A recent study by the Credit Abuse Resistance Education (CARE) program showed the number of 18- to 24-year-olds declaring bankruptcy has increased 96 percent in the last ten years. Credit payment problems are one of the key reasons younger people file for bankruptcy. According to the CARE report, Bad credit can negatively affect teens in the future — their ability to get a job, a loan, basic insurance or even an apartment.
According to a Teens and Personal Finance poll conducted by Junior Achievement Worldwide, 11 percent of all teens now have credit cards. Of teens ages 13 to 14, 6 percent already have credit cards.
Many of these teens don’t know enough about borrowing to use a credit card, but issuers know a lot about them, and they want their business. Encouraged by the numbers, and the fact they have saturated the adult card market, issuers are eyeing post-pubescent, internet-savvy teens.
Some people think that if kids use credit cards while they’re still at home being watched by their parents, they will handle credit responsibly when they’re on their own, but giving your teens credit cards is a little like letting them use drugs early so that they won’t turn into addicts.
A better way to teach kids to manage credit is to have them start with cold, hard cash. Spending money is more real to kids when they have to count out the bills and look down into an empty wallet. To them, plastic is magic money.
I always laugh when I read that kids should not have credit cards.
First if I am a parent, not only do I get my child put on a credit card as an authorized user, but I make sure they have at least one card in their name as early as possible.
Since am trustworthy and have excellent credit, I would make sure the card is only used when I know about it. My child would not carry the card with them until later in life and in the meantime they are creating a credit history that will help them greatly in the future.
Of course you shouldn’t just get your child a credit card and be done with it. Get them one, but don’t let them have it. You have to play the game, so get one in their name… build their credit and then once they are financially smart and stable you can turn over the card to them and let them start out with not only a great credit history, but with the wealth and knowledge that they need to succeed financially in their life.
I agree that having a credit card and learning to use credit the right way is important for young people. I wrote an article titled The Truth About Credit Cards that talks in depth about the postives of having a credit card. Credit cards aren’t the problem. It is the way that they are used. There needs to be more early financial education.