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A child can use a zero interest credit card issued to a parent for their credit needs. The card itself is based on the parent’s credit rating and their relationship with the issuer. The card is issued by a credit card company. The company will add the child to a parent’s account and the responsibility for the debt lies with the parent.
Talking with a Child about Credit
Parent’s considering giving a child access to a zero interest credit card should first establish that certain level of maturity is evident in their children. Then, the parent should discuss the importance of establishing good credit and making responsible spending decisions. It can be all too easy for a child to think of the credit card in terms of “free money,” without fully appreciating the consequences of bad decisions. This is especially true with cards children do not have to pay themselves.
Provide Separate Statements and Set Limits
Find a company that provides separate statements for different card holders in one account. Also, look for restrictive terms or spending limits on the card. Many card companies will send email or text alerts to the parent’s phone when a purchase is about to exceed a preset limit.
Let the Child Take Responsibility
Ultimately, as a child gets older, a parent is going to want to release the child from such onerous monitoring and trust that the lessons taught early on concerning the responsible use of credit have sunk in. Having the child, for example, see their statements and track their spending gives them a visual and clear understanding of the decisions they make and how their money is spent. Many companies also provide pie charts and graphs to help illustrate where funds are appropriated for a clear understanding of spending habits.
Credit cards can provide a parent with many “teachable moments.” For example, a zero percent credit card offer may have an introductory period of 6 months. After the introductory period, a rate can climb up to 11 or 15 percent. Present the child with a spreadsheet about how much the rate affects the cost of the purchase.
