When you want to help your child out of credit card debt, how you offer support is as important as the amount of money you provide.

Here are some simple tips to formulate a plan to help pay off your child’s credit card debt and to ensure they don’t make the same or similar financial missteps in the future.

Hold a family meeting to review what they owe.

Before you discuss the details about how much financial support you’ll provide to help your child out of credit card debt (or if you’ll provide financial support), you need to know how much they owe, to whom and what the debt costs based on the interest rate.

Agree on a meeting time where you and your child can review all of their credit card statements. Create a list of each credit card they own, the total balance owed, the interest rate, the monthly minimum payment required and the payment due date. Calculate the total balance owed so you both know how much debt you need to tackle.

Pull a copy of their free annual credit report.

In the National Federation for Credit Counseling’s 2017 Consumer Financial Literacy Survey, 42% of respondents said they had not reviewed their credit report in the last 12 months. Yet, an individual’s credit report contains information that impacts their financial present and future, including:

  • The active and closed credit accounts associated with a person’s name
  • History of reported balances on credit cards and loans
  • How much of the available credit line is in use
  • The payment history on the account
  • The amount of the monthly payments received
  • The age of the accounts, and whether they’re in good standing

Show your child how to pull a copy of her free credit report at AnnualCreditReport.com. Then compare the list of accounts on your child’s credit report to the list of credit card debt balances you created to ensure you have included all of the accounts your child owns.

Review the information in your child’s credit report together, and point out the important information it contains. For example these are the five factors of a credit score:

  • Positive payment history — no or very few missed payments
  • Amount owed on credit accounts — ideally, using lower amounts of the available credit line can boost a score
  • Length of credit history — the longer, the better
  • New credit — not applying for too many credit products in a short period of time
  • Credit mix — owning a mix of revolving accounts and installment loans

If you notice a history of missed payments, high credit card balances relative to the credit line or a habit of applying for new credit frequently, your child may need some lessons in how to use credit. (If you’re not completely sure how credit works either, check out the free resources at a nonprofit financial literacy site like Jump$tart or the Discover Credit Resource Center and learn together.)

Collaborate to tackle credit card debt.

As Credit.com notes, paying down debt is 80% emotion and 20% action. Discuss how you and your child will be most motivated to tackle the credit card debt together, then choose a debt payoff strategy you both find easy to understand and to which you are willing to commit.

For example, you may put your biggest payments toward the balance with the highest interest rate first while paying off minimums on lower interest debt, then movnig on to next next highest interest rate once the first is paid off. Another example strategy you may consider working with your child to employ is focusing on eliminating the smallest credit card balance first before moving up your list of balances from smallest to largest.

Once you agree on a credit debt management plan, set ground rules for how you’ll help your child out of credit card debt and how he’ll contribute. For example, you may agree to pay a certain amount of money to the balance with the highest interest rate each month, if he continues to make the minimum payment due on the other cards, and stops charging new purchases.

Help your child develop and live on a budget.

You want to help your child get out of credit card debt, but it’s equally important that you teach him or her how to manage money moving forward. If you haven’t taught your child about money, there’s a good chance she’s never had lessons in financial literacy. In fact, CNBC reports that just 20 states require high schools students to take a course in economics; personal finance isn’t part of the basic curriculum at many colleges either.

Start small, and work your way up to more complex topics. For example, you can introduce the concept of budgeting by simply having your child track what he spends every day (and on what) each day for a month. When the month ends, compare what he spent to what he earned and see how much progress has been made on his debt. Discuss how choosing between “wants” and “needs” impacts how quickly he’ll be able to pay down credit card debt and save for the future.

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