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The new ban on plastic for people under 21 (unless they have an adult co-signer or the means to pay) aims to protect them from debt disasters. But Sharon M. Danes, a family economist at the University of Minnesota, says you can teach your child good credit habits well before drinking age.
Age: Grade schooler
Do this: Get him a library card. Make sure he pays any fines.
Lesson: "If you borrow something, you are responsible for giving it back," says Danes.
Do this: Lend him money if he wants to spend more than he has. Charge him interest and agree on a payback schedule beforehand.
Lesson: Borrowed money isn't free, and interest can add up fast.
Age: College freshman
Do this: Add him as an authorized user of your credit card. Establish how much he can spend without approval and the penalty for breaking the rules. Enforce it.
Lesson: This is what it's like to deal with a card issuer.
Do this: Co-sign a card of his own. Assuming he has stuck to your agreement and used the card responsibly, he's ready to fly solo.
Remember: You're still on the hook if he flakes on payments.
NEXT: 89. Best way to preserve family harmony