Raising Children on Sound Credit Card Debt Advice

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Credit card companies call on schools and colleges these days to reel them in when they are still young. That’s what happened to my niece Jessica. She was responsible young 18-year-old who worked part-time to pay for her own college tuitions. She felt that a credit card in her own name would be a nice thing to learn to be a grown-up with, and she figured she wouldn’t really use it for anything other than gas. Before the year was up though, inexplicably, it helped her leave for responsible self behind, and let herself in for $2000 in credit card debt that she had no idea how to get out of. If there is any one thing that teens these days need, it is credit card debt advice.

It shouldn’t be news to anyone that most college students quickly sign up for their first credit card while  barely out of high school, and are quickly initiated into the sinking feeling of credit card debt. But these days, it starts sooner – while they’re still in high school. About one in three high school seniors these days have a card that is either completely in their own name, or is cosigned by a father or mother. That’s about three times the number from 10 years ago. High school seniors on average now walk about burdened with about $1500 in debt, tapping their friends for some credit card debt advice. Much of this could actually be illegal. No one under 18 is actually eligible under the law to hold a credit card on their own. Since it’s actually illegal, credit card monitoring services don’t exactly keep track of these.

It happens somewhat artfully; children living at home with their parents receive credit card solicitations addressed to both them and their parents together. And parents relent. Rarely though, parents who see this sometimes see that to give children a credit card to teach them responsibility is really unnecessary; they feel that the pressure children have to turn in homework assignments on time should be lesson enough in responsibility. Most teens are too young to really understand how credit works;  for instance, my responsible niece apparently thought for quite a while that when they asked for a minimum payment, she just had to pay that to be let off the hook. How could anyone reasonably expect young adults to learn about credit card debt when they are in college and walk with some five or six credit cards and about $1,500 in debt?

For parents and teens trying to avoid credit card debt, advice that makes the most sense would be to go get a debit card instead, or to get a prepaid card. The move to credit cards can’t be all that sudden. Children need to observe closely what you the parent will look for in a credit card bill, what each term used on a bill means, they need to understand what interest is and what reasonable interest is. They need to spend months seeing what it is you do when you get your credit card bill, and why you do it. You need to succeed in throwing a real scare into your child about what careless credit card usage can do. Give them nothing more than a $500 limit, and constantly repeat how dangerous anything higher than that can be. As unbelievable as it seems, young people just don’t get that you need to pay back credit card debt. Show your child how a credit card debt calculator works. Show them how if they have a $500 balance, if they pay nothing more than the minimum payment of $20 a month, at 12%, it could take them to years to  pay it back. And the ultimate in credit card debt advice would be to lead by example.

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