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Children mature at different rates, but in general, the earlier you explain the concepts of money and credit to your kids, the better. Under the Credit CARD Act, companies can’t issue a credit card to anyone under 21 unless the applicant can demonstrate they have the income to pay the debt. But he or she can get a card with a co-signer or become an authorized user. You certainly don’t want to wait until your kids can apply for their own cards to start talking to them about credit cards.

Earlier Is Better

Using credit cards responsibly is impossible without knowing how to use money competently. An allowance system can be a good way to introduce the idea of handling money. But it’s important to provide guidance once you give them that money. Some parents introduce the concepts of saving and spending using piggy banks. So every time you give your child his or her allowance, he or she is free to spend some of it but must also put some away to save for a longer-term goal.

A good time to talk budgets can be around the holidays or on vacation. Work with your child to make a list of the people to whom he or she wants to give presents and then set a budget for those gifts. Then work on what that means for the cost of each present. For a vacation, you can set aside a certain amount of money your child can spend on souvenirs. Explain that he or she can buy one big souvenir or a few small ones throughout the vacation.

As your child gets older, you can introduce more complicated budgets by including him or her in your grocery shopping. Walk them through the planning and then the buying and paying.

Easing Into Credit Cards

A good way to get your kids familiar with actually using a credit card is to make them an authorized user on one of your accounts. This sounds dangerous — and it can be. Set specific parameters about when it is OK to use the card and how much your child may put on the card (he or she will have access to your entire line of credit, so this involves a good deal of trust). Then go over the credit card statement with your child at the end of the month. This way, you can show him or her what a statement looks like as well as explain concepts like minimum payments and interest rates. As she gets a little older, you can demonstrate how credit card balances can grow and the importance of paying the balance off in full.

Even once your child has a credit card of his own, make sure he knows you are there if he has questions. The important thing is not to scare kids but to arm them with information so they can become responsible credit card users.

Learning to use credit cards responsibly should go hand in hand with learning the basics about credit scores, credit reports and the importance of building good credit. It’s a good idea to get into the habit of checking free annual credit reports and monitoring scores, which can also be done for free with Credit.com’s Credit Report Card.

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