Would you like to do something really good for your children, or grandchildren? Here’s something that we did with our kids as soon as they turned 18.
We went down to our bank, and we took out a Certificate of Deposit for one year in the amount of $1,000. We then used that CD as collateral for a $1,000 loan for the child, in their own name – not ours. The $1,000 went into a separate account, and the monthly payments were made from that account automatically. This way there is not chance of the loan payments not being made on time.
At the end of one year, the Certificate of Deposit paid about $40 or so in interest, and it cost us $50 or $60 in interest in the loan. So for about $16 our child had a strong credit history that was beginning to build. This has followed them through their life and they have learned the importance of good credit.
So think about making a short term investment of just a few dollars, in order to get a good start on your child, or grandchild’s credit report.