Caution is required
At the end of my freshman year, I traveled to Europe for 6 weeks to see the sites and explore new cultures. My father insisted on my getting a credit card, “In case of an emergency.” C-r-e-d-i-t C-a-r-d. This was a new concept for me. Now, I knew what credit cards were and what they were for, but I never before saw the need for one. Between good ole cash and my debit card, I was covered. But as part of the requirements for allowing his 19-year-old daughter to hope a plane and fly over an ocean, a credit card was a non-negotiable. So he took out an American Express with both of our names on it.
I had a plan and a budget for my trip, but with this credit card in my hand, it seemed like
everything was free. I never actually ran out of money. I could eat in restaurants, a lot, and not just grab the less expensive but sufficient vendor food or, ::gasp:: go to a grocery store. I was backpacking, so the need to pack light prevented any urge to buy trinkets or souvenirs, but I have little thought to the price of anything. To this day, I still don’t know if I went over budget – who am I kidding – I still don’t know how much over budget I went! My dad handled the credit card bill and, I presume, used the funds I gave to him to cover the bill, plus who knows how much of his own money.
When I returned to the states, summer was only half over. What to do – what to do. I decided to train to be a bartender to open up additional work opportunities once I returned to campus. I called to inquire and before I could blink, I had that credit card out and was giving him the number of the phone to sign up for the course.
After returning to campus in the fall I starting receiving credit card offers in the mail. 
Each week, it seemed, I received at least one offer. I know understand that being on my dad’s card, they now had my name and I was “on the list.” Well, with a lack of critical thinking, I filled each application out and sent it in. Each one has some kind of perk, and each time it seemed like a great deal. I mean, I could get 0% interest for 12 months, who would say no to that. Never mind that I still had no need for a card, and other than the bartending course, still never used the cards (cash and my debit card still worked just fine), it just seemed like I was supposed to fill out these applications. I’m an adult now and this is what adults do.
Oh, I used a card here or there occasionally, always paying it off. I don’t know why I used them, other than they were there.
Fast forward 4 years and I am sitting across from a mortgage broker. I am out of school. I have a well paying job and found a house I want to buy. She runs my credit, looks up from her computer and with nothing short of amazement says, “How many credit cards do you have?”
Honestly, by that time, I had no idea. A lot. That much I knew. But exactly how many? No clue. Some sat unused at the bottom of a box. Others I never took out of the envelope they were sent to me in. I was 23 years old and had upwards of 10 credit cards, maybe even closer to 20.
While I never totally viewed credit cards as free money, neither did I fully understand them. I understood they needed to be paid back, preferably right away. I understood that if I didn’t pay them off each money, I would be charged a fee. I understood that much, and I knew my folks used credit cards, so I assumed I should to. But given the reality that cash and my debit card worked just fine, I never understood what was so great about them.
I was told that you can earn frequent flier miles, so it’s a smarter way to make purchases. Okay, that sounds good.
As long as you pay them off at the end of the month and don’t carry a balance, there is nothing to worry about. Okay, I can handle that.
But what I wasn’t told was the dangers.
After I closed on my house, I need to buy appliances. So I charged them, telling myself I will pay them off before the low introductory interest rate increases.
Then one month I was late on a payment due to an oversight; my low rate just skyrocketed. Oh, but no worries, I just apply for a new card that gives me 0% on balance transfers.
And so the charade began.
Teach your child that credit cards are not free money.
Teach them that while culture and big business laud credit cards as a mark of maturity, that one can live just fine with good ole cash and a debit card (I haven’t had a credit card in almost 9 years).
Teach them the stats – the same stats that companies used to first offer the option to buy on credit: the average person spends 12-18% more when using plastic over cash. (Credit cards are a HUGE money making industry!)
Teach them that those “perks” whether cash back or flier miles, aren’t as free as the CC companies want to make it seem.
Teach them that the $3 cash back for every $100 you spend means they had to SPEND $20 MORE to get that $3. Doesn’t sound like such a great deal anymore, does it?
Teach them that if they budget wisely and work their spending plan, having a credit card “in case of emergencies” will seem ridiculous because they already have $$$ saved in the bank for exactly that reason.
Teach them that their debit card afford the same protections as their credit card, in direct contrast to the myth that a debit card isn’t safe to use.
Teach them that being adult doesn’t require having a credit card – that being an adult is about integrity and responsibility, which they can exercise through wise money management, without debt and without debt tools like credit cards.
sources:
moneycrashers.com/you-spend-more-money-when-you-use-a-credit-card/
nerdwallet.com/blog/credit-cards/credit-cards-make-you-spend-more/