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A Family Approach To The Law

Teenagers and credit cards: Never mix, never worry?

Before the financial meltdown in 2008, credit card companies really wanted your business -- and everyone else's business, for that matter. A typical American household received multiple "special offers" on what felt like a daily basis: one for each adult, one for a joint account, one for each child, regardless of the child's age. We know one woman whose dog received an offer for his own Visa account. She filled out the application and mailed it in but never received a response.

It is easy to make light of it, but some of this intensive advertising was troubling. College campuses were papered with credit card offers, and kids took advantage of them.

The result was college graduates entering the workforce with both student loan debt and credit card debt. If the kids mishandled the cards or defaulted on them while still in college, they started their adult lives with bad credit scores. And, as we have said, potential landlords, potential employers and auto insurance companies prefer to deal with people who have good credit scores.

In 2009, Congress enacted the Credit Card Accountability Responsibility and Disclosure Act, and card companies cut way back on their offers. In fact, the law prohibited card companies from advertising on college campuses. Parents breathed a huge sigh of relief.

The idea was not to cut off all access to credit, though. The idea was to have students and families approach the issue more thoughtfully. Where teens had received a credit card offer and thought, "I could use this," they would learn to think, "Do I need this?"

As a parent or a trusted adult, you can teach teens how to manage debt responsibly. We'll go through a few ways to do that in our next post.

Source: Chicago Tribune, "5 ways to start your kids off right with credit cards," Terry Savage, Sept. 11, 2015

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Lisle, IL 60532

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