Blaming credit cards for young adults' money woes is popular these days; high-school and college students are putting way too many college expenses and other charges on their cards, the thinking goes.
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But as credit-card issuers and Congress race to crack down on over-borrowing, do we risk barring the door so tightly that teens miss out on opportunities to learn financial responsibility?
In a recent article that bucks the popular wisdom about teen credit-card use, my colleague Karen Blumenthal cites a study that suggesting credit cards may be merely a scapegoat for a lack of family communication about money. Kids with credit cards aren't the reckless spendthrifts they've been portrayed to be, the study shows. College freshmen with credit cards carry only a $169 balance, on average, says this 2,000-student study at the University of Arizona. And more than 60% of the credit-card holders demonstrated exemplary credit management skills, paying the bill in full every month.
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To be sure, 70% of all the students surveyed (which included both teens with and without cards) showed bad financial judgment at times, failing to pay bills on time, maxing out credit cards or taking payday loans. But the credit-card holders were no more or less likely to commit these errors than students who lacked plastic. Instead, the significant factor was whether students had good communication about money with their parents; those who did, also had more control over their finances. [url=http://www.gamcc.com/Last-Chaos-gold-money/:vxz98urs]last chaos money[/url:vxz98urs],
Thus the current Congressional crackdown on teen credit-card use may amount to barring the wrong door. A new federal law that takes effect next year tightens rules governing credit-card issuance for people under 21. Banks and colleges are on the same path, sharply reducing teen access to credit without adult co-signors. [url=http://www.last-chaos-gold.com:vxz98urs]last chaos gold[/url:vxz98urs],
The rules will hamper young adults who are ready to take more personal responsibility for their financial decisions, Karen says. In a pre-emptive strike I'm planning to emulate with my 18-year-old son, Karen has persuaded her 19-year-old daughter to get a credit card before the new federal legislation takes effect. Managing the card will not only enable her to earn a good credit record, but give her room to make her own mistakes when the consequences and dollar amounts are low, Karen says.
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We've posted before on the challenges of encouraging your kids to learn money management in a recession and on teaching teens to spend responsibly. Readers, would you let your teen have a credit card? If you do, how would you teach them responsibility? Any pitfalls to avoid, in your view?
Blaming credit cards