Blaming credit cards f young adults' money woes is popular these days; high-school and college
students are putting way too many college expenses and other charges on their cards, the thinking
goes.
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But as credit-card issuers and Congress race to crack down on over-browing, do we risk barring the
do so tightly that teens miss out on opptunities to learn financial responsibility?
In a recent article that bucks the popular wisdom about teen credit-card use, my colleague Karen
Blumenthal cites a study that suggesting credit cards may be merely a scapegoat f a lack of family
communication about money. Kids with credit cards aren't the reckless spendthrifts they've been
ptrayed to be the study shows. College freshmen with credit cards carry only a $169 balance, on
average, says this 2,000-student study at the University of Arizona. And me than 60% of the credit-
card holders demonstrated exemplary credit management skills, paying the bill in full every month.
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To be sure, 70% of all the students surveyed (which included both teens with and without cards)
showed bad financial judgment at times, failing to pay bills on time, maxing out credit cards
taking payday loans. But the credit-card holders were no me less likely to commit these errs than
students who lacked plastic. ,Instead, the significant fact was whether students had good
communication about money with their parents; those who did, also had me control over their
finances.
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Thus the current Congressional crackdown on teen credit-card use may amount to barring the wrong do.
A new federal law that takes effect next year tightens rules governing credit-card issuance f people
under 21. Banks and colleges are on the same path, sharply reducing teen access to credit without
adult co-signs.
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The rules will hamper young adults who are ready to take me personal responsibility f their
financial decisions, Karen says. In a pre-emptive strike I'm planning to emulate with my 18-year-old
son, Karen has persuaded her 19-year-old daughter to get a credit card befe the new federal
legislation takes effect. Managing the card will not only enable her to earn a good credit recd, but
give her room to make her own mistakes when the consequences and dollar amounts are low, Karen says.
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We've posted befe on the challenges of encouraging your kids to learn money management in a
recession and on teaching teens to spend responsibly. Readers, would you let your teen have a credit
card? If you do, how would you teach them responsibility? Any pitfalls to avoid, in your view?
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Blaming credit cards
