Teaching Teens About Credit

By Garrett Lloyd | Apr 29, 2022 7:00:00 AM

Credit is a key part of doing business as an adult. Your credit can be checked whenever you’re applying for a loan, an apartment, an insurance policy, or sometimes even a bank account. That’s why it’s so important to talk with your teenager about the importance of building and maintaining good credit.

When to Explain Credit

Many teens will begin to live more independently once they graduate high school, meaning they may increasingly need to rely on their own credit. This makes their years in high school an excellent time to help them start building a good credit history and score.

You can begin by giving a simple description of what credit is. You might explain that it’s essentially a record of a person’s payment history. If someone has a good history of paying their debts, this will affect their credit score. A credit score can serve as an indicator of how likely someone is to pay their dues to creditors, landlords, insurance companies, and more. In general, the higher a person's credit score, the more likely someone is to do business with them (and the more likely they are to qualify for a loan at a reasonable interest rate). Click here to find out more about what affects your credit score and how to improve it.


The early stages of building credit can feel like you're stuck in a catch-22. In order to begin building your credit history and score, you need to have credit extended to you; but in order for that to happen, you need a credit history and score. This is where cosigners come in. If you have healthy, established credit, you may consider acting as cosigner with your child. This will increase their chances of being approved for their first line(s) of credit (LOC) so they can begin establishing credit of their own.

First-Time Credit Cards

Credit cards are one of the most common first-time LOCs for teens. Under federal law, credit card applicants under the age of 21 must have a qualified cosigner in order to be approved, unless they can prove they’re able to make credit card payments on their own. Once approved, you can help your child set up a budget and help them monitor their spending. If they’ve had a debit card leading up to this point and they’ve done well with it, they may be a little more prepared to begin using a credit card. However, it’s important that they know how a debit card is different from their new credit card. Make sure your teen understands that a credit card does not use funds that are already available in a checking account. If they spend something, they’ll have to pay it back later; and if they keep an owing balance on the credit card, they might also end up having to pay interest. Click here to learn more about teen credit cards at Cyprus.

If you’d like a little added protection against overspending, you may consider opting for a share-secured credit card. With a share-secured card, the spending limit is determined by a deposit you make into a share account. Those funds are then kept in the account to back up whatever is spent on the card. Additionally, share-secured cards often enjoy low interest rates. Unlike prepaid cards, a share-secured card can help your teen begin building credit.

Special Offer

Dream Certificates of Deposit (CDs) are another excellent financial tool for youth. Open a Cyprus Dream CD during April for your child aged 18 and under, and we’ll match your initial deposit up to $25.

For kids aged 12 and under, a Cyprus Dollar Dog account can help teach the importance of saving and managing money. In honor of Credit Union Youth Month, we’ll give you $5 to get your child’s Dollar Dog account running when you open it in April.

Click here to learn more about these offers. Give us a call at 801.260.7600 or visit any Cyprus branch if you have questions.

Topics: dollar dog, credit cards, credit union youth month, Financial Education

Author: Garrett Lloyd