Personal money-management website Mint.com suggests recently that responsible parents should give their kids credit cards--possibly starting as young as middle school. The website says a credit card will help children master responsible spending habits and give parents the chance to teach them some valuable lessons. It's absolutely true that kids should learn about how a credit card works and how to use it responsibly. But the idea that they need a card of their own to practise this is questionable. Yes, credit cards are a teaching tool, but it's the time you spend educating them about money management that does the teaching, not the piece of plastic. Sit down with your child--here we are referring to teens and walk them through your credit card statements. Point out important things like the due date, late fee warning, and APR  . If you have good credit, adding a child as an authorized user onto one of your credit cards also provides teachable moments. Allow kids to use the card to make specific purchases and require their participation in payment. Since the card is still in your name, you can take them off it at any point and cut off their access if they're not able to handle the responsibility. Another option is to set them up with an account at a local bank that offers free use of a debit card  . Unlike credit card, the debit card has no overdraft   function. Children can only use the card to pay for things and the money is taken directly from their bank account. If the account is empty, the worst that will happen is the card being declined at a cash register. What is the purpose of adding kids as credit card authorized users?
To avoid extremely high overdraft fees. To encourage them to share household expenses. To teach them to be responsible credit card users. To help them pay close attention to their bank account.