• Credit card management is an important element of credit scores.three credit cards image by Aleksandr Ugorenkov from Fotolia.com
  
  If the thought of giving your teen a credit card scares you, then take the time to teach them how to manage credit card accounts responsibly. Having a credit card in their name can help your teen build a credit rating. Teach your teens the value of a good credit score, and how credit cards can impact their financial future.
  
  

Not Free Money

• The first thing teens need to know about credit cards is that they do not equal free money. If teens are responsible for the monthly payment, they will learn the correlation between paying for an item with credit cards and paying the monthly credit card bill. Monitor their spending; teach them to save purchase receipts and match them to the monthly credit card bill.
  
  

How Interest Works

• Teens need to know how interest is calculated on their credit purchases. Many credit card accounts do not charge interest if the balance is paid in full monthly. Carrying a balance for two or three months will illustrate to your teen that the great sweater she found on sale actually cost more because she paid for it over time.
  
  

Credit Cards Impact Credit Scores

• Payment history is the single largest factor used to calculate credit scores. Credit card and installment loan payment habits account for 35 percent of the overall credit score. Teens need to know how important it is to maintain a good credit rating. Making their credit card payment on time will positively impact their score; late payments negatively impact their scores. To help teens understand the value of good credit scores, show them the difference in a monthly mortgage with good credit and great credit. Online mortgage calculators demonstrate the numbers. Teens need to know that their credit scores can also impact car loan rates, insurance rates and employment opportunities.
  
  

Credit Card Management

• Before making a large credit card purchase, teens need to know to make a budget or a plan to pay the balance in the shortest amount of time. Good credit card management can save money over time, as well as positively impact credit scores.
  
  

Not All Credit Cards Are Equal

• Teens need to learn to read the fine print and research a credit card before submitting an application. Annual fees and interest rates are two important factors to consider in the credit card selection process.