…And Why Teens are the Number 1 Target for Lenders
If you think getting your teenager a credit card will teach them how to be responsible with money – you’re far from the truth. Credit cards are a great way to create irresponsible spending habits early on in an adult’s life. And financial institutions are now targeting teenagers for this very reason.
The scary truth is that over 80% of graduating seniors have credit card debt before they even have a source of income! Media has so cleverly placed it in the minds of our teenagers that to be an adult requires three things: a driver’s license, mobile phone, and a credit card.
Allowing your teenager to take out a credit card before they can learn to manage their money responsibly is a recipe for disaster. The simple truth is that trying to teach your teenager financial responsibility by giving them a credit card, is akin to letting them sleep with a loaded gun under their pillow to teach them gun responsibility.
The only correct response to “Mum can I have a credit card?” is “No”. Followed by a discussion about the harmful effects of using credit instead of saving to buy the things you want. Unfortunately, teenagers with credit cards are all too common and peer pressure, as well as media influences, will be hard to combat over the long term.
In some cases taking out a joint credit card with your teenager is a viable halfway point. You’ll be able to see exactly what they are spending money on and guide them to making wise decisions.
College Party or Credit Party?
If you’ve visited a college in the last few years you’ll be familiar with the excessive confrontation of advertising for student credit cards. Recently two Oklahoma students committed suicide over their credit card debt, leaving the latest bill on their bed as they hung themselves in their room.
So many students get caught in the credit card trap that college dropouts are on the rise. Not because students aren’t making the grades, but because they need to service an out of control credit debt. One student, Alice, dropped out of college because she had to get a job to make the repayments on her $12,000 credit card debt.
She had been coaxed into taking out multiple credit cards in college to get a free T-Shirt, and had decided never to use the cards unless there was an emergency – but there was an emergency every other week.
When she dropped out of college to get a job, she not only had to make repayments on her credit cards, but also on her $25,000 student loan too. Now because she hadn’t finished her degree she was on minimum wage, and really struggling to pay back her debt.
The crazy truth is that a full 1 in 5 people who file for bankruptcy every year are college students. That means that 20% of college graduates started their lives out as financial failures.
If you want to find out more about teaching your children to treat money with respect, then check out Fran Christie’s new book “101 Money Tips for Kids and Parents” here
