Helping Your Teenagers Build Credit
November 20, 2023 | By austinwealth
To help them establish a good credit history, make sure they buy something with the card once a month. It also is essential to pay off the balance completely (and on time). Help your kids start this habit now so they will carry it with them throughout life!
Help them open an entry-level card aimed for “students” with new credit.
- Nerdwallet is a good resource for evaluating credit cards. See “4 Excellent Student Credit Cards of 2023” for more details.
- Consider the perks that various cards offer. As just one example, the Capital One Student Cash Rewards Card offers a $0 annual fee, a low credit requirement, $50 of introductory bonus funds, a complimentary Uber One membership and high bonus categories applicable to teenagers.
Consider taking your teen to sign up at a local credit union or banking institution for a very small student loan — even if you don’t need it!
- Student loan interest often is deferred while the student is enrolled at least “half-time.”
- Take these dollars and invest them in short-term CDs, an online high-yield savings account, or short-term, high-quality bonds.
- When your teenager graduates, he or she will have accrued some “free” monies from the interest and will have boosted his or her credit score by diversifying to a different credit source than just the credit card. Also, they can pay back the loan immediately.
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