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Kids and credit cards
Our Small Town Hall is generating some discussion around the web, as we hoped it would. The Consumerist has started a debate about one of the questions we asked the kids: Should you have credit cards?
We talked about several topics, including saving, borrowing, the recession, and jobs. You can watch all the video highlights here. But here's the video clip on the credit card question:
The Consumerist debate is fairly split. Among the responses:
Yes, absolutely. Give the kids secured credit cards where the limit is whatever deposit you put into it. Then when or if they make mistakes, they aren't able to dig themselves an enormous credit hole. At the same time, those kids who are responsible would be building some credit history for the future.
No way, after being stupid and putting myself in debt in college, NO. It starts with "oh, it's just for gas.." then it's dinners, a few shirts, then it's a computer... it just gets worse. I'm still working my way out of that crap.
I remember those days myself.
What do you think?
Upon reading the headline of this story my first reflex was to say "No!!!!!" Because I fell into the credit card trap 20 yrs ago when I did not qualify for financial aid at college --I have regretted it ever since. It took me till 2006 to find the gumption to cut up my cards and really start paying down my debt. I cringe at the thought of how much I've really paid to cc companies...<i>gaaahh!</i>
However... had I been more aware of debt --and also how to SAVE-- when I was 18, I believe I would have a learned a hard lesson earlier.
I say let kids experience the responsibility of managing a (credit) card but it should definitely be a secured card. Getting kids more involved in their own personal financial responsibility early is healthy and smart.
As much wealth that this country has and can create, it's ridiculous that the topic of personal finance is not discussed more often and in more detail.
Credit cards can be treacherous. I was taught by my father, a depression era child, that you have to pay the credit card in full each month. I was taught this at about 12 years of age and it stuck with me and my 2 younger brothers and now my 2 kids.
The issue is knowing yourself. If you can't control your desires, then don't get a credit card. In the case of my kids, I felt confident in their ability to use the card as I told them to. Even in their 20's today with their own card, they carry a credit card of mine since they are both in college. In the case of kids, parents have to know them and, more importantly, monitor the receipts each month. I was checking receipts and charges from the first time I got a credit card so it was not hard to monitor.
