First Credit Card

Q: My 19-year old son has charged his first credit card to its $500 limit and hasn't made even the minimum payment in more than four months. He's getting calls asking for payments. I'm worried about what this will do to him in the future.

A: This is a question we hear often and you're right to be concerned about your son's future. Credit is a privilege, not a right, and he will have some work to do.

Derogatory information on a person's credit report will lower their overall credit score and make it much harder to obtain credit in the future.

Your son should start by creating a budget that allows him to make reasonable payment arrangements to repay his debt. His improved payment history will be reflected on his credit report and his credit score will recover over time.

As a parent, you may be tempted to pay the debt for him. I don't encourage you to bail him out.

It's easy to spend money -- and particularly painlessly -- with plastic. Let your son learn the consequences of his actions before he makes an even bigger mistake.

Avoid an "I told you so" conversation with your son by suggesting he seek professional help. There is no cost or obligation to talk to one of our counsellors and our appointments are confidential.

We'll look at his circumstances objectively, help him develop a workable budget and find a solution he can live with.

A good credit rating will help him with better interest rates on a future car loan or mortgage. He can travel abroad carrying his own card in his wallet, and he won't limit employment opportunities due to a negative credit report.

Learning how to manage his money and credit responsibly now is a lesson that will benefit him for a lifetime.