Teens and credit cards...

[Testing]

Testing that is really great that you are able to do those things. I respectfully submit that you are the exception, rather than the rule. That most do not fair as well and those who don't are are specifically targeted by lending institutions as a profit center.

IA the difference is sometimes it is necessary for a kid to cross the street. Credit for kids is not.

But we aren't talking about "credit for kids" here. We are talking about an 18 year old adult, if I read the post correctly, who is shortly able to obtain a credit card. What she/he does with it depends on training, and personality.

I should not be the exception. I should be the rule, and I think I was for a lot of my generation.

No one can be a target of lending institutions unless they play. That makes you a co-conspirator in your own downfall, not a victim. We have to teach our kids how the deck is totally stacked against them and how not to play.

 

[Testing]

Jeremy+3: My daughter cannot rent a house as she doesn't have a credit rating, so her house is just in her boyfriends name, she can't have her name on the utilities otherwise they would have to pay their utilities once a year based on estimation up front, she can't even get a mobile phone contract!

That seems really bizarre to me. Perhaps this is what they have done in response to the market crash and all the profit-grabbing is on.

I don't allow adults into one of my rentals unless all have a good credit rating and all are on the Lease. I'd consider a responsible young adult who made his/her case with other evidence of responsibility.

Now she has got herself a credit card and is using it to buy everything and pay off, so in a few months she can be added to the rental contract, utilities etc so she can build her rating more.

That's just crazy if it works this way today. Yikes.

My son however took out a student credit card the moment he turned 18, he bought everything on it and paid it off within a month each time to avoid any interest, he had no problem being approved to be a tenant, in getting the best deal where utilities are concerned or even getting something as simple as a mobile phone. As a result when he and his husband bought a house they found it really quite easy to be approved and for a good mortgage, having a deposit means nothing if you lack a credit rating, they had a 25% deposit but if they didn't have a decent credit rating they wouldn't be able to even rent a house never mind buy one!

Your son was wise. Be aware of the latest nasty trick banks are pulling on cardholders. Chase is a major offender. If you pay your card off every month, Chase attempts to stick a $1.50 "interest fee" on there to see if you notice. If you notice and call in demanding removal, Chase will do it. If you don't notice...well, more undeserved interest to the bank. Check your statements!

 

[mom2many]

Your son was wise. Be aware of the latest nasty trick banks are pulling on cardholders. Chase is a major offender. If you pay your card off every month, Chase attempts to stick a $1.50 "interest fee" on there to see if you notice. If you notice and call in demanding removal, Chase will do it. If you don't notice...well, more undeserved interest to the bank. Check your statements!

My friend actually had her credit limit dropped because she pays it off every month and one time she forgot a payment (honest mistake on her part, her father had just passed) they raised her interest rate.

 

[bssage]

Ok Ok I was all ready to copy and past statistics and do battle.

Instead I will politely disagree. IMHO it is not a good idea for anyone to use <U>credit</U> cards for anything ever. I also know I am being kinda a hypocrite because I have a mortgage and likely will again in the future. That does not mean I think its a good idea. I do several things that I think are bad idea's.

My final thoughts (opinions) are as stands.

Credit cards are not the only way to teach financial responsibility. Or build credit. (I think there is something called the enhanced FICO for young people without cards trying to establish credit for mortgages ect. I will try and locate the link.)

I dont feel owing money is ever a good thing.

 

[GavinH]

This has been a great debate folks --- thanks for all the opinions and help. It has certainly helped me in developing a position that is honest and one that I can feel good about.

 

[Jeremy+3]

We don't have any systems that will give you a credit rating when you haven't actually built one.

My wife and I have never had a mortgage, as a result if we hadn't in the past continually used a credit card even we would be unable to get something as simple as a mobile phone contract, me including and I pay the top tax rate!

Bssage, how do you expect to teach your children financial responsibility when you don't practice what you preach?

 

[BabyAngel]

Encouraging teens to have a credit card is not entirely bad... The idea is to make them be wise about it.

I put about 95% of all monthly spendings on credit cards..for points AND for the free payment delay. The idea is to be wise about it, pay all of it at the end of the month, 0 interest.

I certainly will encourage my daughter to do the same when she is old enough.

 

[bssage]

Bssage, how do you expect to teach your children financial responsibility when you don't practice what you preach?

I try.

And I am to a point practicing what I preach financially now. I don't have any credit cards. My only debt is my mortgage. I dont borrow from anybody. I have money taken out of my check for four different savings accounts. I am currently landscaping below the house and putting in a pool for the kids that I am paying cash for.

In the states even maintaining some debt on cards can become problematic when a unforeseen loss of job, or medical issue pops up. You may just be fine with your CC's for years. Then suddenly your in a tailspin. Its more common than you might think.

But there are some things I preach that I am hypocritical about. I would guess this is not uncommon in parenting but maybe I am wrong. My goal is for my kids to be better than me. Not just as good as me.

But I do try very hard not to be a hypocrite.

 

[IADad]

You're right that a credit tailspin is easy to have happen, which seems to me even more reason to teach how serious the responsibility of credit is.

I know these days you can do many things witha debit card you used to need credit cards for, but can you rent a car with a debit card? I don't think you used to be able to. I'd want my kids to have some available credit in case of a roadside accident, or being stranded in a city unexpectedly.

I agree that it's wonderful to keep 0 balance and I think you can teach that, but just avoiding it isn't teaching it, I think.

 

[IADad]

oh, and there are the issues of fraud protection and identity theft protection that do operate differently on credit cards vs debit cards.

 

[bssage]

IA yes you can rent a car get a hotel room ect. It works the same as a CC i believe where they place on a block of money until the transaction is complete. You may need to ask in advance.

As far as the protection. My debit is a visa debit. pretty sure it has the same protection. I think I already mentioned that the bank has called me several times when I was using the debit out of the area or spending more than a set amount in a day.

I am not trying to get into a debate. Its just my opinion. To me debt means owing somebody something. I personally dont like that. Whether it friends, family or a bank. Whether its for a book, a boat, a car, or a pizza pie. I personally just dont like it.

In my Opinion it should only be used as a last resort.

I think again IMHO that the more important lesson is to save. Use your money wisely. The difference between needs and wants. To me the lesson of how to owe money is lost without that.

I dont claim and hope I have not implied that I am any kind of financial wizard. Far from it.

 

[mom2many]

IA yes you can rent a car get a hotel room ect. It works the same as a CC i believe where they place on a block of money until the transaction is complete. You may need to ask in advance.

As far as the protection. My debit is a visa debit. pretty sure it has the same protection. I think I already mentioned that the bank has called me several times when I was using the debit out of the area or spending more than a set amount in a day.

I am not trying to get into a debate. Its just my opinion. To me debt means owing somebody something. I personally dont like that. Whether it friends, family or a bank. Whether its for a book, a boat, a car, or a pizza pie. I personally just dont like it.

In my Opinion it should only be used as a last resort.

I think again IMHO that the more important lesson is to save. Use your money wisely. The difference between needs and wants. To me the lesson of how to owe money is lost without that.

I dont claim and hope I have not implied that I am any kind of financial wizard. Far from it.

Yes, you can rent a card with a debit/visa. The visa portion offers the same protection.

I happen to agree with bssage on this one. We pay for everything out of pocket. I hate credit and if I can't pay for it, even if it means driving a beater around, then we don't get it. My teens have no interest in a credit card, they'd much rather buy what they can afford and save what is left over.

 

[cybele]

Those of my kids who are thinking about this stuff are the same.

I guess Dita has seen her cousin save up and be able to buy a block of land and have a plan for a house to be built, so now she has been bitten by the saving bug. I think thats more valuable to be taught than credit useage (that said, going on this threaf it seems that credit history is no where near as important in Australia than anywhere else, I wonder why that is?) and she has actually gone out and gotten a second high interest bank account and puts half of her pay from her after school job in there and spends the other half. She dosent quite seem to know what she's saving up for yet, whether it be house, car, or just to have it there, but it makes me very happy to know that its something she's thinking about. Azriel has been talking about opening up a second bank account too, but he's under 16 so he would need me to go with him.

 

[IADad]

not trying to debate either, just being sure everybody considers all the aspects. BSSage, I did say respectfully disagree, and I do respect your opinion.

I guess my point of view is that I got in way over my head not being terribly frivolous, but just putting things off, and doing it the easy way rather than the smart way, and I want to teach my kids about credit not just avoid it.