As teens approach adulthood, understanding credit cards becomes increasingly important. While most teens can’t get their own credit card until they’re 18, learning about responsible credit use early can set the foundation for a healthy financial future.

Key Points for Teens to Understand:

1. What is a Credit Card?
   • A tool that allows you to borrow money for purchases
   • You must repay the borrowed amount, often with interest
2. How Credit Cards Work:
   • You have a credit limit (maximum amount you can borrow)
   • You receive a monthly statement showing your balance and minimum payment due
   • Interest is charged on unpaid balances
3. Benefits of Credit Cards:
   • Convenience for online and in-person purchases
   • Build credit history for future loans (e.g., car, house)
   • Some cards offer rewards or cashback
4. Risks of Credit Cards:
   • Easy to overspend and accumulate debt
   • High interest rates if balances aren’t paid in full
   • Late payments can damage your credit score
5. Credit Score Basics:
   • A number that represents your creditworthiness
   • Affected by payment history, credit utilization, and other factors
   • Important for future loans and even job applications

Tips for Responsible Credit Card Use:

1. Start Small: Begin with a low credit limit to avoid overspending.
2. Pay in Full: Always try to pay your full balance each month to avoid interest charges.
3. Pay on Time: Set up automatic payments or reminders to avoid late fees.
4. Monitor Your Statements: Regularly check for unauthorized charges or errors.
5. Understand Fees: Be aware of annual fees, late payment fees, and foreign transaction fees.
6. Don’t Max Out Your Card: Try to keep your balance below 30% of your credit limit.
7. Avoid Cash Advances: These often come with high fees and interest rates.
8. Choose the Right Card: Look for cards with no annual fee and low interest rates.
9. Educate Yourself: Learn about credit scores, interest rates, and financial management.
10. Use Credit as a Tool: Don’t view your credit card as free money.

For teens under 18, options to start building credit include:

1. Becoming an authorized user on a parent’s credit card
2. Opening a joint account with a parent or guardian