One of the first things I had my daughter do when she went off to college was sign up for a Discover Student it Card. This article discusses why I strongly believe this is a good move for most teens.
Is Your Teen Ready?
Credit cards are an excellent tool when used responsibly. Not all teens are going to be a good fit for a credit card, so this is where parents need to evaluate their child’s maturity level and willingness to allow their parents to act as their accountability partners.
Parents should also explain to teens the dangers associated with credit cards, before taking any steps to apply for one. My daughter was always a responsible kid, so I had her take the step to apply for a Discover Student it card, which is designed for students (more on that later).
Best Way to Use the Discover Student Credit Card
To start off, I instructed my daughter to use the card to purchase gas for her car. She was not to put any other purchases on the card. She made sure she had money in the bank to pay the Discover Student it Card balance when it came due at the end of the month.
Surprising Benefits When Used Responsibly
As a result of using the card this way, she was able to establish a credit score, which she did not have before. When her car insurance was set to renew, it dropped by over $400, because she now had a credit score (and it was good). Having this credit score made her less of a risk in the insurance company’s eyes.
Establishing Accountability for New Users
For the first year, I held monthly meetings with my teen to go over her finances. I reviewed her credit card to ensure she was still using it properly. Once I was confident she would continue using the car in a way that would benefit her financially, I stopped monitoring her.
It’s been several years (she’s now 21 and married) and her credit score is in the 800 range!
So, Why the Discover Student it Card?
Discover has a great history of catering to students. I got my first credit card in college through Discover (25 years ago) and it helped me get where I am today! I believe in the card and see the benefits it offers for teens. I have yet to find a student credit card that even compares with what Discover offers.
Perks Associated With the Card
The Discover Student it Card comes with the following perks:
- A reward for good grades. Students qualify for a $20 statement credit each year that they hold a 3.0 GPA or higher. This benefit is available for up to 5 years.
- 5% cash back on everyday purchases that is matched by Discover the first year. If at the end of the year your teen earned $50 cash back, Discover will add another $50 to that amount for a total of $100.
- The ability to activate free alerts. Teens can set their account so that alerts are issued when any new loans are opened up in their name, their Social Security number is found on the “Dark Web,” or when their credit is pulled.
- 0% fraud liability. If any unauthorized purchases show up on your teen’s credit card statement, they will not be held responsible for the charges.
- Free credit score. Each statement comes with your teen’s credit score. This helps motivate your teen to use the card responsibly. My daughter loved seeing her credit score rise as she made regular timely payments each month.
It’s best for your teen to learn how to use a credit card responsibly under your care. You’ll be there to help them navigate through any mistakes, so they eventually develop healthy money habits that will last into adulthood!