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Credit 101: An Introduction

It is common for young adults to find themselves in a situation where they have an overwhelming amount of credit card debt accumulated in a short period of time. This boils down to lack of self-control, lack of knowledge, and the ease of swiping a credit card in exchange for goods you might not actually need. In our culture, where spending with a swipe or click is glamorized, it is essential for parents to educate their children on the potential consequences of credit card spending.

Establishing Credit

One of the easiest ways for young adults to establish credit is by opening a credit card account. With credit cards comes great responsibility, as there are several financial risks involved. For instance, missed payments can make it difficult to manage monthly balances with high interest rates. Teach your kids to always pay their credit cards on time and never spend more than they can afford each month. The stress of managing significant balances can be avoided by smart spending, saving, and budgeting.

Understanding Borrowing

Many young adults – and even people who have used credit cards for years – can forget that the card you use to swipe has borrowed money on it. This is why it is crucial to teach your children to set a spending limit for their first credit card and get in the habit of using cash or their debit card for smaller purchases.

Purchasing Power

Depending on their credit limit and how reliable of a borrower they are, your children may experience credit limit increases. This gives them more purchasing power, but that doesn’t mean they should utilize all of it. Using a small portion of their credit limit can also help improve their credit score. The goal is to avoid coming close to maxing out credit cards. Outstanding balances can take years to fix before gaining control of your finances, and your children need to be aware of the consequences.

Knowledge and Self-Control

An important lesson to teach your children is self-control. They must understand that credit cards cannot regularly be used on a whim to buy things they don’t need. It is also wise to talk to them about your own experiences with credit cards and any spending mistakes you’ve made in the past. A little bit of knowledge can go a long way to set them up for financial success.

If you find yourself struggling with your finances, PCS Debt Relief can help. We have helped hundreds of overwhelmed clients get out of credit card debt. We have been helping the community regain creditworthiness and peace of mind for over 30 years. Call us today at (636) 209-4481.

PCS Debt Relief

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At PCS, our programs are tailored to the client’s specific financial needs. What sets us apart from our competitors is that clients see relief, before any payment is received. Our NO UP-FRONT FEE policy ensures our client’s a 100% satisfaction guarantee. We also do not charge any monthly fees or any cancellation fees. We want the client to feel comfortable during the whole process that’s why we allow them to be part of it every step of the way.

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