket to steal that first credit card. They can just skim it with a hidden device on a gas pump, or read the information wirelessly from a hacked cell phone. So if you want to make sure your child’s first foray into the world of credit is a safe and happy experience, try following these 5 steps to make sure they’re using their credit card responsibly.
1) Don’t just give them your premier credit card. If you’re going to give your teen a copy of one of your credit cards instead of signing them up for their own, make sure it isn’t your ultra-exclusive credit card with the $10,000 limit. That’s like handing your kid the keys to a new Corvette the day they get their license and telling them to step on it. Instead, start them out with one of your low-limit cards – like the one you use for online shopping. This way, if and when they lose the card, you can cancel it before any serious damage is done to your credit score.
2) Monitor their credit scores. Under federal law, everyone is entitled to a free annual credit check from each of the three major monitoring services – TransUnion, Equifax and Experian. You should use these free reports to check up on your teen’s credit score every four months. Not only will you be able to see if they’ve been using their card responsibly, but you can also check the charges for suspicious activity.
3) Teach them to use a shredder. One of the most common ways for thieves to get hold of personal information like credit card numbers is by sifting through trash cans and dumpsters for old statements and bills. That’s why it’s important to get your teen into the habit of shredding all of their bank statements and credit card bills before throwing them away. It’s a cheap and easy way to ensure that sensitive information doesn’t fall into the wrong hands.
4) Make sure they’re using their credit cards online, not their debit cards. It can be hard for teenagers to tell the difference between a credit card and a debit card, but they’re going to have to learn if they ever want to shop online. Why? Because credit cards offer a number of protections under the CARD Act that will limit your teen’s liability if their information is ever stolen from a merchant database. Debit cards, on the other hand, don’t offer these protections at all.
5) Keep their computers clean. Even if your teen uses his or her credit card responsibly, information can still be stolen by malware hidden on their computer. It only takes one wrong click on a phony email or website link to download this dastardly software, and once it’s on a computer it can transmit personal information to hackers for years. That’s why you should install malware removal software on any computer that your teen uses to transmit credit card information. By running regular checks and removing suspicious files when they’re discovered, you can make sure that your teen’s computer stays as safe as it was the day you bought it.
Nowadays, credit cards are as much a risk for teens as they are a resource. Thieves are waiting around every corner, so it’s important to keep an eye on the way your teen is using that first credit card. By teaching your teenager how to check credit reports, shred personal documents and use credit cards online, you can help your child develop healthy habits. You’ll be teaching your son or daughter how to spend safely well into adulthood. Then the only thing you have to worry about is that whitewater rafting trip the gang is planning for next summer.
Thank you to our guest author Bill Hazelton of CreditCardAssist.com!
Bill Hazelton is the founder and CEO of CreditCardAssist, a leading pro-consumer credit card resource. Since 2004, he’s been providing American consumers with all the tips, tricks and news they need to navigate the world of personal finance. His on-site reports have been cited by the San Francisco Chronicle, the New York Post, Yahoo! News and more.