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What is the thing you’re most afraid of when your child turns 18? Is it the party they’ll want to have? Or the final loss of control as they officially become an adult? Perhaps you’re celebrating that they have grown into a capable independent young person who can now take on the world. One thing you should be aware of is that as soon as your child turns 18, their bank will send them a letter with a credit card offer. Whether or not your child is smart with money, a credit card is a huge temptation to a newly “graduated” adult.

When this letter arrives in the post, it’s a good idea to talk to your child about what it means to have a credit card; what are the benefits and dangers.

How to talk to your teenager about credit:

  • Explain interest rates and give them an example of what the interest rate will add onto a small balance over time. This ASIC calculator will help.

  • Explain minimum payments.

  • Talk about credit rating, and how a good credit rating is very important, but a bad credit rating can be very detrimental to future borrowing (i.e. for a house).

  • Introduce alternatives to credit cards – i.e. a personal loan (if they need it for a big purchase), debit cards for online shopping, or travel cash passports for overseas travel.

At the LLL, we encourage you to teach your children to save before they learn to spend. Which is why our children’s and personal savings accounts have no LLL fees or charges, and we pay a good interest rate without any “bonus hurdles” to jump over. And, when your child turns 18, we will never send them a credit card.

Open a children's account here, or call 1800 556 457 for more information.

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