WalletPop

I don't for a minute believe this statement you made...

How many college students do you know who got a new credit card and ran out and maxed it out almost immediately? But on the flip side, how many do you know who just held onto that credit card in case of emergency or for an occasional purchase? (Hint: There are lots more of the latter.)

I think most college kids learn their first harsh lessons about credit from those "too easy to get" credit cards.

It wouldn't surprise me though if your kids didn't abuse their credit cards.... hell they probably built their own log cabin, sew their own clothes, chop wood for the stove, and grow their own food.

You are totally out of touch with reality!

Reply

Naturally, I take very seriously the criticism given by someone who refers to himself as "Al Coholic". LOL

Sorry, I guess I've always been someone who is responsible with credit. And if you check the statistics, you'll see that I'm right.... those who can't properly handle credit are a small percentage of the consumers. (Just that when they mess up, they mess up baaaaaaaaaaaaaaaad.)

Reply

I just turned 30. I'm going to prove that i'm now old by telling a "when i was their age" story...

I come from a lower middle-class family, so we're not rich at all. But when I turned 18, I moved out and started college. My parents paid for the 1st year, after that it was up to me. I held two jobs to pay for my rent and whatever and yes, I had a credit card ($500 limit!). I used it to build my credit, by making small purchases that i know i could pay back. Never once did it occur to me to spend more than I made. This "knowledge", which is also called "common sense", was imparted to me through reading the paper and internet, and watching the news. Yes, 12 years ago people were going in debt too. (Fun fact: the first time I carried a balance on my CC was the same month i bought my engagement ring for my wife. In fact, I'm still paying for that. Just not financially. ZING!)

If kids today (oh god another sign of my oldness...) can't figure out to not spend more than they make, they have to be illiterate. Present day, everyone and their brother is talking about recession. You can't miss it!

My point: To spend more than you make and go into debt makes YOU totally out of touch with reality. Not the other way around, Mr Colohic.

Reply

::high fives Doug::

Me too! (well not the wife part)

Reply

Sorry Tracy, you are the one out of touch with reality. Here is the scoop on college kids credit cards.

Card debts average $2,200 for students
The average undergraduate has $2,200 in credit card debt, according to Nellie Mae, the nation's largest maker of student loans. That figure jumps to $5,800 for graduate students. Since so many student credit cards have high annual percentage rates, the longer these youngsters wait to pay the cards off, the worse it gets.
Detweiler points out that by sticking to minimum payments it would take a student more than 12 years and $1,115 in interest to pay off a $1,000 bill on a card with an 18 percent annual rate.
If students fall behind in their payments, they get slammed with high late fees. And it's easy for things to get out of hand.

There is nothing wrong with your advice to live within your means. Unfortunately as a society we have not followed that path.

And that, my friend, is the true reality we find ourselves in.

Reply

I'm of two minds about this.

I think there's something unquestionably unethical about the school actually being in bed financially with firms that have generated student misery on such a wide scale.

OTOH, I do agree with your basic premise. Out-and-out forbidding businesses from doing business on a college campus is probably just as questionable, especially when they are providing a valuable (if oft-abused) service. Getting that credit card in college is often much easier than trying to wait and get it later, as my wife and I found out.

Colleges should really have mandatory personal finance courses. That might not be the reason for their existence, but then again, you're not doing much R&D if everyone's broke, either.

Reply

It would be nice if we could set our kids up for financial success by advising them and also by setting a good example ourselves. But in the end, most kids have to "touch the stove" before they really believe it's hot enough to hurt them.

I think mandatory finance courses are a wonderful idea.

Reply

Here's the thing -- many students leave the home knowing nothing about credit. They have never had a credit card, don't understand how interest works, and don't realize how quickly debt compounds. So when they leave home for the first time, they are easily coaxed into getting a credit card in exchange for a free T-shirt, gym bag, or sandwich. It's not that they are terribly irresponsible adults -- they are young adults who most often haven't been taught the nuts and bolts of credit, period.

I was an authorized user on my mom's credit card account in high school, and used it for gas and emergencies, but because I wasn't allowed to useit on everyday things and I wasn't the one who paid it off, I didn't truly understand how it worked. It just seemed like Mom's money, and while my parents taught me about saving, it never occurred to them to teach me about credit. Then in college I read so much about student debt and saw friends racking up credit card debt, so I was paranoid and didn't want a credit card at all. Senior year of college, my boyfriend finally convinced me to get a credit card because he taught me about why we needed credit, and I realized I had no idea how important it is.

While some college students start school knowing what they're getting themselves into with credit cards, believe me, as someone who hasn't even been out of school a year, I can tell you that many are unprepared and simply aren't equipped with knowledge. For that, I blame many parents, or even high schools for not teaching personal finance to their kids.
http://blogs.creditcards.com/emilyg.php

Reply

I just think our culture has gotten too far into the blame game. Nothing is anyone's personal fault anymore. Yes, some college students will have to learn their financial lessons the "hard way." Let them. They are adults. If they don't understand the credit game, they need to learn. ESPECIALLY if they're in college of all places, one would think they have the resources to do some research and get educated on this very important life skill.

Reply

True. I just wish parents and schools made better efforts to equip young adults with this knowledge before they go out on their own. Sure, they can learn the hard way, but wouldn't you rather your kid not wreck their credit and incur debt they'll be paying off for years if you can help it by sitting down one afternoon for a personal finance talk? It's so preventable, but so many parents are afraid to talk about money. If you have the talk and the kid still doesn't get it, then it's nobody's fault but their own. I just think it's only fair to give them a little credit education since it can so vastly affect their finances (whether an apartment complex will rent to them, how high their car insurance is, what their spending limit is on a cell phone plan, etc.).

Reply

Just curious Tracy, are you a parent with teenage (13-19) kids? I'm wondering because you seem to have alot of advice to those who do.

Reply

So your premise is that they should be able to drink at the age of 18. The fact is: if they have it they will use it. How about a bull in a china shop, or a kid in a candy store. Most older teens are not adults or mature enough to regulate the usage of a credit card. It is a proven fact and therefore, thru adept marketing, these cc companies play the odds. We haven't seen the entire impact yet but these kids are getting out of school with insurmountable college loan debt in the 10's of thousands and now will face thousands more in cc debt. What impact on our society and economy will it have with these "professionals" enter into the marketplace with no borrowing or buying power. My son did apply for 4 cards at one site, just for the free pizza's so he could eat for the week. Never used the cards but they are in hand therefore the possibility of usage is there. Advantage CC companies. How do you offer credit to someone w/o full time and verifiable employment. He was working part time for the school but with as few hours as 8-12 per week. And can anyone even come close to justifying the low $500 limit inching up to the 1000 or 2000 dollar limit with only minimums being paid. You said it yourself, these CC companies are in it to make money but with very few if any ethical guidelines. With very few money management/education courses in high school (a great need in this day and age), some very basic guidelines are needed to curtail this unethical practice. You can justify all you want but the
fact remains we should do all that we can to minimize their debt until they are gainfully employed (and the terms fair). Handing an unemployed 18 year old student a credit card with a 23% apr and calling it a fair business practice? Wow, unbelieveable. At this time of a debted nation? Yea, that'll solve the problems.

Reply

Your whole premise is on catagorizing people you know little about as "adults"? And an adult is? And when does this occur in human beings? You use an age as a parameter when some MAY mature at 18, while some at 19 and others at 20,21,22 etc.. And by your analogy, 18 year olds are mature enough to drive to a drinking establishment, sit down at the bar and partake, with his or her keys within their reach because they are supposedly "young adults". That's why bounderies were set in place to prevent the obvious immaturity of these "young adults" from hurting themselves or others. This premise of letting the private sector do what they want by enticement lead us into the subprime mess. Rules are set into place to minimize self destruction to a certian point. If you can come up with a "maturity test" that these financial institutions can apply to these applicants early on, and if passed, they can hand them out like candy at a parade for all I care. If a 23 year old living on their own with full-time employment has a CC and gets buried, I would agree that it is their responsibility, but to say the same of a un- or part-time employed 18 year old college student is painting with a very broad brush when comparing their maturity. And how old are you?

Reply

not getting personal Tracy, but I'm simply a responsible
adult with some common sense that is also a parent that knows no matter what you advise your children, some mature quicker than others, and at times need s every bit of "common sense" from others to assist those kids who do mature at a slower pace in minimizing their short-comings (to a certain extent.)

Reply

Forget it Scott. Tracy doesn't have a clue about what it's like to raise kids. Read her reply to you in #14.

Yeah, Tracy, that's all it takes to raise children, being a responsible adult with common sense.

Like I told you in a different thread, you are bright but lack perspective. Raise some kids for the next thirty years or so and report back to us and we'll be glad to tell you where you went wrong.

Al

Reply