Credit Card Debt & Teenagers

College kids are bombarded with credit card offers.
i Jack Hollingsworth/Photodisc/Getty Images

If you or your honey has a teenage sibling or relative, you might want to help that family member stay on the right financial track. Or maybe you’re thinking about the day when you have children. If you were sucked into using credit cards when you were a teen or are just concerned about teenagers having easy access to credit, you might want to help prevent a teenager you know from racking up debt. Start by letting the teen know what actor Ashton Kutcher said at the Teen Choice Awards: “Don’t ever charge anything on a credit card if you don’t already have the money in the bank to pay for it.”

Targeting College Kids

Credit card companies often target teenagers, especially college kids. The U.S. Public Interest Research Group conducted a study in 2008 and found that 80 percent of students are solicited to apply for a credit card. Many kids do so to get a free T-shirt or a pizza. More than 80 percent of graduating college seniors carry credit card debt, according to It’s no surprise that teenagers can be impulsive. Combine that with a credit card and the accumulation of debt is not far behind. It’s not unusual for teens to take on debt in the thousands of dollars without having a job to pay it off. In 2008, 19 percent of bankruptcies filed were from college kids.

Targeting High School Kids

Although teens can’t apply for a credit card without a parent cosigning for it until they’re 18, credit card companies pursue high school kids anyway. Some seniors who are 18 get cards on their own, and sometimes parents go ahead and cosign so that younger teens can get one. Often, having a credit card doesn’t teach responsibility; it just teaches teens how bad debt can be.

Lack of Understanding

Much of the problem with teens and credit cards stems from a lack of understanding of how they work. Many teens know they must make a minimum payment each month, but they often don’t realize how much they pay in interest by only paying the minimum due. Many don’t realize they must pay late fees if they don’t pay on time or that being consistently late damages their credit.

Debit Cards

A good way for teens to learn about using plastic is with a debit card they can get when they open a checking or savings account. This teaches teens to keep track of what they spend. Using a debit card is like using a check; you can’t spend what you don’t have. A debit card carries certain risks, however. Fees accumulate fast if overdrafts occur. And if someone steals and uses the debit card, although the same fraud protections exist with debit cards from a major card issuer as with credit cards, the account could be temporarily wiped out.

Joint Credit Card

After teens show they can use a debit card responsibly, parents can then open a low-limit joint credit card, said Mark Minker, a New York City financial specialist, as reported by When the first statement arrives, you can go over the statement with the teen to determine whether she can pay the card off in full. If she can’t, you might prohibit her use of the card until she pays it off. The best way to teach teens to use credit responsibility is to let them learn for themselves.

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