What are the pros and cons of (a responsible 16 yr old) using a credit card? debit card? checking account?

Answer 1

Most people are opposed to teenagers with credit cards, unfortunately, someday they are going to need credit and someone does need to teach them.

The pro's are they can learn a lot about earning good credit and balancing a checkbook. Many adults that I know, even in their 40's and 50's don't even know how to balance a checkbook, they go based on what the bank says their balance is, bad idea. Another thing is too, a lot of adults live beyond their means and they use credit cards to do this.

I would start off by adding them as an authorized user to a major credit card you as a parent already have. Have them work a part-time job and what they use they will need to make monthly payments on till its paid off. Once monthly payments come into play, young adults start to realize these credit cards are not "FREE" money.

As for a debit card/checking account. Open one up with a very small amount. Teach them how to balance a checkbook and how to verify the bank has taken the correct amount out. Many people forget what they bought and end up bouncing checks.Another thing too is people think because their debit card went through that they must have money.This is not true. Banks will let you use the card to buy stuff even if you only had $3 in your account, this is how they make their money. Then you're suprised with a statement saying you owe money.SO KEEP TRACK CONSTANTLY of what is used.

Answer 2

At 16 I would encourage them to stick with a debit card for a while, save check account and credit cards for a while yet. One step at a time, the pros are they can learn to manage their income more easily but the cons are that if they get into financial problems then you'd be the most likely one to bail them out. I would be surprised if the bank would allow check or credit cards to someone 16 its not the case in Australia as far as I know they still have to reach the leagl adult age to apply.

Answer 3

With credit cards the benefits are that you can build your credit history and hence get more loans etc if you use them wisely. The cons are that if you falter on credit card payment you will have to shell out more as interest and penalties. And this will reflect poorly on your credit history.

With debit cards you only spend what you have in your account. So this gives a kind of financial discipline and there is no interest charged so this doesn't hurt on pockets much.

With a checking account you have all your money in a bank account and you can withdraw using checks etc. If you are not using a debit card linked with that account.
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Answer 4

there are no pros to a sixteen yr old using a credit card, credit is earned not given, debit card is ok with parental oversite as it will teach you how to manage living within a budget without danger of overloading debt since you can only spend what you have in your account (unless you have check overdraft protection, which I don't recommend for a minor with little or no financial experience), and a checking account is not a good idea due to bad check possibilities, so if you can get a parent to deposit money in a checking account for a debit card I would think this is the best way to go to give you a sound basis in managing a budget and handling your own finances

Answer 5

Debit cards can teach budgeting, organizational skills and responsibility without the risk of overspending, since you can only spend what's in the account. I got a debit card for my daughter when she traveled to Europe in high school and she did fine. It was much safer than cash or travelers' checks. You can run into trouble with checking accounts by writing checks you don't have funds to cover ("bouncing checks"). I'd avoid credit cards, which can spiral into high interest rates and overspending. It's too easy to buy things you can't afford. Save credit cards for adulthood, where use of them is bad enough.

Answer 6

Pro of credit card- fast money pay later
Con- you always have to pay more

Pro of debt card- Its your money so you dont have to pay more once you take it out
Con- I guess it can be really easy to take out money

Pro of checking account- place to hold money where you can save and its not paper you can take from your room


I would go with the checking account seems safest for a 16 year old

Answer 7

I know of no cons since you said "responsible".

The pros would be that they would learn even more about managing their financial future. I have my son start at age 13 and what a grand financial future he has now!!

Answer 8

If you're responsible, then you wouldn't go into debt further than what you can afford. Benefits are that you can learn how to control money, it's safer than carrying cash (in case it get stolen) and takes up less space, etc...

Answer 9

use a debit card that way she don't over spend and you wont have a huge bill every month to cover what she bought.

Answer 10

any debt acquired by the minor will be the adults responsibility..
dont let them have that much responsibility too soon,
even if responsible 16 y.o..........
they are still JUST A KID