LowCards.com

[Greg Hampton]

Your 18-year-old has been nagging you for his own credit card to cover gas, music downloads and his other major expenses.

Should you do it?

Not until your teen has earned a passing grade in Credit Cards 101. And not until you've checked out the options for that first credit card, options that have changed significantly thanks to credit card reforms.

The credit card law, part of legislation passed by Congress last spring, contains two provisions to make it more difficult for young consumers to hold plastic.

Like teaching them to drive, talk to your teen about credit — the pitfalls and how to use it to his long-term advantage. Start with your credit card statement and explain interest rates, grace periods and minimum payments. Show them how much you'll be charged in interest by only paying the minimum.

"Don't be afraid to tell them real-life pitfalls you've run into and mistakes you've made using a credit card," said Bill Hardekopf of LowCards.com, a consumer-oriented Web site.

Establish what constitutes a good use of the card — textbooks, plane tickets — and what doesn't — food and entertainment. Make it clear that credit cards are loans that have to be repaid in full each month.

Link to story by Steve Rosen for the Chicago Tribune:
http://www.chicagotribune.com/business/yourmoney/sc-ym-0328-teen-credit-20100318,0,7207795.story?page=1