They Want Your Children!

Do you know whom the credit card companies really want to reach? Are you aware of whom they really desire to bring into their fold? Well, if you read the title of this article, you already know. It's your kids, starting with your 12-year-old and up through your college student and young adult. But why would credit card companies want to reach kids when they could focus exclusively on wage-earning adults?

It's actually quite simple. The credit card professionals know that children are vulnerable, that they're usually short on cash, and that they're fairly easy to snare into the minimum-payment lifestyle. Young people are outstanding targets for credit card companies because kids, accustomed to seeing their parents pay with plastic money, have been conditioned to believe that credit debt is simply a natural part of life. These companies also target college attendees because the students are assumed to be relatively safe risks; this is because the companies anticipate that the parents will step in and pay the balances off if the kids can't do it.

Additionally, cash-starved universities are making big-money deals with credit card companies in the hopes that cards named for their schools will sentimentally stay in the hands of students as they enter into the workforce. It's a great instrument for the card companies to establish a lifelong customer base and for the colleges to make extra money. The students, however, generally end up paying a high price for this commerce.

It's staggering when you consider that the average college undergraduate student owes over $2,000 on credit cards, and over twenty percent of all undergrads that have cards are in debt between $3,000 and $7,000. Bankruptcies filed by young people are steadily rising. In 1999, about seven percent of personal bankruptcy filings were made by minors. Put bluntly, high school and college students are heavily in debt. And to make matters worse, the condition is now creeping down into the junior high schools.

Many parents believe that their children can't have a credit card without parental consent, but that isn't true. Even kids under the age of 18 can have credit cards. In fact, kids as young as 12 can have credit cards issued in their own name (but guaranteed by a parent) or prepaid, stored-value cards.

It's true that credit cards are an inevitable part of life, and certainly college students need to learn to manage credit responsibly. Parents must remain aware that credit cards are widely available on colleges campuses (many schools include card applications as part of their welcome packages) and that their kids could easily be building up a mountain of debt without understanding the long-term financial consequences of their actions.

So, what's the solution? Talk with your kids. Explain to them how credit cards work, and help them to manage their monthly bills. Teach them about credit reports, and explain how their first credit card is an important part of developing a successful credit history. Realize that you – the parent – are the best person to train your child regarding financial responsibility.