Allowing your son or daughter to take a credit card may sound like a good idea. And, if you trust their spending habits, it actually is, since it will teach them what responsibility is and how they can actually manage their finances.
Still, what happens if your kid over-spends on something and he/she ends up with a huge credit card debt? What are the alternatives of fixing up the entire situation?
First of all, you could use this event to teach them something important. You could talk to them about lending them the money they need in order to pay off the debt and you could do it the same way a lender does (you can even sign a contract if you want to make things more official).
Think of everything a lender thinks when someone applies for a loan: will your son/daughter be able to pay off his/her debt to you? In how much time do you expect this to happen? This way, you will show your kid how important it is to be careful with his/her finances and how much of a burden debt can be.
Secondly, take into consideration whether you co-signed or not for your kid’s credit card loan. This is highly probable, taking into consideration the fact that since 2009 it has become increasingly difficult for young adults to be approved for a credit card loan without a co-signer. If such is the situation, then the best thing you can do is to pay off the debt yourself and then discuss the issue thoroughly with your son/daughter.
If you truly believe in your son/daughter and if you believe that this was an honest mistake and that they have learned their lesson, you could simply pay the debt and not ask for anything in return. Also, you could let them pay the credit card debt themselves (especially if you cannot afford paying it on their behalf).
Keep in mind one thing though: getting a personal loan in Singapore between you and your kids could affect your relationship a lot. If they do fail to pay back on time, it could lead to remorseful feelings and shame and these are never welcomed in the family life. Therefore, try to maintain a continuous open discussion with your kid about his/her finances. Furthermore, make sure that the “business” life and the family life are split by a thick wall; otherwise, things could be harmed irremediably.