The Truth About Teenagers and Credit Cards

by Dave Ramsey

Myth: Make sure your teenager gets a credit card so he or she will learn to be responsible with money.
Truth: Getting a credit card for your teenager is an excellent way to teach him or her to be financially irresponsible. That.s why teens are now the number-one target of credit card companies.

Over 80 percent of graduating college seniors have credit card debt before they even have a job! The credit card marketers have done such a thorough job that a credit card is seen as a rite of passage into adulthood. American teens view themselves as adults if they have a credit card, a cell phone and a driver's license. Sadly, none of these "accomplishments" are in any way associated with real adulthood.

You are not teaching your sixteen-year-old child to spend responsibly when you give him a credit card any more than you are teaching gun responsibility by letting him sleep with a loaded automatic weapon with the safety off. In both cases, you as a parent are being stupid. People with common sense don't give sixteen-year-old's beer to teach them how to hold their liquor. By giving a teenager a credit card, the parent - the one with supposed credibility - introduces a financially harmful substance and endorses its use, which is dumb but unfortunately very normal in today's families. Parents must instead teach the teenager to just say NO.

Anyone visiting a college campus in recent years has been shocked at the aggressive and senseless marketing of credit cards to people who don't have jobs. The results can be devastating. Recently, two college students in Oklahoma gave up on their credit card debt and committed suicide with the bills lying on the bed beside them.

Vince called my radio show with a problem that has become a trend. Vince signed up for multiple cards during his sophomore year at college to get the free campus t-shirt. He wasn't going to use the cards unless there was an emergency, but there was an "emergency" every week, and soon he was $15,000 in debt. He couldn't make the payments, so he quit school to get a job. The problem was, without his degree, his earnings were minimal. Worse than that, he also had $27,000 in student loans. Student loans aren't payable while you are in school, but when you leave school by graduating or quitting, the payments begin. Vince was one scared 21-year-old with $42,000 in debt but making only $15,000 per year. What.s scary is that Vince is "normal.. The American Bankruptcy Institute reveals that 19 percent of the people who filed for bankruptcy last year were college students. That means one in five bankruptcy filings were by very young people who started their lives as financial failures. Do you still think it is wise to give a teen a card? I hope not.

The reason why lenders market so aggressively to teens is brand loyalty. The lenders' studies have found that we consumers are very loyal to the first bank that certifies our adulthood by issuing us plastic. When I am doing an appearance and cutting up credit cards, the emotional attachment many people have to the first card they got in college is amazing. They clutch it like it is an old friend. Brand loyalty is real. For over 10 years, we've been teaching people how to beat debt and build wealth.

Dave Ramsey is a personal money management expert, an extremely popular national radio personality and best-selling author of "The Total Money Makeover: A Proven Plan for Financial Fitness." In his latest book, a follow-up of his enormously successful New York Times best-sellers Financial Peace and More Than Enough, Ramsey exemplifies his life.s work of teaching others how to be financially responsible, so they can acquire enough wealth to take care of loved ones, live prosperously into old age, and give generously to others. This content is provided by DaveRamsey.com and may be used only in its entirety with all links included. Dave Ramsey is changing the face of America by helping people.

Copyright © Dave Ramsey. Permission to republish granted to Pregnancy.org.

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