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What your kids need to know about borrowing money

19 November 2018

This article is part of the Suncorp ESSI Money Family Challenge series, in partnership with the Financial Basics Foundation, an independent charity working to educate young people to better understand money and finances.

Borrowing money tends to get a bad rap. Did you know that on a credit card balance of around $4,000, the average card holder has around $700 in interest each year? But using credit isn’t always a bad idea. The trick to getting the most out of credit is to learn about the different types and how they work so you make the right choice for what you’re trying to do.

Educating your kids, friends and family about credit can help them make better financial decisions now, and into the future. Children tend to pick up a lot of their habits from adults, so it’s a good idea to brush up on the basics so you’re ready for their questions!

Types of credit

Credit is a broader topic than just your everyday credit card. Here are some examples of credit that you may of have heard before:

  • a personal loan (unsecured, or a secured car loan)
  • a mortgage on a house
  • a payday loan
  • a credit card
  • a store card, typically attached to a particular big retailer, like Myer
  • an interest free loan
  • rent to buy, or hire purchase
  • consumer leases.

While your kids might not encounter credit until they’re older, having the conversation now will get them used to hearing the lingo. Educating them on the different types and what they’re used for is all part of improving their financial literacy, which is a skill that will become valuable as they enter adulthood. 

For more on investing, including topics to discuss with your family, download our fact sheet.

Borrowing Money – Fact Sheet

One of the key pieces of knowledge to impart is that the biggest cost of using credit is interest. However, you might also be slugged for:

  • loan or credit card set up fees
  • an annual fee, typically for holding a credit card
  • late payment fees
  • overdrawing your account
  • processing fees, for manual transactions or managing your account.

Tips for using your credit better

If you do decide to access credit, here are some ideas to get you started and stay on track:

  • shop around for the best deal
  • use credit for good debt (appreciating assets), not bad debt (expenses and depreciating assets)
  • try Suncorp’s Budget Planning Tool before you commit to credit
  • keep a record of your transactions because it’s easy to lose track of what you’re spending with a credit card
  • try to pay off your credit card balance every month
  • lower your credit limit to remove the temptation to overspend
  • avoid having multiple credit cards.

Borrowing money and using credit doesn’t need to remain a taboo topic. With a little bit of thought – and some education – you can teach your kids how to effectively handle their money and develop the foundation for great habits.

Read more:

Financial Basics Foundation

The Financial Basics Foundation is a non-for-profit charity focused on educating young people in money and personal finances. Their vision is, “that all young Australians are financially capable and can manage their finances now and into the future.” For more information visit

This is general information only, current as at 20 November 2017 and is not legal or financial advice, nor is it intended to be legal advice or financial advice. It is not a recommendation or advice in relation to the Suncorp Group or any product or service offered by any company or entity in the Suncorp Group and does not take into account a person’s objectives, financial situation or needs. Before acting on this information you should consider the appropriateness of this information having regard to your personal objectives, financial situation or needs. The information is intended to be of a general nature only. We do not accept any legal responsibility for any loss incurred as a result of reliance upon it – please make your own enquiries.