Whether you’re considering getting an add-on card or applying for a student credit card, giving your teen their first credit card is certainly safer than carrying cash.
On the other hand, leaving a credit card in the hands of a teen can bring risks such as over-spending or sharing card details. To help you decide if your teen is ready for a credit card, read on to consider the key points.
Benefit: Your teen can access funds in an emergency or when traveling abroad
In an emergency, giving your teen a credit card can help with last minute drug purchases or a phone charger.
Also, a credit card can be especially useful if your child plans to study or travel abroad after the pandemic. Carrying foreign currency can also be awkward and unsafe, especially in countries where pickpocketing or theft is common.
Pros: Earn discounts and perks for more savings
Many student credit cards are designed with user preferences in mind. This means that if you choose the right credit card, your teen will enjoy extra perks when spending money at their favorite places like McDonald’s, Golden Village, and Starbucks.
These credit cards may offer even more savings through discounts, annual fee waivers, and the ability to earn miles.
For example, the Maybank eVibes Card offers students a one percent discount on all expenses with no merchant or category restrictions, making it incredibly easy to maximize cashback.
Additionally, students can access Maybank’s TREATS program, which offers everything from $ 1 meal vouchers to discounted amusement park tickets.
Downside: Your teen can be at risk of overspending
Over-spending is common among adults and can be a problem for teenagers as well. It’s easy to lose track of how much we’re spending when using a credit card because it’s not cash. The overspending problem can be a bigger problem when there is interest on unpaid debt.
The average Singapore credit card interest rate is around 25 percent per year, and if your teen doesn’t know how the credit card interest rate works, they can end up in significant debt in a short period of time.
ALSO READ: 4 Things To Do Immediately If Your Credit Card Information Is Stolen
Cons: Annual card fee incurred
The issue of an additional additional card is usually free of charge; However, most student and young adult credit cards have an annual fee. To make it worth it for you, try choosing cards that offer free or refundable annual fees to save more.
Here is a list of the best student and young adult credit cards with the best deals on annual fee:
What are the best credit cards for teenagers in Singapore?
| Types of credit cards | Annual student credit card fee | Exemption from fees |
|---|---|---|
| Maybank eVibes card | $ 20 | 2 years |
| DBS Live Fresh student card | $ 192.60 $ | 5 years |
| Citi Clear card | $ 29.96 | A year |
| Standard Chartered Manhattan $ 500 Card | $ 32.10 | A year |
Find out which type of card will work best for your teen
Choosing the right credit card will depend on your teen’s lifestyle, preferences, and the benefits that come with the credit card. A student credit card has a minimum age of 18-21 and a spending limit of $ 500.
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This ensures that only mature teenagers can apply for the credit card. It also protects the bank from the risk of default as these cardholders may not yet generate income to meet the monthly repayment.
Overall, student credit cards give parents more security and control over credit risk.
Alternatively, you can offer your teen an additional card to save on additional annual fees; However, you are liable for any late payments or unpaid debts of the additional card holder.
On the plus side, it gives you a complete picture of your teen’s spending habits and can help them make smarter budget decisions.
Set a credit limit to avoid spending too much
Setting a credit card limit is the first step before giving a credit card to your teen. They are important to trust, but you also need to use financial caution.
After all, teenagers are less financially savvy and may not think about potential pitfalls such as the consequences of defaulting. It’s important to explain the principles behind credit card rates and how interest rates work.
ALSO READ: Best Credit Card Hacks for Your Buy Now, Pay Later Service Choices
Define what the credit card can be used for
Having a new credit card can be an exciting experience and can entice your teen into using it without a second thought about purchases.
As a parent, you need to make sure that your child is financially responsible and understands what the credit card can be used for. Start with a clear, defined list of what the credit card can and cannot be used for, and make sure you set limits for different categories of spending.
This will ensure that your teen is more careful before he or she uses their credit card.
This article was first published in ValueChampion.
