One of the warnings we (Jim, Julesie, and me) gave the older boy before he left for college was to stay away from credit cards. They are dangerous if not used properly, and can make life miserably expensive for decades.
I remember when *I* was in college, companies were constantly trying to get us students (and newly-away-from-home-and-doing-whatever-we-wanted-to-do teenagers) to accept the cards they “pre-approved” for us. Back then (late 80’s), credit cards weren’t as big of a problem in general as they are today. People were still paying for most things with cash or check, and layaway programs were readily available in department stores. I was able to easily ignore the offers.
When Jim and I got married, we made the decision that we wouldn’t get any credit cards. Our income was miniscule anyway: we were used to not shopping for anything but necessities.
Eventually (I think it took about two years), we decided to get an Exxon gasoline card. Then? A JCPenney card. For the most part at that time, we used the cards we had in a very, very responsible manner. Later in life, we added several other credit cards and, though there was one point in time when we had total balances that were far above the national average, we buckled down, paid it ALL off, and cut up all but one credit card. Now we pay off our one credit card (yes, only ONE!) at the end of each month.
The way our country has become a credit-based society worries me; it has for a while now. I feel certain that a majority of people (more than we can even imagine) are living beyond their means. Although the state of our economy has forced many people to make cutbacks, I wish there were more people who would voluntarily cut back on their use of credit. So many kids today have been brought up seeing their parents charge all kinds of things they have no business buying, and I believe that this is part of the reason that there is an outrageous sense of entitlement among young people.
So when the credit card companies of today stalk college students (and newly-away-from-home-and-doing-whatever-we-want-to-do teenagers)? It’s a different story than it was twenty-five years ago. So many of them will readily accept these pre-approved cards and then use them irresponsibly. This will add to the nation’s madness, as well as put young people way behind the eight ball by the time they graduate from college.
The older boy has received, here at our home address, more than five credit card offers in the mail since he left for school just four weeks ago. For now, he knows that it’s ridiculous for him to sign up for them: he’s not working regularly and the money he does make, needs to go towards tuition and the occasional pizza (or Easy Mac, for which he walked to the grocery store on Saturday, over three miles each way!). I’m happy that he is also a young man of simple tastes; we talk about financial stuff all the time in this house: he knows what things cost and he has always had to work for things that are on the high-end side of his wants, like his computer, iPod, CAR…
I think we’ve done a great job preparing him (and his brother) for what lies ahead. I believe that when he does sign up for a credit card, it won’t be for a few years until he has a regular job, and I think he will use it responsibly. (At least, I hope so!)
What about you? Do you talk to your kids about the pitfalls of credit cards?
©2010 Suburban Scrawl
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We're not quite there yet. 🙂 But we have already started teaching our 3 & 5 yos about money. They don't get allowances (though they are expected to do chores appropriate for their age levels) but they do occassionally get quarters, etc. from other family members. Each boy has a bank in his room for their "monies". When they ask for extra things (which, honestly at this point usually is a 25 cent gumball) we tell them we won't buy them one but will borrow them money and they can pay us back with their own money when we get home. We've seen a decline in the number of gumballs purchased, which makes us happy for dental reasons as well! 🙂
Obviously, I'm not there yet… BUT this is my area of expertise. I'm really interested to see how companies market to college kids now. As of February 28, they had to change a whole lot of things (I wrote a post on it back then), including not marketing on college campuses, not doing the giveaways for signing up, and requiring a cosigner or proof of income for any applicant under 21 (and my understanding is that most simply decided to not approve people under 21 due to system complexities required to code that).
Even with him getting preapproved offers, note that he may not be approved with them. They still require additional information and verification. AND to reduce tempatation, you can also request to be removed from preapproved lists going forward – there is an 800 number printed on every preapproved offer just above the fold in nice bold print where you can request to be taken off ALL preapproved offers. It is a central database that all companies are required to bump up against when doing a prescreen, but prescreens take a ton of time to run (trust me, I've done them) so it can take a few months before you receive no more. There is both a 5 year and a lifetime option for removal.
And teaching kids about credit and money? Yep, we do that with the wee ones all the time. ALL the time. It will be an ongoing discussion.
Credit itself though? Not a bad thing. Having credit and taking care of it makes getting auto insurance, renting a place, even getting a job easier as you exit college life.
Stepping away fro my podium now….
I think the way you are preparing your boys is the only way to go. Even here in Germany people start overusing their credit cards. Not as bad as it is in the US but still enough to get you in trouble. I don't buy on credit and when i use my credit card I balance it out at the end of each month…the mortgage is bad enough a burden 😉
Man do I wish my parents talked to me about this! How cool did I feel when they practically BEGGED me to take the credit card!! It was all downhill from there.
Luckily I've been able to pay it all off, but I know SO many people who have gotten buried by this very problem.
Oh, yes. My daughter always wants to swipe the card at the grocery store and I'm quick to point out that her moment of fun comes with interest.
It's an unfortunate fact that our generation is desperate for instant gratification (thanks to the internet, social media, etc.) and credit cards come with that gratification. Unfortunately, too, most don't realize the penalites with interest or high balances.
Curt and I have 1 joint AmEx credit card, and I have a Best Buy credit card, which I have only had since February (even after working there for over a year!) I bought him a brand new tv & stand on that card in Feb, and it's already paid off.
We struggle with money a lot– Curt's background is totally different from mine, so it's a challenge each month when we budget, but still, I refuse to backdown and get more credit cards. He wants more, I want less. hah. Our AmEx is used strictly for "emergencies" only– we have used it a few times over the course of the past month or so due to my decline in health, but other than that? Nothing. I have never even bought a PURSE on that thing, which for me is miraculous, as I have a penchant for expensive purses 😉
Anyway, my point is he will thank me in a few years when we buy a house. At least I hope 😉
I started working to help my mom last year of HS. We were doing worse than struggling, she and I made close to nothing even though we were working our butts off. Once I started college I saw the opportunity and signed on for the first credit card I was offered. I needed money from anywhere I could get it and I was able to do A LOT with it. Groceries, bills, rent, you name it, I paid it with the brand new spankin' credit card. Needless to say I racked up a pretty huge bill and it took me forever to pay off. My mother has never wanted to get a credit card and knew nothing of me having one then she would've had a fit!). I knew it came with interest and all that good stuff but I thought it was either that or no heat/no electricity/no groceries. It saved us, really.
Then I got a new job and made a little more and gave up the credit card with the highest interest rate ever-that's how it felt to me! I went without for a couple years. Now, I only have one, (establishing credit history) and glad I've been able to keep up with it. Nothing like bills or groceries go on there anymore, just small stuff I know I will and can pay off 🙂
Oh yes, I've sat each one down and showed them what happened to me. I make them read the (>20%) interest charges, and how much that trip to McDonalds costs you in the long run. I have an italian friend who said to a credit card company, " My people get arrested for this".
I'm not teaching the kids about credit cards yet, because I'm still teaching myself. What you said about the youth and entitlement is dead on. After college, I had that entitlement feeling and because I was on my own, managed it pretty well. But once the wife and kids came, that feeling didn't go away. I thought for some reason that I was still entitled to everything I wanted. I knew I had responisbilities as a father, so the kids were always taken care of, but that's where the credit cards came in. They were there to fulfill that sense of entitlement even though the means to do so were no longer there. I don't know what caused me to see the light, but I did and I've buckled down to the point that there's only one card to go. I too hope to be like you soon, having only one card that never carries over a balance.
My freshman year MBNA was practically a resident on our campus and I got my first shiny new credit card with a $500 credit limit with no income to speak of. It was stupid, ridiculous and maxed within a month.
When it comes time for my kids to go to school I will do for them what my parents did for them. Give them one of our cards with their name on it for books and necessities. The first time they use our card for anything but something they have to have for classes or didn't get our approval on, it is gone. I can only hope that I've laid a strong enough foundation for my kids to not want to spend money they don't have.
Yes, we do, but just in case, we've thrown away all of the credit card offers that have come in the past month. I know–it's probably illegal or something, but I don't care.