Why start the credit conversation early?
In a world where tapping a card is second nature, it’s easy for young adults to see credit as “free money.” That quick tap might feel like to big deal, yet behind every swipe is a financial decision that can shape their future. As a parent, mentor, or community leader, helping teens and young adults understand credit is one of the most empowering lessons you can offer.
1. Credit Cards Are Not “Your” Money
One of the first lessons to teach is that credit is borrowed money. It’s not a gift or a reward, it’s a loan that must be repaid, often with interest. Helping young adults and teens understand this early can prevent costly mistakes later.
A great way to make this real is to sit down with a credit card statement. Walk through the charges, interest rates, and minimum payments. Show how a small balance can grow if not paid in full. These honest conversations go a long way in building confidence and removing the mystery of how to mange their finances.
2. Explain the Power (and Risk) of Interest
Interest is one of the most misunderstood aspects of credit. It’s also one of the most dangerous if not managed properly. Use simple, relatable examples, like lending your teen $50 and asking for $60 back, to demonstrate how interest works.
Explain how carrying a balance month to month can lead to paying much more than the original purchase price. This helps young adults understand why paying off their balance in full is so important.
3. Build Credit, Build Trust
A credit score is like a financial report card. It tells lenders how trustworthy you are with borrowed money. The earlier young adults understand this, the better prepared they’ll be for future milestones like renting an apartment, buying a car, or in some instances, getting a job.
Teach them the basics: pay bills on time, keep balances low, and avoid applying for too many credit products at once. These habits build a strong credit history, and a strong sense of financial responsibility.
4. Choose the Right Card - Not Just Any Card
Not all credit cards are created equal, encourage young adults to compare cards. Look for credit cards designed for young adults or first-time users, with low interest rates, no annual fees, and digital tools, like CardWise, to help track spending.
Credit unions often offer more personalized, community-focused options than big banks. These cards are designed to support, not trap, young adults as they begin their financial journey.
5. Lead by Example
Young adults and teens learn more from what we do than what we say. Show them how you manage your own credit. Review your statement together, explain why you pay your balance in full, and talk openly about your financial decisions.
Modeling good credit habits helps normalize financial conversations and builds trust. It also shows that managing credit is a lifelong skill, not a one-time lesson.
6. Use a trusted financial partner
Navigating credit can be overwhelming, especially for young adults just starting out. That’s why it’s important to have a financial partner who puts people before profits. Credit unions, and partners like Collabria, offer tools, education, and support tailored to the needs of young Canadians.
Whether it’s choosing the right card, understanding credit scores, or learning how to budget, we’re here to help every step of the way.
Empowering the Next Generation of Financially Confident Canadians
Credit is more than a convenience - it’s a responsibility. By starting the conversation early, modeling good habits, and choosing the right financial partners, we can help teens and young adults build a strong foundation for their future.