Important Lessons When It Comes to Teaching Credit to Kids

Given the current state of the world, you've certainly thought of building credit for your child. That's perfectly valid since the future is rather unpredictable, even with the vaccines starting to roll out. However, have you considered a credit score education for kids? It's actually never too early to start teaching your children about finances.

What are the important things to remember when teaching kids about credit?

Finances will be a constant in your child’s life no matter what they do, and no matter how old they get. Letting them learn exactly how credit works will certainly give them a good advantage. More importantly, being responsible in the financial sense is actually something that even adults find tough to master. 

In this way, your child will have a solid foundation when it comes to spending and saving. They can also be made aware early on of the burdens in the financial sense that happen when credit is misused.

What are important things to teach kids when it comes to credit?

This doesn't just apply to credit; it applies to most things: starting with the basics is always the best way to go. Start a conversation through a simple explanation of what a credit card is: money that's borrowed, which can be used to buy things. Adults typically use them when they're trying to buy something but don't have the exact amount they need. Additionally, credit cards are used to build creditworthiness overall and for making big purchases. Since the money on a credit card is borrowed, it's important that it's paid back at the soonest possible time.

As we all know, there are a variety of terms that are associated with credit cards. It's key that your children learn these terms as well. Go over them however many times until they have an understanding of it. This way, debt, loans, and credit will be well understood.

These terms include, but are not limited to:

  • Credit card balance
  • Credit card payments
  • Credit report
  • Credit score
  • Credit limit
  • Interest

Make sure that your kids understand that a bank or some other money lender giving a credit card will also include the lender saying just how much they’re allowed to borrow. Emphasize that this is basically what credit is. Make sure they know that the amount you are lent will likely increase the more responsible you end up being with the credit card you get.

Financial irresponsibility through borrowing more than is allowed or not being able to pay back borrowed money promptly will result in a late fee. That's aside from the amount that's already owed because it was borrowed/spent and not paid back yet. 

Those late fees have a term that defines them: interest. Interest will continue to add up until the borrowed money is paid back in full.


Teaching young kids about credit and finances is not as far-fetched as some people may think. If anything, giving kids proper education on the basics of finances, such as what goes into a credit card, will give them a major advantage in life. Be sure to explain terms such as interest, credit card balance, and credit limit.

On the lookout for the best money apps for kids? Download Kiddie Kredit, the mobile app designed to educate children on the credit system by completing chores!

John D Saunders

John D. Saunders is a Web Designer and Founder at 5Four Digital, CMO at Kiddie Kredit and an Automation Expert with a decade of experience building brands online. He's worked with clients including Audi, NAACP and Apps Without Code.