March Parenting Thought of the Month: Should kids have credit cards?

A new survey found that the number of children between the ages of 8 and 14 with a credit card has quadrupled over the past year. A recent survey found that the number of 13 and 14 year olds carrying credit cards has jumped twofold in the past year.

“While it might be shocking to hear that so many preteens and young teenagers have credit cards, since they can’t open them on their own, in most cases parents are opening cards with them,” Kimberly Palmer, a credit card expert for, told Newsday. “If parents use that opportunity to talk about how credit cards work, how to avoid debt and how to budget, then it’s a great learning opportunity and will help them graduate to using credit cards responsibly after they leave home.”

But handing a kid a credit card isn’t the best way to teach impressionable minds about money management. For many kids, holding coins and bills in their hands, then spending those same dollars and coins for something tangible is what helps them to figure out what money means.

We need that basic connection to money—the feel and heft of it in our hands, the “pain” of handing it over to someone else for something you want, and the saving up to buy something special. With credit cards, you bypass all of that in an instant.

Want to teach your kids how to avoid debt and how to budget? Then give them an allowance and don’t let them have carte blanche access to your credit cards. We give each of our four children a weekly allowance with only one string attached: they must give at least a five cents each week in the church offering. Here’s some common scenarios and how we’ve handled them.

Scenario one: Child wants something at the store but forgot their cash at home. We grill them on how much the item costs and will occasionally buy it for them, but demand immediate payment when arriving at home.

Scenario two: Teen wants something online. We either make them pay us in cash before hitting the “buy” button or they can purchase an Amazon or iTunes gift card at a store with cash to use for online purchases. Either way, they must ask permission before hitting send—we’ve stressed that we have the right to confiscate any item ordered to return if permission wasn’t granted ahead of ordering it.

Scenario three: Child wants something but doesn’t have enough saved to buy it. We make them wait until they have cash in hand. For one of our daughters, that meant more than a year of saving.

What do these three scenarios teach your child about money? That it comes with a cost. That saving takes discipline and commitment—and you really have to want something to save for months before buying it. And that ordering online with a credit card is exactly the same thing as paying in cash.

However you teach your kids about money, using cold, hard cash is always better than plastic.


Using Allowance to Teach Responsibility

Q: My husband and I recently started giving our children an allowance (not connected to their chores) to help them learn to manage money. Our 7-year-old receives 70 cents per week and tithes 7 cents of that. Our 5-year-old receives 50 cents per week and tithes 5 cents of that. 

I read in a recent parenting column that allowance should be tied to responsibility in some way so that kids don’t think money comes from Mom’s purse or Dad’s wallet. I can see how this would make sense for an older child who wants to buy things for themselves. Mom and Dad may expect the child to pay for some of their clothes from their allowance money. But what would this look like for younger kids?

Image courtesy of posterize/
Image courtesy of posterize/

A: Great question! It’s important that children start learning about money management as kids and you’re off to a good start by not tying it to regular chores (which are done because the children are part of the family and as such, should help in the upkeep of the home, etc.). At this age (five and seven), we should be teaching kids three things about money:

  1. That we should give some of it away
  2. That we should save some of it
  3. That we should spend some of it.

You’re helping them with the first part with tithing (which I’m assuming each child brings for the offering at church each Sunday). You might also talk to them about other opportunities to give throughout the year, such as a special offering at church to help a specific cause (our church sent money to sister congregations in flood-ravaged South Carolina earlier this year and my kids wanted to bring extra money for that).

For saving, there are things a 7-year-old and 5-year-old want, such as books from the school book fair or a toy at the store. When one of your children expresses a desire for such an item, help him find out the cost, then talk about how long he must save his allowance before he can purchase the item. This gives him a goal and helps him develop that self-control muscle of delayed gratification. One of my daughters saved her allowance (plus any birthday cash) for more than a year for something she really wanted. During that time, she had plenty of opportunities to spend her cash on something else, but she held firm to her goal.

For spending, it’s also important to help your child buy things and not just put all his money in a piggy bank. This teaches a child what things cost—and that mysterious thing called “sales tax” which jacks up the price of things. During the warmer months, yard sales are wonderful places to teach children the value of money, plus a bit on bargaining too, and they also learn about depreciation when they see something that costs $5 in a store but only 50 cents or a quarter at a garage sale.

So when you’re shopping with the kids, and they oh and ah over something, have them check the price, then consider what’s in their piggy bank. The only note of caution here is that you should never advance any allowance to a child—you are not a credit card!