![]() Step also provides a seamless experience for teens who “graduate” into young adulthood. Security deposit: 1 month’s rent instead of two months’ rent.Student loan: 6.24% interest rate instead of 10.46%.Car insurance: $147 per month instead of $250 per month.How much of a difference could that better credit make? Step says that an 18-year-old user with a score of 725 could expect these kinds of savings compared to users with lower credit scores: But based on a Step survey, 18-year-olds who used Step for at least seven months had an average credit score of 725. Credit scores are assigned once someone turns 18, and most teens will begin with a score of under 600. Parents, who sponsor the card, can opt to have Step report the past two years’ worth of information-transactions, payment history, and more-to the credit bureaus when their child turns 18. It functions just like a Visa credit card, but it offers the safety features of a debit card-and most importantly, it can help build your child’s credit history. The Step Visa Card is a unique “hybrid” secured credit card that’s tailor-made for kids and teens. However, multiple financial companies are working on an emerging class of kid-focused card, and one such product is already on the market. And because kids at most are merely authorized users, credit card providers naturally don’t make their cards, websites, and apps with minors in mind. Also, if you make poor credit decisions, your child’s credit could suffer. Many consumer credit cards won’t allow you to set spending limits on authorized users, for one. While some parents have gone the latter route, making your child an authorized user on your credit card has some serious flaws. Traditional (and especially prepaid) debit cards for kids offer a number of guardrails to control a child’s spending, and over the past few years, several child- and teen-focused debit-card solutions have popped up. The former, which we’ll talk about in a minute, is considered the safer and more traditional route. Make their child an authorized user on the parents’ credit card.Get their child a regular or prepaid debit card.Historically, parents have had two solutions: That’s why there are rules preventing companies from opening individual credit card accounts for anyone under age 18. Simply put: Unsecured credit cards-the traditional type of credit card that doesn’t require a deposit beforehand-are considered too hazardous a tool for kids. With the right tools, you can give kids an edge that’ll help them build credit and make smart financial decisions. The Best Credit Cards for KidsĪny parent can counteract poor money habits through financial education. We’ll discuss this emerging class of card, teach you more about the best debit cards for kids, and explain more about the relationship between kids and credit cards. If you don’t feel comfortable with your kids having a credit card for now, you can take an important first step toward that by setting them up with their very first debit card. ![]() That’s changing as banks and other financial companies are exploring special credit cards tailored toward minors and beginning to introduce them to the market.But with all the worries of credit and the responsibility that comes with it, diving straight into credit can present a lot of stress and quickly lead into a deep hole of debt – which is precisely why, historically, there haven’t been any credit cards for kids. Credit cards are a powerful tool for building credit and teaching kids about money.
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