How Should Parents Teach Teens About Credit Cards?

Arnold had his son, who just turned 18, start with a debit card. "I will definitely encourage my son to get a credit card when he gets in college after he has proven to me that he can use a debit card without any issues," he said.

Peters said Bellamkonda could also add his daughter as an authorized user on one of his existing accounts. That would allow him to monitor her spending. If she spends too much, he could pull the plug.

"That way, she'll gain the experience of using credit and start building her credit history but will not be legally responsible for her own account yet," Peters said.

Of course, if Bellamkonda's credit is bad and he doesn't properly manage the card, his daughter's credit file would be damaged. But that does not appear to be the case.

Whatever he decides to do, Bellamkonda should have a long, honest talk with his daughter.

Show her how carrying a balance and making minimum payments can result in finance charges far greater than the original purchase amount. CardRatings.com has an online calculator that illustrates this point. There are also good financial literacy resources at Jumpstart.org.

Bill Hardekopf, chief executive of LowCards.com, said parents should pull out their own credit card bills and talk their children through them. Explain the interest rate, minimum payments, grace period and finance charges. If they've had late fees or payment problems, they shouldn't hide them. "Use these as teaching examples," he said. "Getting a teenager a credit card while she lives in your home is a great teaching opportunity on finances."