Why My Nine-Year Old Got Her First Credit Card

Raise your hand (right now, go ahead and raise it) if you’ve been to Target and had to tell your child for the one hundred and fiftieth time “no” you will not buy them something.  Let’s be honest. It’s EVERY SINGLE TIME we visit that store. 

Raise your hand (again, right now) if there have been so many times when you’ve caved and they’ve gotten what they wanted. 

Not surprisingly, a recent study commissioned by Slickdeals, found that parents who shop on their own spend an average of $133 during their excursion, while shopping with their kids cost an average of $179.  As if our kids aren’t expensive enough, that’s a $50 increase during each outing. 

There is value however in shopping with our kids as this could be a great opportunity to teach them about the concept and value of money.  With 30% of Americans not having a savings and about 108 million consumers having a low or no credit score, my husband and I thought it was important to start teaching our daughter, Nyeema, not just the value of money, but how to value credit.  Because let’s be honest, how many of us are actually exchanging dollar bills on a daily basis.  Our kids rarely see us use tangible money.  (Read about the six-year old who racked up a $1000 Grub Hub bill!)

Our financial fitness, or lack thereof, can be the direct cause of imbalance in our mental, social and physical spheres, causing anxiety, depression, relationship problems, weight gain/loss, physiological stress, etc.  So, it’s imperative that we teach our kids the importance of having a strong and balanced financially sphere as they are growing up.  

There are two teaching methods we decided to implement with Nyeema recently. The first, when she wants something, it’s time she spends her own money. The second, we gave her a credit card. Your eyes just got big and you think we’re crazy, right? Well, don’t be so quick to judge. Keep reading… 

The first lesson, spending her own money, is a good one to stick to because kids are not quick to spend what’s in their own wallets.  They will actually think twice or thrice as to whether they really want something. 

Now, Nyeema does not receive an allowance nor does she get paid to do chores. The money she has she received from the tooth fairy, grand parents and the occasional “gift” from us.  She now takes her wallet when we go out just in case she wants to buy something. She really considers how much she has and if the item is worth spending on.  The result? There are fewer jars of slime and mystery balls with junk inside at our home. 

Through the second lesson, we’ve been teaching Nyeema the concept of credit, why it’s important to pay back credit and the importance of credit scores in our daily life.  Please keep in mind that these concepts are not too much for a 9 year old to grasp.  

By making our daughter an authorized user on our account, we gave her her first credit card with her name on it.  Adding a minor as an authorized user on your account does indeed build the minor’s credit. 

Not surprisingly, the first thing she wanted to do when she received her card was go to Target and shop.  And that’s where the big lesson began.  

We explained that we gave her this card because we believe she is responsible enough to use it.  She is not allowed to take it to school and can only use it with our approval.  We explained that whenever something is charged on a credit card, she is responsible for paying it.  She will receive a bill with the total amount she charged that month and that is the amount she has to pay back.  If she doesn’t pay the full amount that month, she will be charged interest (she had a slight idea of what interest was already) by the credit card company. I drew a simple diagram of how the credit card company is the “middle man” between the consumer and the vendors.  I saw a light bulb brighten inside her sweet nine year old head realizing that Amazon is not a magical fairy that delivers presents to the house for free.  Mommy and Daddy actually pay for everything we get from Amazon.  

We went on to briefly explain what a credit score was and how paying your bills and paying them on time affects your credit score and your ability to get a car loan, personal loan, mortgage or even a cell phone plan.  I loved seeing how big her eyes were and how it clicked what a huge responsibility this was.  

Over the December holidays, we went out to dinner with family and my husband asked Nyeema to treat everyone and pay the bill. Hesitation in her face, she whispered, “Daddy, I don’t think I have enough money to pay the credit card bill if I pay for this dinner with my credit card.”  He explained to her that the line of credit was plenty sufficient and that this was one of the charges that he would pay when the bill arrives because he wants to build her credit.  

The following month, she used her credit card to buy me a $25 Sephora gift card for my birthday. She asked her dad for permission and said she had the funds to pay the bill when it arrived.  Cha Ching, I think she’s got it! 

As adults, we (should) know that to have a good credit score, we need to get access to credit. And in order to get access to credit, we need a credit score.  

Today, 46% of college students are already carrying a credit card debt and 79% of college students do not know that a credit score measures the risk that you will default on a loan. 

Once you start on a path of debt, it is not easy nor fun to get out of it.  We do not want our kids to get lured by credit card companies their freshman year in college with a measly free lunch or even worst, a t-shirt.  I know I’m not the only one who was and then racked up an ugly balance.  I knew I had to pay the credit card bill, but buying new clothes and new CDs was just too enticing. I eventually paid it off but I really wish I would have known the stress that came along with it. 

Teaching generation Alpha financial literacy now provides a strong foundation they can build upon as adults to help them avoid a lifelong imbalance in their financial sphere and consequently,  their mental and physical spheres.