Family & Consumer Sciences

HOME

Kentucky High School Financial Planning Home Page

Back to E-Mail Updates page

HSFPP Weekly Update #119—Should Teens Have Credit Cards?

Message from Bob & Chris: Credit is one of the most important financial topics, not just for teens but for everyone. If you have a good credit record, the interest rate you pay for credit remains lower and you pay less for property insurance and when financing purchase of a car or home. By using credit cards wisely, you can help increase your credit score, which will save you hundreds of dollars yearly.

 

Related Updates:

Update #109 - Avoid High Interest on Credit Cards - 6 December 2004
Update #101 - LifeSmarts contest & Survey related to Credit Scores - 11 October 2004
Update #88 - Paying Back College Loans - 18 March 2004
Update #78 - Fair and Accurate Credit Transaction Act of 2003 - 9 January 2004
Update #63 - Impact of Driving Record & Credit Score on Car Insurance - 8 August 2003
Update #43 - Debit Card Liability - 6 January 2003

 

Web Site Pick of the Week:

The following student page (found on the Kentucky HSFPP Web site under links for Unit # 5) is great for helping anyone choose the right credit card based on how they would want to use it:
http://www.bankrate.com/brm/rate/BRM_ccSearch.ASP

The direct link to all other recommended links for teenagers:
http://www.ca.uky.edu/fcs/hsfp/stlink5.htm

The education leaders’ link for Unit # 5:
http://www.ca.uky.edu/fcs/hsfp/talink5.htm

 

Activity for Educators:

This week we are trying something a little different. In addition to the regular article In the New$... and discussion questions to go with that article, we are also including a link to a second article as a counterpoint to the first article, with discussion questions to go with it. You have the choice to use only the first one or to use both articles. The link to the second article, “Teens and Credit Cards: An Alternative View,” and questions related to it follow this paragraph. Discussion questions for this week’s article In the New$... appear near the end of this update, right before the Student Activity. The Student Activity consists of a credit quiz at this Web site: http://www.law.state.ky.us/cp/quiza01.htm.

“Teens and Credit Cards: An Alternative View,” by Patricia Chadwick:
http://www.stretcher.com/stories/01/010205g.cfm

1. After reading both articles, which do you agree with? Should teenagers have credit cards? Should it depend on the situation (maturity level, prior spending habits, how willing parents are to bail their teen out if he or she overspends)?
   
   
2. Do you think you would be successful in managing a credit card?
   
   
3. If your parents used the same method as Patricia Chadwick, would having a credit card be a good idea?

 

In the New$.... Kids and Credit Cards Don’t Mix

“Not long ago, I was asked to appear on a TV show to discuss whether youngsters should carry credit cards. ‘What's to discuss?’ I asked the producer. ‘That's the dumbest idea I've ever heard.’

“Not so fast, I was told. Some people think that if kids use credit cards while they're still at home being watched by their parents, they will handle credit responsibly when they're on their own.

“I repeat: It's the dumbest idea I've ever heard.

“Giving your teens credit cards is like letting them use drugs early so that they won't turn into addicts. I'm all for learning to use credit responsibly, but having a card to practice on isn't the way to do it.

“The best way to teach kids to manage credit is to have them start with cold, hard cash – ‘cold’ and ‘hard’ being the operative words. Spending money is more real to kids when they have to count out the bills and look down into an empty wallet. As my 16-year-old son puts it, ‘If I don't have cash, I can't buy stuff I don't need. If I have a credit card, I can buy anything.’

“That's what makes a new marketing gimmick like the Hello Kitty Debit MasterCard so insidious. Like the Visa Buxx card, Hello Kitty is a prepaid card aimed at children. Parents are encouraged to get the card for girls as young as 10 and reload it when it's empty.

“The card, which is loaded with fees, can be used to make purchases or get cash out of an ATM. Purchases can be tracked online, and pushers of this plastic promote it as a way to help kids manage finances.

“But, trust me, kids won't get it. To them, plastic is magic money. Credit cards, debit cards, prepaid cards – you name it, they're all just a direct line to Mom and Dad's wallet.

“Referring to the Visa Buxx card, one young woman once asked me where she could get ‘the card that my parents can fill up when the money runs out.’ In one survey, 35% of teens said having a prepaid cash card would make them ‘look cooler in front of their friends.’

What card issuers really want to do is get plastic into little hands so kids can buy stuff. Hello Kitty, in fact, bills itself as the ‘cutest way to shop.’”

Source: Janet Bodnar, “Money Smart Kids” column, “Kids and Credit Cards Don’t Mix,” Kiplinger.com, 2/17/2005.
http://www.kiplinger.com/columns/drt/archive/2005/dt050217.html

 

 Discussion Questions:

 Read the article and jot down your thoughts for group discussion.

1. What do you think is the best way to teach a teenager to manage credit wisely?
   
   
   
2. Which is better for a teen to have: a debit card, a credit card, both, or neither?
   
   
   
3. Do you feel that you need a credit card? If so, why?

 

Activity:

Take the credit quiz at http://www.law.state.ky.us/cp/quiza01.htm, and print out your results.

 

Kentucky High School Financial Planning Program

http://www.ca.uky.edu/fcs/hsfp

The purpose of this Web site is to assist county extension agents, credit union educators, and high school teachers in improving the economic well-being of our constituency, beginning with today’s students; and also, to assist teachers in Kentucky in meeting KERA’s goal that all students become technologically literate. Weekly Updates are provided by the University of Kentucky Cooperative Extension Service, and are free to all educators.