April 9 marks the start of Navy Federal’s Youth Week 2018, a week dedicated to help your children become financially successful. What better time to help your kids learn smart money habits today so their finances can grow with them?


Being a parent means teaching your kids valuable skills like how to tie their shoes, to drive a card and eventually filing their own taxes. Some of these lessons are easier to teach (and learn). Others – like managing a credit card – have a little more to them.

Financial education is an important part of being successful in life. Budgeting properly and managing credit responsibly can be some of the biggest hurdles. Your child may not need a credit card right now – but with these credit card tips, you can equip them to use one when the time comes.

A credit card isn’t free money.

To a teenager, a credit card might feel like a never-ending source of money, but we all know that’s not the case. When you make purchases with a credit card, you’re borrowing money that you’re agreeing to pay back. If they can’t afford that new pair of shoes today, it’s unlikely they’ll be able to afford them later. A good rule of thumb to follow – don’t charge anything you can’t pay back now.

You can build your credit score…

When you use a credit card responsibly! Credit scores may impact many future financial decisions. It’s important to keep a clean track record and use credit responsibly. Emphasize that a good credit score may show lenders that you have a good payment history and will pay them back if they lend you money. Your teen may not be thinking about those decisions now, but they’ll want to get into those good financial habits early.

The longer it takes you to pay off your bill, the more you’re spending.

Making just the minimum monthly payments could mean you’re paying more in interest. Try giving your child a scenario they might relate to.  If they bought a shirt, would they rather pay $25 for it now, or $29 for it later? Minimum payments can make even reasonable purchases more expensive over time. There’s more value in paying off your card in full, or at least paying more than the minimum monthly payment.

Read the fine print.

A credit card is essentially a contract between you and your lender. But that contract has a lot of pages, with a lot of words your child may not be familiar with. Walk them through the terminology they may find in a credit card application or agreement. That teeny, tiny print holds the ins and outs of the card. Knowing those can help them avoid incurring any fees that may be associated with the card.

Set guidelines.

Discuss the types of purchases and payments your teen should use their credit card for. Set a cap on spending to make sure they’re keeping purchases limited to the decided use. Doing so can help avoid any shopping sprees.

Pay on time – all the time.

Paying your credit card bill on time every month is a must. But payment due dates can sneak up on you. Have your teen set up text alerts from their financial institution to be notified of upcoming due dates.

“If possible, set up automatic payments along with text alerts on your mobile device to ensure payments are made on time. Maintaining a healthy track record will only boost your score.” – Aaron Aggerwal, assistant vice president of credit cards at Navy Federal

If your teen is old enough and looking to get a credit card, but you’re worried they may overspend, you can always get a card with a low credit limit. They can also think about applying for a secured card. Secured cards allow a borrower to put up collateral in the form of a savings account and borrow against the deposit.

“Younger borrowers may want to consider starting with a secured card, as this will help build credit while limiting how much they can charge,” adds Aggerwal. “Secured cards, like Navy Federal’s nRewards Secured card, even allow you to earn rewards for the purchases you make. Reward points can be redeemed for gift cards, merchandise and everyone’s favorite – cash.”

You can also add your teen as an authorized user on your credit card. Authorized users will receive new cards with their own unique card numbers and have the ability to make purchases on the account. “The primary cardholder can earn rewards for their teens purchases, set spending limits on all cards, and track spending via mobile and online banking,” Aggerwal explains. Account performance will be reported in all the account holders’ and authorized users’ names to the credit bureaus, so if your teen uses the card responsibly, it may help them build credit.

You don’t need to be a credit card expert yourself to teach your teen how to use a credit card wisely. But you should have a solid understanding before you sit down with your child. Use this opportunity to brush up on your own credit card spending skills! Continuous learning will help you continue to have these types of conversations with your kids.

Remember all the time it took you to teach them to tie their shoes? Just think how amazing your teen will be if you take as much time to teach them how to handle a credit card responsibly!