The Center for Financial Empowerment, the nonprofit organization founded by SCE Credit Union, has a mission to educate high school youth with personal finance concepts, preparing them to make smart financial decisions as they move into adulthood. As part of that mission, we encourage parents to take an active role in helping their teens establish strong financial habits for managing money.

In this post of our “Teach Your Teen” series, we’re providing you tools to help your teen understand the basics about credit cards.

Teach Your Teen About Credit Cards

Today’s teens are used to seeing cards used for just about every type of financial transaction. They’ve most likely received gift cards as birthday gifts, and many are already using debit cards sourced by a checking account by the time they’re in high school. This familiarity with card payment services at a young age may make it more tempting to use credit cards without fully understanding how they work. These tips can help you introduce your teen to credit card basics.

What a credit card is

At its most basic, a credit card is a plastic device that allows the user a convenient way to borrow money on-the-spot. If the amount borrowed is paid back in full within a specific period – usually around one month – the borrower won’t have to pay interest charges. If the amount isn’t paid in full within the specified cycle, the user can instead pay smaller amounts on a monthly basis, along with additional interest charges. Additional fees may be charged to the borrower, as defined in the credit agreement. The longer the borrower takes to pay off the credit card balance, the more interest charges they’ll have to pay.

What a credit card isn’t

  • A credit card isn’t “your money” or “extra money”
  • It’s not the same as a debit card
  • It’s not a status symbol or a sign of wealth.

Benefits of a credit card

  • It can be convenient to borrow money quickly, if needed
  • Some credit cards have “rewards” like airline miles or cash back offers
  • You can make hotel or car rental reservations without needing a large deposit, as with a debit card
  • You can make purchases online without risking your personal cash if fraud occurs.

Negatives of a credit card

  • People using credit cards are more likely to overspend than if they’re buying with their own money
  • It’s easy to charge more than you can afford to pay off quickly, which means paying interest
  • Many credit cards charge other fees in addition to interest
  • There’s an increased risk of financial fraud when using a credit card.

Credit cards are financial products that can be easily mismanaged, so it’s important young people understand the pitfalls and approach them with caution. This is so important that age restrictions were put in place to protect teens and young adults from getting credit cards too soon without parental supervision. Make sure your teen understands these credit card basics before they start using one.

Additional resources

Help us empower the next generation for financial success! 
The Center for Financial Empowerment is a 501c3 nonprofit organization whose mission is to empower disadvantaged youth through financial literacy education. Find out more about our work at