Many professionals in the financial industry warn against the dangers of student credit card use. They fear that young people will let their credit card use run out of control. Instead of fearing that young people will fail, try educating them about credit card use. After all, the benefits of getting a credit card while young far outweigh the risks.
The Risks Involved
Many young people have the perception that using a credit card is the same as paying with their bank debit card. They do not consider the extra fees or the risk of building debt. These people think that they can just go ahead and use their credit card for any purchases that they cannot afford at the time. This type of thinking can lead to a huge credit card balance. With young people, this can be particularly dangerous, as they do not have the income to pay off the balance. Credit cards allow young people to dig a financial hole that they do not have the resources to climb out of.
As their credit card debt builds, young people often don't recognize the problem until it is too late. Eventually their debt gets to the point that the minimum monthly payment only pays off the interest charges. Instead of seeking help with their debt, many young people ignore the problem and, worse yet, they even try to get a second credit card to build more debt. As these young people are trying to prove their independence to their parents, they are often too embarrassed to ask for help. It can lead to a feeling of helplessness.
Education is the Key
The root of the problem is that young people are never taught how to responsibly use credit cards. The school system chooses not to teach such life skills as money management or credit card use. This leaves the responsibility solely in the hands of the parents. Unfortunately many parents are starting to lose touch with their children just when credit education is most necessary. There are also some parents who do not know about responsible credit card use themselves.
Young people need to know how to use a credit card responsibly and how to avoid credit card debt. They need to know to only use their credit card for as much as they can reasonably pay off each month. They need to know all about credit card interest charges too. Without credit education, it is far too easy to make mistakes with your credit card.
The Benefits of Getting a Credit Card Younger
Sure there is the convenience factor of having a credit card when you are just out of high school. More importantly, a credit card helps build credit over time. The earlier you start building credit, the easier it will be to make large purchases in the future. Anytime you need a loan from the bank, the bank will look at your credit history. The longer you've built credit, the easier it is to get a loan. Plus you will pay lower interest rates. Without built up credit, you might even get declined for that loan.
Credit cards also give young people the independence that they need. Who wants to phone their parents each time they want to order something online? What about when you sign up for a video rental account or when you register for phone service? A credit card is a must. A credit card can even act as a financial safety net in tough times.
Conclusion
So unless young people get educated about credit card use, there is a good chance that they will have to learn by making mistakes. Help protect their future by giving them the tools to succeed today.
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Frequently Asked Questions
Can a credit card debt be charged to your personal ...
By: treyes724 | 03-07-2008
can a credit card debt be charged to your personal bank account without your consent? Is that legal?
Grants
By: mek72 | 19-04-2008
yes i would like more info on how i can get grants for myself. i do see that you guys have alot of options for grants,but when im trying to get more info you have to submit a credit card to get more info. Do you have a 1-800 number so i can talk to a live person there are alot of scams going on an i dont want to take part in any im already in debt dont need any more. so i need some info on how i can qualify for grants please i have tried alot of companys but i have not been able to get much help please help me.
Need help from credit gurus
By: snoopy52 | 19-04-2008
Here is one for the credit gurus out there. I'm in the middle of a break up from an 11 year relationship. We were not married, but our finances were more intertwined than most married people I know. Ok, here is the senario. We have aprox $15k in credit card debt and we own a house together. We spoke to a realtor and we owe $275 on the house and in today's market, we can only get $250k to $255k at most. After the standard 6% fees, we are upside down on the house by about $35k. Put all the debt together, we are at $50k. We are looking at two choices here. Should we just let the house fall into foreclosure and not pay that house payment and use that money to pay down the other debt, or should we just do bankruptcy and have the courts liquidate everything? Which is easier for our credit history to recover from? By the way, this is an ugly break up so renting the house till the market comes back around is not an option. The only other option that was considered was to borrow $15 to $20k each to make up the difference. Neither one of us wants to spend the next 6 to 8 years to pay back a loan for a house we don't get to live in anymore.
Can credit card debt eventually take your house away?
By: Joymoon | 07-04-2008
can credit card debt eventually bought by lawyers get a motion going to force the sale of your house?? I got a letter from a lawyer about my debt and do not know what it is about. The original debt was about 15, now 21 grand.
Loans and credit card debt
By: womannotagirl | 05-04-2008
If you have a lot of credit card debt already, will banks or credit unions still give you a personal loan? Can you get a reasonable interest rate?
I have over 30,000 dollars in credit cards, but I ...
By: Richyrey | 02-03-2008
i have over 30,000 dollars in credit cards, but I'm thinking on moving away to France where my wife was born. what is going to happen if I forget about my bills and stop making the payments on my credit cards. does that make me a criminal or is it penalize by the law?
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