Credit card companies often target teens—especially college students. As a result, almost 65% of students have credit card debt before graduating. 

Credit card use can be both a blessing and a curse for an average teen, depending on their responsibility and money management skills. Unfortunately, issuers don’t concern themselves with the negative impacts of their products on your child’s long-term financial stability. 

To help you protect your teen, this guide will show you how to teach them about proper credit card use and how to defend themselves from common marketing tactics. You’ll learn why teens are a huge target of credit card companies today so that you can take the appropriate precautions.

Why Are Teens a Major Target of the Credit Card Industry?

There are several reasons why college students are among the main demographics for credit card companies:

1. Their impulsiveness and lack of proper education 
2. Parents’ support in repaying the debt
3. An opportunity to get them used to credit early

Teens Are Prone to Making Poor Spending Decisions

Source: Blake Wisz

When your child goes off to college, they’ll want to get the most out of their newly discovered freedom. More often than not, this involves excessive spending. Parties, dining out, and occasional luxuries make it easy to stack up significant debt.

Credit card companies are aware of this, and many use teens’ impulsiveness as the basis of their marketing efforts. 

Besides, many teens need credit even without any over-the-top purchases. They might need money for books and additional materials, in which case a credit card seems like a perfect solution.

The problem is that not every teen can control themselves and stick to the necessary purchases without excess. This makes them more likely to overspend, which means the credit card company makes more in fees and interest.

Most Parents Would Jump In To Repay the Debt if Needed

Many teens don’t think about the long-term consequences of their actions, so they may not realize the importance of timely card repayments until they’ve already amassed excessive debt. 

If your child doesn’t have a stable job or another way of paying the lender, they’ll likely come to you for help. As much as you might want to use the situation to teach your child a valuable lesson on responsibility, there’s a high chance you’d repay at least some of the debt.

Credit card companies know that every parent wants the best for their child and that the balance will be repaid even if the child isn’t responsible. A combination of a teen’s potentially reckless spending and a near-certain backup for repayments makes young people ideal clients.

Teens Are Easily Influenced by Lenders’ Tactics

Teens can easily mistake a credit card limit for the available budget. Many tend to overlook the fact that they’re spending someone else’s money, so they get used to paying for everyday items and activities with credit cards.

This habit can be hard to break, especially if the teen struggles to meet their needs from their income. The result is a perpetual debt for which the card company will charge hefty interest.

Pair this with all the perks and rewards offered by many companies to incentivize spending, and you can see how easy it is for a teen to tie themselves to the lender. Knowing all this, credit card issuers try to attract them in numerous ways.

How Credit Card Companies Market to Teens

Source: Kindel Media

Card issuers rely on various tactics to make their products appealing to teens, despite the fact that many can’t obtain one independently. The CARD Act of 2009 aims to prevent irresponsible spending by prohibiting banks from issuing credit cards to anyone under 21 unless they meet one of the following two conditions:

1. The applicant can demonstrate an independent ability to repay the debt
2. They have a co-signer over 21 who can be held responsible for the card

To further protect teens from making impulsive decisions, federal regulations don’t allow credit card companies to gift any tangible items as a sign-up incentive if they are:

• On the college campus
• Near the premises
• At any college-sponsored event

Many issuers try to circumvent the above limitations by running reward programs tailored to teens. They might offer the following perks:

• Signup bonuses
• Discounts with popular retailers
• Free memberships for various services

None of the above is a tangible incentive, so it’s perfectly legal to use as a compelling way to draw in college students and other teens. You need to teach your teen to resist such tactics and avoid making hasty decisions that might cause long-term damage to their financial future. 

How To Help Your Teen Approach Credit Cards the Right Way

There’s nothing wrong with your teen having a credit card, as long as they don’t decide to obtain one haphazardly before they’re ready as a result of clever marketing. This is where some financial education can make a world of difference.

Teach your child that however attractive the offer may be, there’s a negative aspect of credit cards that many companies don’t talk about. No perks can make up for the risk of extensive debt and long-term damage to their credit score.

Chances are your child won’t learn about credit cards in high school, so you might have to teach them all they should know. Emphasize the responsibility that a card carries and explain that any used credit funds come at a cost.

You can also support your child by making it easier for them to obtain a credit card at favorable terms when the time comes. The best way to do this is to help them build credit early on.

The Value of a Strong Credit Profile

Source: PiggyBank

Ideally, your child will enter adulthood with a solid credit profile that can open many doors. Establishing a profile with a credit card can be risky, as their first credit score might be low if they’re not responsible enough.

Besides, waiting until your child qualifies for a card might make them waste a lot of time. That’s why some parents decide to add children as authorized users of their cards. This gives them some hands-on experience with borrowed money and creates a credit profile sooner.

Still, this method also involves significant risks. Your child will inherit your credit history, and any red flags will show up on both reports. The child also won’t build an independent credit profile but merely piggyback on yours until you remove them from the card. When you do, all credit history associated with it gets deleted from their profile.

If you’re looking for a more reliable way to set your child up for a more financially sound future, Austin Capital Bank created an excellent solution—FreeKick.

Avoid Credit Card Restrictions With FreeKick

Getting a credit card as a teenager comes with many challenges. If you’re looking for an easier way to build credit early on in life, consider FreeKick by Austin Capital Bank. FreeKick is an FDIC-insured deposit account that offers two services—credit building and identity protection.

Using FreeKick to Build Credit

You can use FreeKick’s credit building service if you’re between 13 and 25 years of age. Ask your parents to take the following three steps:

1. Create an Account—Sign up on FreeKick.bank and choose a deposit that suits your parents’ budget
2. Set It and Forget It—FreeKick will start building 12 months’ worth of credit history for you and your siblings
3. Keep Growing—After 12 months, your parents can either close the account without any fees or continue building credit for you for another year

As a result of these three steps, you can get up to five years of credit head start when you turn 18. This will help you save $200,000 during your lifetime because you’ll be able to secure loans with more favorable terms.

Using FreeKick to Protect Identity

A child’s identity is stolen every 30 seconds. If you fall victim to this crime, your credit building efforts may go to waste because identity criminals may use your identity to take out loans and commit crimes, damaging your credit. To avoid this scenario, FreeKick offers the following identity protection services for minors:

• Credit profile monitoring
• Social Security number (SSN) monitoring
• Dark web monitoring for children’s personal information
• Up to $1 million identity theft insurance
• Full-service white-glove concierge credit restoration
• Sex offender monitoring—based on sponsor parent’s address

Your parents can also benefit from FreeKick’s identity protection services. Here’s what adult children and parents get:

• Credit profile monitoring
• SSN monitoring
• Dark web monitoring for personal information
• Up to $1 million identity theft insurance
• Full-service white-glove concierge credit restoration
• Lost wallet protection
• Court records monitoring
• Change of address monitoring
• Non-credit (Payday) loan monitoring
• Free FICO® Score monthly
• FICO® Score factors
• Experian credit report monthly

FreeKick Pricing

FreeKick offers two pricing plans:

FDIC-Insured Deposit	Annual Fee
$3,000	$0 (Free)
No deposit	$149

Both plans offer the following:

1. Credit building for six children aged 13 to 25
2. Identity protection for two parents and six children aged 0 to 25

Kickstart your credit profile with ease and secure your identity—sign up for FreeKick today.

Featured image source: Andrea Piacquadio