Tracy Watson still gets shocked sometimes when she sees some of the latest clients coming into debt and money management seminars run by her organization.

It's not because their debts are in the tens of thousands of dollars, although that is often the case. What troubles Watson is their age.

"Kids 18 to 25," said Watson, director of communications with Money Mentors, a Calgary-based credit counselling service. "We're seeing kids coming in who had signing privileges on their own credit cards.

"They're way too young, and they're coming in with big debts."

Watson's accounts are part of a potential nightmare for any parent: teenagers and young adults -- and the financial damage they can do with credit cards.

We're seeing kids coming in who had signing privileges on their own credit cards. They're way too young, and they're coming in with big debts.

It's a scenario parents have to weigh when considering whether to hand over the plastic to their children.

While figures are hard to come by, anecdotal accounts aren't encouraging of how teens are racking up debt.

And with the advent of online retail, the opportunity -- and desire -- for a credit card is now higher than ever for those who may not even have a high school diploma yet.

"It's like a rite of passage," Watson said. "It's like getting that first car.

"We offer seminars to post-secondary institutions, but students react more to banks and credit card sign-ups."

But early exposure to credit cards isn't necessarily a bad thing.

Both financial industry officials and money management experts agree that a card can be a valuable tool of teaching your teenager about balancing their own budget -- if used correctly.

"I would say that learning about financial responsibility and managing funds is not something that should be learned later in life," said Anna Judek, senior manager of card products with Royal Bank of Canada.

"You're starting to see that in schools . . . and the credit card is a learning tool."

But an early start into the credit world doesn't guarantee prudence. Such is the case with recent SAIT graduate Amy Bown, who credited her parents for discussing the matter with her at an early age.

But Bown added even the most responsible teenager can lose track when the power of a credit card is in hand and financial freedom hits for the first time.

"My spending habits aren't that great," said Bown, who first got a credit card at 14 under her father's account, then her own at 18 -- the minimum age requirement in Alberta.

"When I had my first card, I kind of abided by my dad. But when I was by myself (at 18), that's when it got out of hand."

Bown recalls hitting the $500 monthly limit within three weeks of getting the card.

Despite attempts to rein in the spending, she would regularly hit the monthly limit ahead of schedule during her first year in college in Red Deer.

It got away from her so much, Bown said, that she stopped carrying the card with her altogether.

"My dad's financial tips didn't stick with me very well," she said with a meek laugh.

"It was a rude awakening. I definitely had a learning curve, and it took me a year to figure it out."

Bown's tale outlines how difficult it is for teenagers to gauge their debt levels, says Margareta Hinrichsen, a teacher with the Alberta Distance Learning Centre in Edmonton who is also involved in the Financial Consumer Agency of Canada's student education program dubbed The City.

Hinrichsen recounted the experience of her own son, 20, who recently applied for and quickly received a credit card at college.

"They just gave him a card with a $15,000 limit," said the personal money management teacher. "And he said, 'Mom, I'll be responsible. I'll only use $10,000.' He thought he was being really proactive when he said that."

Stories like Bown's resonate often with most parents when faced with the teen-credit dilemma. But there are exceptions, according to Wendy Ogonoski.

The single parent, who works as a foster mom for Alberta Children and Youth Services, has three daughters. The two older ones, Ogonoski said, were never problems when they received credit cards.

She believes their common sense is a result of her sitting down with them early and talking candidly about what a credit card is and the basics of money management.

"You have to know you can afford something sometimes, and you can't for others," Ogonoski said, stressing teens need to spend within their means. "If you can't afford it, you can't get it."

What helped in the case of her first two daughters, she said, may have also been the environment and mindset in which they were brought up. The family was strapped for money and the children learned to keep finances in line.

But that is what also worries her about her youngest, nearly 14.

"I'm doing better (financially) now, so she thinks the money comes from the heavens," Ogonoski said.

"Hopefully, when she gets one, she'll be ready. She hasn't had a job yet . . . and I'm going to sit down with her to talk about taxes and how much of a paycheque you actually get to spend.

"She's already talking about shoes . . . and that's what she would get (if she had a card)."

Money Mentors' Watson agrees that kids have to learn to spend within their means, and parents should ask why they want a card. But the answer also should not be a simple "no" across the board, she adds.

"It can be very beneficial when used properly," she said.

"Teens need to budget for it. And you have to explain to them that the bills need to be paid off 100 per cent, not just the interest. They need to look at it as a loan.

"Ask them: 'If you want to go out with your friends, would you take out a loan for that?' "

RBC's Judek said products such as her bank's family card option, which allows the parent to put the child's card in the parent's name and set strict limits on spending, is a good compromise -- almost like having training wheels on a bike.

"It eases your child into the world of credit," she said.

Teacher Hinrichsen said the approach for parents are simple: Discuss formulating a financial plan with your child.

"Look at what they plan to have at the end of the school year, and go through how they get there," she said.

"Understand their priorities. . . . We're doing them a disservice if we're not teaching them how to deal with this."

But ultimately, Ogonoski said, the parents have to take charge. And it may not always be a pleasant experience.

"You're not going to be the good guy all the time," she said, noting sometimes a "no" is the only answer.

"They may say they hate you, and it's not going to feel good. But what they think about you now doesn't matter.

"It's OK to be the bad guy."

cchiang@theherald. canwest.com