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It’s absolutely true that kids should learn about the mechanics of credit: How to use it responsibly and why it can get very expensive very quickly if you don’t. But the idea that they need a card of their own to practice this is questionable, at best.
Personal money-management website Mint.com suggests in a recent blog post that responsible parents should give their kids credit cards — possibly starting as young as middle school. In making the case for giving minors access to their own personal line of credit, Mint.com says a credit card of their own will help them master responsible spending habits and give parents the opportunity to teach them how to read a statement, what their APR is and other valuable lessons. It’s absolutely true that kids should learn about the mechanics of credit, how to use it responsibly and why it can get very expensive very quickly if you don’t. But the idea that they need a card of their own to practice this is questionable, at best.

Recent changes to credit card laws put limits on the amount and type of credit someone can acquire before they turn 21. Despite new regulations aimed at curbing credit card issuers’ targeting of college students with aggressive on-campus marketing, young people are still a coveted market. Companies have rolled out prepaid debit cards intended for teens and even pre-teens, although some of these products — like the notoriously pricey card promoted by reality TV’s Kardashian sisters — have caught flack for high fees.

(MORE: How I Did It: Aaron Patzer on Creating Mint.com)

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 or teen — monthly, if possible — and walk them through your credit card statements. Point out important things like the due date, late fee warning, APR and details about how long it will take to pay off a purchase making only minimum payments.

Provided you have good credit, adding a child as an authorized user onto one of your cards isn’t a bad idea. This gives them the benefit of your credit history to bolster their own, and also provides those teachable moments. Since the card is still in your name, you can take them off it at any point and cut off their access if they demonstrate that they’re not able to handle the responsibility just yet. Make paying off their portion of the card part of the deal, and make them conscious of the due date by requiring their participation in payment.

(MORE: Bank Account for Teens—That’s Custom-Made for Helicopter Parents)

Some personal finance advisers suggest getting kids prepaid debit cards to help them take their first steps into the world of credit, but there are a couple of reasons why this isn’t a great idea. First of all, none of those cards are free; all cost something to buy, and some have usage fees, maintenance fees and other charges that can nibble away at the balance. What’s more, none of the big prepaid companies report card usage to the three major credit bureaus. Unlike a secured credit card, which is also expensive but has the benefit of helping a young user establish a credit history, prepaid cards don’t show up on any report a lender would see.

Another option is to set them up with an account at a local bank or credit union that offers free checking and use of a debit card. Make sure the overdraft function is turned off so if the account is empty, the worst that will happen is the card being declined at a register rather than racking up overdraft fees. Like a prepaid card but without the extra charges, this won’t help build their credit history but it will give them practice budgeting and managing their money.

With this foundation, when it’s time for your child to get a credit card of their own — maybe by the time they’re heading to college — they’ll be well-equipped to use it responsibly.

Martha C. White writes about consumer credit, debt and retail banking for TIME.com and previously contributed to AOL’s WalletPop.com. She has written about business, finance and the economy for outlets including Slate, the New York Times, MSNBC.com and Fast Company. A native of New Jersey and graduate of Princeton University, White resides in upstate New York.
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