If you want to help your teenager build a solid credit history and high credit scores, it’s important to establish responsible spending habits from the start. A joint credit card account can help your teen learn to manage debt responsibly, while taking advantage of your credit history to provide lower rates and better terms.  However, opening a joint account with your teen has an impact on your credit scores as well. The new line of credit, as well as your teen’s spending habits will be reflected on your credit report.  Here are a few tips to make sure that your teen’s new credit card doesn’t spell disaster for your credit scores:

1. Set up-front expectations. Owning a credit card is a big responsibility. Make certain your teenager knows when it’s ok to make a purchase, and what types of purchases are acceptable. Agree upon a set spending limit per month – ideally no more than 10-20% of the total credit limit.

2. Enforce limits. Once you’ve set up purchasing limits, make certain that your teen sticks to those limits by reviewing purchase history and balance information regularly. If you find that your teen is regularly spending more than the agreed-upon amount, you may need to place tighter controls on the use of the card.

3. Use automatic payments. Don’t give your teen the chance to miss a payment. Set up automatic payments that debit directly from his or her checking account, and follow up to be sure that payments are received on time. One missed payment can lower your credit rating as well as your child’s, so it’s important to stay on top of payments from the very beginning.

4. Set up alerts. Many credit cards have an option for email alerts if the balance on the card goes over a certain amount. If your son or daughter is in college far away, these alerts can help you to keep track of your child’s spending before it gets out of hand.

5. Review spending habits. Go over the monthly statements with your teenager for accuracy, and to be certain that your teen is using the card responsibly. Teach your teenager to compare the charges on the statement with receipts and records for the month to minimize the chance for fraudulent charges.

By taking the time to educate your teenager about responsible credit-use, you can ensure that his or her credit scores are well-established along with solid financial habits. This will be especially helpful when it’s time to establish credit in his or her own name, and will give you peace of mind when it comes to your teen’s fiscal responsibility.

These credit cards still typically have very low credit limits initially – anywhere from $200 – $500 to start – and they still charge the maximum amount in fees to start, so you’ll also have to deal with an opening balance before you make your first purchase. While the fees will not consume your entire credit line, from the moment you make that first purchase, you’re locked into that high interest rate. At 79% APR, that means for every $100 you spend, you’ll pay back an additional $79 on that debt in the course of a year. These interest rates are entirely legal under the new credit card laws as long as they are prominently disclosed in the terms and conditions of the credit card offer.

Subprime credit card companies know that most people won’t sign up for a credit card that has such a high interest rate, but they are counting on the fact that most people won’t read the terms and conditions. Instead, they tout your pre-approved status in the invitation letter, and point out the reduced fees and increased purchasing ability without ever mentioning interest rates. It’s only when you look at the fine print that you realize the interest rate is more than double most subprime rates of the past.

If you have the money to pay off the initial fees and the additional interest charges, a secured credit card may be a better option. In addition to providing an opportunity to establish a solid repayment history, secured cards offer the added benefit of establishing a savings or money market account that can help your finances grow. If you don’t have the money to pay off the initial fees, one of these subprime credit cards can quickly wreak havoc on your credit scores, as any charges that you make on the card will accrue interest that will make it difficult, if not impossible to pay off the charges and keep your available credit ratios within acceptable levels.

If you’ve had credit problems in the past and haven’t opted out of pre-screened credit card offers, chances are good that you have, or will soon be receiving those ‘preapproved’ offers from various subprime credit lenders. Don’t be fooled – always read the terms and conditions before you sign up, and don’t let subprime credit card companies put your efforts to improve your credit scores at risk.

1. A limit on fees. Under the new laws, credit card companies can’t charge more than 50% of your credit limit in fees for a new card, even if your credit is less than perfect. Additionally, they can only collect up to 25% of your credit limit in fees up front. The rest must be spread out over several months. You also can’t be hit with “convenience” fees when you pay by phone or online, provided that you are paying well before the due date.

2. No over-limit fees (without opt-in). No longer will credit card companies be able to charge you an over-limit fee on a case-by-case basis. You have to opt-in to the fees, otherwise, your card will simply be declined, and no fees will be incurred. Staying away from over-limit fees is a good way to avoid a hit to your credit scores as well.

3. No multiple over-limit fees for a single transaction. If you do opt-in to the fees, the credit card companies will only be able to charge you once. For example, if you go over your limit one month, but make no new purchases the next month, they cannot charge you a second over-limit fee, even if your balance remains higher than your credit limit.

4. 45-day notice required for changes in terms. If a credit card company decides to change any terms of the card, they must provide 45 days’ notice. You have the right to opt out of the changes, and pay down your balance, but in many cases, if you don’t accept the changes, the account will be closed.

5. Consistent due-dates. Due dates for your credit card bill must be consistent from month to month. This helps to eliminate the potential damage to your credit scores due to fluctuating payment dates.

Even with these changes, getting new credit may not be simple. In some instances, you may want to opt for a secured credit card in order to guarantee the best rates possible. If you’re having trouble deciding what kind of credit card would be best for you, it’s important to do the research first. Applying for several different credit cards at once will harm your scores, so narrow down your choices and only pick one or two applications so send in. The new credit card laws can help you to improve your credit scores, but only if you use your credit wisely.

Under the new credit card regulations, companies are forbidden to change interest rates on pre-existing balances for fixed-rate credit cards. However, many credit card companies are switching to variable rate cards for most of their customers. This means that as the prime interest rate rises, so will the amount of interest you pay on your credit cards. This ultimately leads to higher balances which are harder to pay off, and in turn can damage your credit score by causing you to utilize more of your available credit limit than you normally would.

If your credit card company switches you from a fixed-rate credit card to one with a variable interest rate, you can reject the change. However, in most cases this means that your credit card will be canceled at the end of the current agreement cycle. When this happens, if you’re still carrying a balance on the credit card your credit scores will drop due to the fact that your credit report will show a balance higher than your available limit on that card.

When dealing with a credit card that has been switched to a variable interest rate, it’s generally in your best interest to continue making payments until you have paid the balance of that credit card entirely. Then, if you decide to cancel the card you can do so without having as much of a negative effect on your credit report. Currently, because interest rates are generally low, you may even be able to save money versus your fixed interest rate, assuming you can pay the card off in only a few months.

Another option which may help you to keep your credit scores healthy is to pay off the variable rate card, and then use it for purchases that you can pay in full each month. This will help to prevent any reduction in your credit limits, as well as avoid ‘inactivity’ penalties that some banks have begun to assess. If you have credit cards that you haven’t used in several months, now is the time to do so. Make a small charge to keep the account active, and pay it off as soon as possible. Otherwise, you run the risk of owing fees due to inactivity, which can pile up and cause late payments and higher interest rates overall.

Regardless of whether you decide to keep the account or close it, the important thing to remember is to keep the account open until the entire balance is paid off. In this way, you’ll avoid a major hit to your credit scores, which will save you money on any new credit that you apply for.

Last Minute Interest Rate Hikes – Many credit card companies sent out notifications detailing higher interest rates and other terms in advance of the new credit card laws. Some of these notifications may be confusing to consumers, due to the fact that the listed changes may not take effect for several months. Here’s the bottom line: if you received a notice of a change to your credit card’s terms before August 20th, you only have 15 days to opt out, even if the proposed changes don’t take effect until months later. Don’t wait to take action, and be sure to read the fine print in order to avoid having your account closed, or assessed additional fees.

Changes to Minimum Payments – Some credit card companies are also raising the amount you have to pay each month if you carry a balance – up to 5% from the typical 2-2.5% seen in years past. While you can’t always opt out of these changes, in some cases you may have the option to write in and retain your old rates. Be careful with this option, however, as some companies will close your account if you opt out of their new terms.

Increased Penalties for Late-fees and Over-limit Fees – While these types of penalties are easy to avoid if you pay your bills on time and stay within budget, credit card companies are also reducing consumers’ credit limits without providing any notice. Because the credit card companies aren’t required to inform you about changes to your credit limit, you could rack up over-the-limit fees without realizing it until your statement arrives in the mail. Your best defense against this is to sign up for alerts that will let you know when you are approaching your limit, coupled with regular vigilance through online access or customer service, so that you always know your limit before you go shopping.

Another way to avoid paying extra: Opt out of over-limit purchasing altogether.  Companies are now required to allow you to do this, but you will have your credit card declined for any purchase if that purchase would take you over the limit. If you typically keep your balances low, but aren’t sure about your credit limit, this is one way to avoid getting hit with additional fees.

Most credit card companies allow for automatic payment of your bill, either in full or the minimum balance, monthly. By taking advantage of these programs, you can eliminate the chance that you’ll be charged a late-payment fee on your accounts as well. Just keep track of your due dates and be certain that you have the funds readily available to cover the automatic bank draft, or you could wind up paying just as much, or more, in overdraft fees from your bank.

While changes in interest rates require a notice, these reductions to your credit limit can come without warning, leaving many uninformed about the reduced limits until they receive their monthly statement. Reductions of hundreds or thousands of dollars are not uncommon, and can really put a dent in your credit score, regardless of how responsible you are when it comes to making on-time payments each month. What’s worse, you may be hit with over-the-limit fees on newly reduced balances, when your original spending was well-within your old credit limit.

Many consumers are surprised to realize that unlike interest rate changes, changes made to the credit limit can be done at any time, without informing the consumer. This means that even if you have a $1000 credit limit today, there is nothing stopping the credit card company from lowering that limit to $800, or even $500 tomorrow. The only way to stay informed is to check your account information regularly. If your credit card company offers online access to your account, it may be helpful to check your credit limit in this way.

Another option is to set up an alert that will send you an email or text message when you are approaching your credit limit, but this may not be as helpful in terms of saving your credit. Why? The ratio of how much you spend on your cards, versus your available credit limit is a factor in calculating your credit scores. If you wait until you are only a few hundred dollars away from your limit to set an alert, the damage to your credit score may already be done. While you will avoid any sneaky over-limit fees, you won’t be able to prevent the hit to your credit score that comes from over-utilization of available credit.

If one credit card company reduces your balance, others may follow suit as your available-credit-to-debt ratios will now categorize you as a higher risk. While the logical option would seem to be avoiding the use of your credit cards altogether, this choice can backfire, as many credit card companies are actively closing accounts that do not have any activity after a few months. Your best option is to continue using your cards, and pay off the balances each month if at all possible. This will keep you from having an account closed for inactivity, and it will also keep you from being targeted for credit limit reductions due to carrying a balance each month.

While there is no law that requires your credit card company to keep you informed about your credit limit, you can remain informed by keeping a close eye on your balances, either online or via customer service. Don’t let surprise credit limit reductions derail your good credit – set up alerts, check your balance regularly, and pay off as much as you can to avoid unpleasant repercussions.