Teens Failing to Understand the Perils of Credit
Posted by Tom Wilkins on Mon 3rd September 2007 at 06:00 AM, Filed in Credit News
There have been some fascinating results emanating from the eighth annual poll on Teens and Personal Finance by Junior Achievement Worldwide. Most of the evidence seems to indicate that teenagers are often developing dubious credit habits.
One of the key tenets of the report suggests:
“Many teens seem to be taking advantage of parental responsibility for minors’ debts by not bothering to learn how to manage their credit card’s monthly payments,”
i.e the bank of mummy and daddy jump in to help - and the kids know it!
Interesting stats coming from the poll include:
• Among teens ages 13-14, only 2.7 percent report having credit cards.
• The percentage nearly doubles to 5.3 percent for teens 15-16.
• Percentages double again to 10.6 percent for 17-year-olds.
• Percentages nearly triple to 28.8 percent for teens 18 or older.
However, this growing market of teenage credit card consumers seems to be lacking the nous to manage their debts sensibly
Problems include:
• Increased rates of skipped credit card payments.
• Figures suggest 15% of teens make a minimum monthly payment. Some made no contribution whatsoever to their credit card debt.
• 11.2% of teens acknowledge that their parents make their monthly payments for them
These are worrying trends. Kids who fail to manage their finances are likely to struggle as adults. Particularly when the supply of parental support begins to wain. There is also a major concern over the effect on credit histories. Sometimes poor money management in our early years can have far reaching financial affects.
I know from personal experience that some missed payments on my credit card whilst studying at University showed up on my credit reference many years later. Kids make mistakes with their finances - that’s part of learning. However, these figures suggest a problem going beyond the occasional financial misjudgement. That’s the real worry.
(Via Dallas News)
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