The Truth About Teens and Credit Cards

from daveramsey.com on 03 Aug 2009

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% 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 16-year-old child to spend responsibly when you give him or her 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 16-year-olds 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.

Pouncing on the College Prey

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% 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.

Help guide your teenager toward making smart money decisions. Dave's bestselling book, The Total Money Makeover, is an entertaining and helpful resource to get them started.

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Post a Comment

I think teens should not have credit cards. bad idea
Pancake March 11 2010 9:42 AM

Harper-I hate to criticize your obvious understanding of maturity, but your grammar alone makes me concerned about more than just teens and credit. Credit cards are a scary business at any age. Teenagers, myself being one, are barely responsible enough to remember their homework, let alone check balances, pay bills and keep up with interest rates. I think that if a teenager wants some plastic money, he or she should begin with a debit card. Debit cards are a baby step toward getting a credit card, and parents can monitor the flow of money with a debit card more than with a credit card. Alex- Have you asked your husband what his son plans to do when he is an adult? Will his father still pay his bills? What lesson is his father teaching him by giving him free reign with no responsibility? Teenagers should be taught responsibility by self-control, not limitless spending. Debt will undermine happiness. Self-control and moderation in all things can serve well for anyone--especially teenagers. It's common sense: buy things you can afford or you know you can pay off quickly, and save up for things you want but can't afford. I'd rather wait and save for fancy expensive things than spend my life in a mountain of debt.
Concerned March 10 2010 11:23 AM

I am a teenager and i know that teenagers are mature.Alex says that her steop spends too much money. That doesn't mean that all teenagers are like that. Its actually your husbands fault for not leeting you say anything to him. I know that most teenagers parents would say no and we are responsible enough to handle a credit card. How is it iresponsible to let us use credit cards.most teenagers have jobs and they could buy themselves items.We teens are not toddlers we have self control and understand our parents conditions.
harper January 14 2010 3:00 PM

Hello: I have a 16 year old daughter from a previous marriage, my husband has a 16 year old son from a previous, and we have a 9 year old daughter together. We've been married for 10 years & truly our only main source of arguments is the older two children. Recently my stepson was given a credit card - that is actually my husband's card but since they share the same name my stepson is able to use it without problem. I was shocked when I learned that he had done this considering his age, that no restrictions were placed upon the use of the card & that dad just pays it off every month for him. The two bills that I have seen myself (I believe he intercepts them in the mail) have both been near $2,000.00, give or take. That is PER MONTH!! A 16 year old boy in high school. Not responsible for one dollar of that bill. He recently went Christmas shopping for his girlfriend and surely his other family members/ friends and when he rattled off the list of things that he'd bought his girlfriend alone, I thought I would die! The main problem is communication. We are great together in almost every other way and we do not feud about money since we are fortunate enough to have substantial income. My daughter has to work for her money - I'd have it no other way - but I'm sure as a 16 year old she is wondering why there is such a difference in the way that they are treated. He is handed everything, she is not. My husband is very protective (oddly so) of his son from me therefore, I am basically not allowed to voice my opinion on anything about my stepson - unless it's good, of course. So talking about this with him is fruitless as he will immediately be on the defensive & not discuss with me in an adult, parental manner. If I had to guess, he'd say something along the lines of, "I pay the bill so it's none of your business & what do you care anyway?" I need help figuring out if it's normal these days to give a 16 year old (with no job or chores) a credit card that has no limitations? Or am I right to be concerned that it's a horrible idea to do this?
Alex January 03 2010 9:41 AM