(When) should we encourage DD to get a credit card?

[TeenTimesTwo]

DD1, 19, lives with us rent free, and is OK with money, managing her pay well, saving for yearly bills such as car insurance.

We are wondering when / whether we should encourage her to get a credit card. This would not be for the credit (we would expect her to set up a direct debit to pay it off in full each month), but more to build up a credit rating, and also for the guarantee it helps give when purchasing things online.

The big risk of course is she spends too much. But is that better learned when with us than once she's moved out?

Any opinions / advice?

I got my first at 19 to go on holiday, just in case. The cashback or points ones are best (Clubcard, Nectar etc) for extra benefits

I always use interest free credit cards for holidays to spread the cost over the year. People are so arsey about credit cards sometimes.

It’s just another tool to manage money. If she’s sensible I can’t see why not. Ditto the phone contract. You have to let her be an adult at 19.

Also, I’d take a bit of rent money, OP. Unless she’s saving up for a purpose then not taking rent just gives a false impression of how cheap it is to live. You can always save it up and give it back to her when she moves out if you don’t need it.

Not ce to know about the phone contracts.
I got a credit card at 18 when I opened my first bank account.
I now have several.One for using on holiday as I get cash from cash machines with just the exchange rate.Two linked toy bank account(one lives in the car to ensure that I don't take the wrong handbag out and forget the purse.
The other is for everything else and I pay a direct debit in each month and pay the rest off at the end of the month.
I will encourage my DD to get one when she is 18as a means of paying for larger items not for spending money she doesn't have.

tell her to get a Sim only contract its usually for 12 months and you can get a good deal for £20 a month

A sim only contract for £20 a month is not a 'good deal' it's ridiculously expensive. It should cost less than half that amount.

If she is sensible with money a credit card is an excellent idea. She needs to just use it for normal spending, not see it as free money and set up a direct debit to pay the whole bill off in full every month without fail and make sure she keeps enough money in her current account to do that. Regular use of a credit card will make sure that the limit builds up to a useful amount - say around £2000-3000.

This means that she will be able to hire a car on holiday, and instead of buying the rip off hire car company insurance, to reduce the excess, she will be able to buy the same cover in the UK for a tiny fraction of the cost.

If she gets a cashback card, she can get cashback on all her spending.

Protection if a supplier goes bust or fails to deliver. Like others have said, if you make big purchases like holidays on a debit card, you are an idiot who is throwing away valuable consumer rights.

Lower risk of fraud as you don't need to use the debit card linked to your current account on the internet.

And yes, Stoozing. Sadly my run with Tesco has come to an end, today as it happens, but there was a year or two where they lent me £6k at 0% with no fees, that I then parked in a couple of their current accounts paying 3%, making me £180 a year profit for about half an hours work. Tesco Credit Card also kindly paid for replacement flights and consequential losses when Monarch went bust 2 days before we were due to fly with them.

These days if you want a card to spend abroad, your best bet is the Starling debit card, but a second card is useful as a back up, Halifax Clarity or Santander Zero credit cards are probably the best ones.

I am very anti getting into debt. I have a small mortgage (I pay less in interest than I earn on interest in my savings account/ISA) but I do have an American Express credit card. I use it for online purchases, theatre tickets and major purchases in order to get the extra consumer protection. I have known people lose large sums of money when furniture retailers or ticket sellers have gone bust.

There is also the added bonus of cashback and at Christmas my husband can't see where I am buying his present from.

Using cash or debit cards to pay for holidays and large purchases is quite frankly irresponsible (unless you can afford to lose the money)

I agree Barbara, £20 per month for SIM only is extortionate. My kids have VOXI 30 day rolling plans for £10 per month.

I have a Three rolling one month contract for £5 a month with 1GB of data which is plenty for me given that WiFi is in most places these days. I called to cancel after my two year phone contract ended and said I was going to go SIM only with whoever was cheapest and they offered me that, which is a £7 discount on the actual plan I think.

I agree about the phone contracts and indeed it is no longer necessary to sign up to one long term as there are several providers that will do unlimited effectively unlimited minutes (sometimes there will be a limit of 1000 minutes a month, but almost no-one will use that amount) texts and a decent chunk of data for £6 ish a month, so it's just a matter of choosing one with network coverage in your area. And the beauty of it being a one month contract is that if the network is poor, you can just cancel and try another one.

dn is starting to do some ground work for her first mortgage and applied for a credit card as her credit rating was poor due to never having any.

I would say don't encourage her, when she is mature enough to be planning her own finances and is able to independently realise the pros/cons of having one then she'll be ready. You are micro managing her, step back.

I am in my 40's, never had a credit card and I privately rent so need to get credit checks done, which always seem me 'low risk'.

Any recs on 0% interest credit cards?

Never.
We've never had them so won't be encouraging any of our children.
Our grown up dc have one but no encouragement needed.
They were mid twenties, iirc.

Freudian, if you've never had a credit card, you probably don't need a 0% one, unless you're planning a big purchase?

Ideally you need a cash back one, so you can earn a bit extra money from your normal spending, but if you don't have much in the way of credit history, you might need to start with a beginner one, until you've proved you can handle credit. The interest rate is irrelevant, because you don't get charged anything if you pay it off in full every month.

Your own bank would also be a good place to try as they see your salary coming in every month and how you run your current account.

Anyway, all the ins and outs of credit cards can be found at:

www.moneysavingexpert.com/creditclub

She's 19 and old enough to get a credit card - surely she's old enough to make these sort of financial decisions for herself?

At 19 it's really her decision.

I got one at 18 as a student, I've had store cards too (to get the discount on first purchase) and various credit cards over the years and I have never paid a penny in interest. I have, however, earned £££ of cashback/charity donations/gift vouchers depending on the card. DH and I put almost all our spending on our Partnership card these days and get over £100 of John Lewis vouchers each year.

The only credit card debt we've ever had was a holiday we put on a 0% credit card (got the chance to take a fantastic holiday not long after moving house due to school having an extended half term). We set up an amount to pay that off by direct debit each month. It's really annoyed me having to pay that off after going so I would only do it for a holiday under exceptional circumstances.

There is nothing inherently wrong with credit cards as long as you make sure you pay off the balance in time.

She's 19 and old enough to get a credit card - surely she's old enough to make these sort of financial decisions for herself?

Well this exactly

She's 19 and old enough to get a credit card - surely she's old enough to make these sort of financial decisions for herself?

Well, for starters, lots of people who are well over 19 are clearly not able to make good financial decisions, hence the threads where people are in debt and trying to pay it off, or the women with no independent money etc.

Second, I don't subscribe to the 'You're 18 now so you're on your own' school of parenting. Of course ultimately it would be her decision, but it sometimes helps to have people who know you and who have more experience of life to help you think through the pros and cons of choices.

But thank you all. It has been really helpful. We'll hold fire suggesting it for now but keep it in our thoughts as an option as something to suggest when she's been in her job a bit longer.

I don't subscribe to the 'You're 18 now so you're on your own' school of parenting.

Neither do I. But it's perfectly possible to treat your adult children like adults and allow them the space to make their own financial decisions, whilst also providing practical and emotional support where necessary.

Credit cards do have their benefits but I guess it all comes down to if your DD is responsible not to get into debt she can’t afford to repay every month, as it would all be very tempting. TBH I think the majority of 19 yos wouldn’t be responsible enough. I definitely wasn’t at that age.

DD has had a credit card paid off every single month in full since she went to Uni at 18. She also had one issued for one of my accounts for emergencies. The one on my account came in useful when the airline she was booked to travel home with cancelled the flight and left passengers to fend for themselves as airport hotels are generally expensive. It’s all about educating your children about money and it sounds as if you’re doing an excellent job. We also do not subscribe to making children fend for themselves at 18 and are happy to give any support required, financial or otherwise regardless of age.

Don't encourage her, what's the point? I haven't had a credit card for twenty years and don't use credit at all, it's never been a problem to live within my means.

I think it's a good idea. My parents did the same, sat me down and explained all about credit ratings and that by using a credit card and paying it off each month I would build up my rating.

I think I had a Tesco clubcard one which I just used for petrol and food. I set up a direct debit for the full amount to be paid each month.