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Teenagers and Credit Cards: A Guide to Teaching Your Kids Responsible Spending

July 22, 2019
3 mins
A young woman buying something on her phone with her credit card

Some parents wouldn't consider allowing their teen to have a credit card, while others add them as authorized users of their credit cards as soon as possible. You're probably somewhere between these extremes.

Teens can't get their own credit card until they're the legal age of majority, which is 18 in some provinces, or 19 in others. Until your teen turns either 18 or 19, both you and your teen are responsible for credit card use and debts.

Parents and teens should be equally knowledgeable about credit cards and how to use them wisely. Credit cards can be a great tool for learning smart spending habits as long as you know the facts.

Teach your teen what a credit card really is

A credit card is an agreement with a financial institution that represents a loan of money for a period of time. It's not "free money" or "extra income." The institution agrees to pay the charges on the card up to the card's limit. When you accept the card and use it, you agree to pay the card company on time under your agreement. The card's interest rate is calculated and added to any balance that isn't paid in full at the end of every month.

Is a higher credit limit better and more prestigious?

Teens tend to be status-conscious, but having a higher limit on a credit card can encourage spending more than your teen can pay off in one month.

A higher credit card limit means that the credit card company thinks you might be willing to charge more on the card and can reasonably be expected to pay it back. If your teen has a part-time job, a credit limit equal to one month's earnings could be a good fit.

Many financial advisors recommend a limit of $500 for a teen's first credit card. The limit guarantees payments will be manageable and credit use will be within reasonable limits.

How important is it to pay the credit card on time and in full?

As teens grow into young adults, some find they can't get credit because they don't have a credit history. Having a credit card as a teen helps to build a positive credit history, but only if the credit card is used wisely.

Late payments will reduce your teen's credit score. Paying the minimum payment instead of the full amount owed each month adds to credit card interest payments. Over time, a minimum payment habit can be expensive. It can also lower credit ratings.

What should teens know about credit card and ID theft?

Teens need to know that their identities and credit cards, including contactless payments on their mobile phones linked to the card, can be at risk. They should never lend their credit card and shouldn't respond to phone or text message requests for credit card information.

Finally, many studies have proven that people spend more money when they use credit cards than when they pay with cash or a debit card. Find a credit card that fits you and your teen’s needs. also offers resources for learning more about using credit wisely and developing a bright financial future.


The RATESDOTCA editorial team are experienced writers focused on sharing stories and bringing you the latest news in insurance and personal finance. Our goal is to provide Canadians with the information and resources they need to make better insurance and financial decisions.

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